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Organic Food – Environment concerns impacting the way we shop The industry I have chosen for this report is the organic food industry and in particular the distribution channels for the food industry in Ireland and how they have reacted towards the changing in trends in consumer buying behaviour. Recent European scares regarding meat, BSE, and the bad publicity surrounding GM foods have been drivers of the organic food revenue. There is a growing demand for organically produced food in Ireland. The level of growth has accelerated exceedingly in the last few years. The rise in the area that is being farmed organically, which has more than doubled recently has resulted in increased volumes of Irish organic food becoming available, although like most European markets imports are prominent especially in the fruit and vegetable, spices and pasta markets. 28 per cent of Irish consumers buy organic food at least once a month. On average buying households spend around £20 per month on organic food. Irish consumers spontaneously associate organic food with being produced without chemicals and pesticides (57%) and being health and natural (37%). 60 per cent of purchases take place in supermarkets. 83 per cent do not recognise any of the main organic symbols in Ireland. 68 per cent of those who do not buy organic food say it is to expensive. Fruit and vegetables are the organic food products most likely to be tried by “non buying” consumers first followed by meat and dairy products. This latest report by Bard Bia identifies clear potential for the development of the organic food sector in Ireland. It is also clear that significant challenges confront the sector in fully realising this potential. Bard Bia's market development and promotional programmes, at home and overseas, equally accommodate the development of opportunities in growth market segments such as organic foods. In addition, specific programmes and activities have been designed to further support the development of the sector. The increasing number of food scares across Europe over recent years has led to a strong rise in consumer demand for food products that have been produced without the use of pesticides or other chemicals and in more recent times free from genetic modification. This has meant that increasing numbers of consumers have been turning to organic food as a source of good quality healthy food. Given the trends that have been particularly evident over the last few years this development is likely to accelerate further over the next decade. Problems regarding the consistent availability of organic food products have to some extent been inhibiting the level of growth in consumer demand for organic produce, as some consumers have me frustrated with the ad hoc availability of supplies. Also, there is an increasing consumer demand for more value added organic food products with a longer shelf life such as ready meals, fruit juices, hot beverages and other convenience products. As these products become more available and providing the price premium isn't excessive, it is likely that the share of the market held by organic food will continue to grow strongly. All organic food that is sold at retail level in Ireland has an organic logo on the label. This logo is the symbol used to show that the product has been produced under the standards of a particular inspection body. The main logos that are evident in Ireland at the moment are shown below; Reaction of distributors to the changing trends in consumer behaviour. There are several supermarket chains in Ireland with Dunnes Stores, Superquinn and Tesco, Marks & Spencer and Supervalu being the main ones. Each chain has taken its own stance on the issue and reacted in different ways to address the “organic friendly shopper”. The reason for an adjustment in strategies by these main players can be seen as twofold; In this age of information consumers are making more and more educated decisions on consumable items. This has resulted in a lot of small/medium businesses cashing in on the organic market and the fact that people may be willing to pay a premium price for natural foods. Rather run the risk of losing potential business super market chains have had to adapt & adopt a more environmental marketing approach with their consumable goods. Albeit as you will see some have been a lot more receptive than others. The high number of food scares and the infinite amount of damming reports on food production has prompted the EU to take legislative actions governing the production of food substances. New tighter laws and raising the standards of food preparation along with the regulatory compliance for ingredients to be shown on packaging has had wide implications for the food industry. These new measures have raised the standards of foods reaching the shop shelve and made it a lot more transparent for the consumer to identify what exactly they are purchasing. Supermarket Wars – How do they stack up ? As part of the research for this report I examined the different marketing strategies and stances taken by the main players in the Irish market along with the smaller outlets. Most definitely the market leader refer to web site – UK head office, a lot more Organic friendly in the UK, has more affluent cliental (ABC1) and can afford to raise their prices. Of the Irish owned chains Superquinn is the market leader, strong play on green issue, portrays its image as an environmental and family store. Recently expanded there vegetable section. Tesco plans to introduce hundreds of new organic items to its shelves, and make them more affordable to all customers. Tesco has carried out its own consumer research, and said that 63% of customers would buy more organic food if it were available in-store. Tesco also found that 60% of customers were now buying more organic produce. Whist Tesco were initially slow to react (especially so in their Irish division) In association with Bord Bia, advises Healthy Eating options for customers. Dunnes Stores approach on Organic is also outlet sensitive with the selection of foods varying between outlets with Organic foods being very prominent in more affluent areas and less available in poorer areas. Geri check website or goggle search “Super Valu organic” Cheap and cheerful aiming toward the money sensitive market and less organic products available. As Ireland becomes more cosmopolitan, so peoples' tastes grow steadily more discerning. The result is a number of specialist and epicurean food shops and markets. The Big Cheese Company (Andrews Lane, Dublin 2) is a delicatessen with a huge range of cheeses and foreign foods. Epicurean Food Hall (Lower Liffey Street, Dublin 1) is a gourmet shopping mall, with a number of shops and stalls selling everything from bagels and organic smoothies to cheeses and pastries. The Temple Bar Food Market (Meeting House Square, Temple Bar, Dublin 2) happens every Saturday. With a diverse range of traders selling cheeses, vegetables, meats, bread and cakes, the market makes for a lively and - frankly - delicious visit. The Dublin Food Co-operative (St Andrew's