Understanding the organic consumer is focus of panel at SPC conference
Understanding the organic consumer is focus of panel at SPC conference
TAMPA, FL -- As the trend toward organic produce continues to grow, produce suppliers and retailers are well served to gain a better understanding about what drives consumer decisions to buy organic produce. A panel discussion held here Feb. 24 during the Southeast Produce Council conference set out to examine some of the buying habits of organic consumers.
Moderated by Steve Lutz, executive vice president of the Perishables Group, the panel was comprised of representatives from three retailers that have made a concerted effort in marketing organic produce and two suppliers that expect to increase their organic offerings in the future. Retail representatives were Greg Carlson of Sunflower Markets, Tom Holbert of Wal-Mart and Don Harris of Wild Oats. Suppliers were Tracy King of Dovex and Billy Heller of Pacific Tomato Growers.
According to Mr. Lutz, the Perishables Group embarked on a first-of-its-kind research project that surveyed 2,000 organic/all-natural consumers -- 500 each from the Northeast, Midwest, South and West -- to determine what drives their purchase decisions. The full study will be released in April, but some of the salient points to date show that heavy users and light users have very different opinions and shopping patterns.
For example, heavy organic users shop at supermarkets but at lower levels than light users. Instead, heavy users are more apt to utilize alternative- format stores. Also, consumers under the age of 44 are more likely to purchase organics, and 57 percent of consumers are purchasing more organics than they did last year.
Two main criteria for organic purchases are price and appearance, and price was the main barrier for non-users. With price, respondents said that they believe a 10 percent premium for organics is a good value, while a 50 percent premium is considered expensive. On average, consumers are willing to pay a 19 percent premium. Appearance is the most important factor for fresh food purchases for organic and non-organic items alike.
Mr. Lutz said that there is tremendous opportunity for the produce industry to capitalize on the organic trend since produce serves as the entry point for organics. When comparing light users and heavy users, the former group seeks accessibility and value, while the latter are more influenced by lifestyle and experience.
Regarding whether organics are a passing phase or are here to stay, the panel roundly agreed that it is no fad.
"We don't believe it's a fad at all," said Mr. Carlson of Sunflower Markets, which is a division of Supervalu. "It's a developing market. I believe we will see more consumers moving toward organic and more suppliers getting into supplying organics."
Mr. Heller of Pacific Tomato Growers agreed, calling organics "intellectual consumption."
Mr. Holbert said that Wal-Mart also doesn't view organics as a fad, adding that his company has done a lot of research and identified strong demand for organics.
Mr. Lutz posed the appearance of items to the panel, a factor that the Perishables Group research identified as a key point to drive organic consumption.
Mr. Harris of Wild Oats said that as large-scale producers get more into organic production, "the standards will be raised across the board."
Mr. Carlson of Sunflower added that reliable supply partners know that their retail customers need nice-looking product and will meet that standard to keep the business.
Mr. Holbert said that consumers want organic product to look the same as conventional product.
When asked about the keys to maintaining a successful organic program, the panel said that commitment to an organic program is essential and that retailers need to be flexible.
"Making the commitment of land and resources is what will make the [organic] category thrive," said Mr. Harris.
Mr. Heller said that he likes to go into supermarket produce departments and speak with store-level produce managers to determine what is moving well and why. "I like to take that feedback to the produce buyers" to make sure that consumers are getting what they want. Also, "retailers need to be amenable to what is in the supply chain."
Mr. Carlson agreed, saying, "Flexibility in organics is key, and retailers and suppliers alike need to recognize that."
He added that communication between suppliers and retailers is also important. "We have to know what we are getting so that we can be prepared to properly sell it. I realize that the sizes might not be available, but I need to know beforehand and not when the product shows up at the back door."
Moderated by Steve Lutz, executive vice president of the Perishables Group, the panel was comprised of representatives from three retailers that have made a concerted effort in marketing organic produce and two suppliers that expect to increase their organic offerings in the future. Retail representatives were Greg Carlson of Sunflower Markets, Tom Holbert of Wal-Mart and Don Harris of Wild Oats. Suppliers were Tracy King of Dovex and Billy Heller of Pacific Tomato Growers.
According to Mr. Lutz, the Perishables Group embarked on a first-of-its-kind research project that surveyed 2,000 organic/all-natural consumers -- 500 each from the Northeast, Midwest, South and West -- to determine what drives their purchase decisions. The full study will be released in April, but some of the salient points to date show that heavy users and light users have very different opinions and shopping patterns.
For example, heavy organic users shop at supermarkets but at lower levels than light users. Instead, heavy users are more apt to utilize alternative- format stores. Also, consumers under the age of 44 are more likely to purchase organics, and 57 percent of consumers are purchasing more organics than they did last year.
Two main criteria for organic purchases are price and appearance, and price was the main barrier for non-users. With price, respondents said that they believe a 10 percent premium for organics is a good value, while a 50 percent premium is considered expensive. On average, consumers are willing to pay a 19 percent premium. Appearance is the most important factor for fresh food purchases for organic and non-organic items alike.
Mr. Lutz said that there is tremendous opportunity for the produce industry to capitalize on the organic trend since produce serves as the entry point for organics. When comparing light users and heavy users, the former group seeks accessibility and value, while the latter are more influenced by lifestyle and experience.
Regarding whether organics are a passing phase or are here to stay, the panel roundly agreed that it is no fad.
"We don't believe it's a fad at all," said Mr. Carlson of Sunflower Markets, which is a division of Supervalu. "It's a developing market. I believe we will see more consumers moving toward organic and more suppliers getting into supplying organics."
Mr. Heller of Pacific Tomato Growers agreed, calling organics "intellectual consumption."
Mr. Holbert said that Wal-Mart also doesn't view organics as a fad, adding that his company has done a lot of research and identified strong demand for organics.
Mr. Lutz posed the appearance of items to the panel, a factor that the Perishables Group research identified as a key point to drive organic consumption.
Mr. Harris of Wild Oats said that as large-scale producers get more into organic production, "the standards will be raised across the board."
Mr. Carlson of Sunflower added that reliable supply partners know that their retail customers need nice-looking product and will meet that standard to keep the business.
Mr. Holbert said that consumers want organic product to look the same as conventional product.
When asked about the keys to maintaining a successful organic program, the panel said that commitment to an organic program is essential and that retailers need to be flexible.
"Making the commitment of land and resources is what will make the [organic] category thrive," said Mr. Harris.
Mr. Heller said that he likes to go into supermarket produce departments and speak with store-level produce managers to determine what is moving well and why. "I like to take that feedback to the produce buyers" to make sure that consumers are getting what they want. Also, "retailers need to be amenable to what is in the supply chain."
Mr. Carlson agreed, saying, "Flexibility in organics is key, and retailers and suppliers alike need to recognize that."
He added that communication between suppliers and retailers is also important. "We have to know what we are getting so that we can be prepared to properly sell it. I realize that the sizes might not be available, but I need to know beforehand and not when the product shows up at the back door."