Resource Centre, 114-116 Pearse Street) opens every Saturday, specialising in organic vegetables and fruit, as well as vegetarian ingredients and eco-friendly domestic products. The part of survey asked consumers if they had ever seen the symbols displayed on food products before. The results indicate that consumers have a low awareness of the organic symbols with only 6 per cent recognising any of the Irish symbols. Around three per cent recognised the IOFGA logo with one per cent of consumers recognising the organic trust and Demeter symbols. Interestingly the most recognisable logo was the Soil Associations at 15 per cent. This is a UK symbol and is indicative of the level of imports that are present in Ireland. A similar situation was evident when consumers were asked their opinion of what the symbols represented. Only 17 per cent of consumers knew that they indicated organic food production standards. Five per cent said that it meant food that was naturally grown or produced without pesticides. A further eight per cent knew that the soil association logo represented organic food. . The main conclusion coming from this is that 83 per cent of Irish consumers do not recognise any of the main organic symbols on the market and that at least 70 per cent do not know what any of them represent. Importance of Certification Symbols When asked how important it would be for an organic food product to have a label that certifies it was produced under specific circumstances if consumers were considering purchasing organic food, 71 per cent of consumers said it would be very important. A further 18 per cent said it would be fairly important while 5 per cent felt it was neither important nor unimportant. Consumers were then asked if a retailer provided a label on the product that certified it was organic, to what extent would they trust it as a guarantee that the product was organic. Over 37 per cent of consumers said they would trust it completely while 38 per cent said they would trust it to some degree. When they were asked if they would trust an EU symbol, 45 per cent said they would trust it completely while a further 36 per cent would trust it to some degree. Over 45 per cent of consumers would prefer an EU symbol to a retailer symbol. Profile of Irish Organic Food Consumers While there is no specific profile of an organic food consumers in Ireland they generally tend to fit into the following criteria; In the ABC1 socio-economic group .Generally tend to be married and female. More likely to be in the 35-54 age group .Tend to be from small to medium sized households .More likely to live in an urban area One third of Irish consumers buy organic food at least once every three months with 28 per cent purchasing monthly. The level of spend on organic food tend to be around £20 per month with 60 per cent of purchases taking place in supermarkets. The cost of the organic food is a prohibiting factor that is preventing a large proportion of consumers from buying organic food with 53 per cent of consumers saying a drop in the price of organic food would be very likely to encourage them to buy. Fruit and vegetables are the organic food products that consumers are most likely to try first followed by meat and dairy products. Irish consumers generally have a very positive attitude to organic food. However, there is a high level of confusion among consumers as to what the term "organic" actually means. Also, there is a very low recognition of the Irish organic symbols by consumers. This suggests that the term "organic" is selling the product at the moment. However, if the Irish organic food sector is to grow. It is important that consumers know how to recognise a certified organic product. Also, Irish organic produce needs to be clearly labelled as such so that Irish producers can benefit from the growth in the market. The primary research method used by myself is listed bellow; 1. Questionnaire drafted. (appendix 1.) 2. General public surveyed in a selection of supermarkets. (results appendix 2.) 3. Outlet owners / managers interviewed. On the back of the results I then compared them with previous polls taken by An Bord Bia and assessed to what extent consumer changes have evolved since the last survey. How companies have communicated their activities in this sector and how this has led to changes in product choice. The Future of Organic Food Marketing We'll see increasing focus on organics. First, there must be growth in the number of certified organic farms, since demand for organic ingredients still outweighs production. If the situation changes, we should see more completely organic food stores in the future. We can expect more consumer advertising of natural foods products in major media. Just recently, we saw a full-page ad in The Irish Times promoting organic foods in the Superquinn supermarket chain. These ads are costly and can only continue if the products sell in larger quantities. At the same time, natural foods manufacturers will have to do more advertising to drive customers to their products in huge supermarket settings. Greater sales would enable natural foods products to be competitively priced. Corporations buying out natural foods companies will focus on the marketing side; however, they may not be developing new products and they will quickly drop a product if sales do not meet their expectations. The result is a new era for entrepreneurs. There are a number of factors affecting consumer demand for organic food across Europe. A number of positive factors are helping to boost sales of organic food while at the same time there are some negative issues that need to be addressed if the market is to reach it's full potential. The main positive factors driving the European organic food market include; 1. Consumers that purchase organic food feel that it tastes better due to the natural system of production. 2. Organic farming is seen as a positive way of promoting the environment. producers and the local region. 3. When organic food is purchased direct from the producer. consumers have the satisfaction of knowing where the product comes from. At the moment there is very positive consumer attitude towards organic food and this has resulted in a strong increase in sales over the last three years in particular. While this growth is likely to continue over the coming years there are a number of negative factors that could have potentially very serious consequences for the development of the organic food market. These include; .There continues to be an insufficient consistent supply of products available to ensure a year round supply for consumers to choose from. If the proportion of consumers purchasing organic food is to increase it is important that they can source these products when they need them otherwise they will look for an alternative- .The product range available continues to be quite limited and is mainly confined to primary foods such as fruit & veg. milk and meat. If the market is to grow it is important that consumers have a wider choice of products available to them. Bibliography: Word Count: 2502
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