Business & Policy
‘Organic’ label perceived as an excuse to charge more
May 15, 2015, New York – American consumers seem to be confused about the benefits of organics and many perceive the organic label as nothing more than an excuse to sell products at a premium, according to new research.
Market intelligence agency Mintel found the biggest selling point for organics is the perception the products are healthier (72 per cent). Only 29 per cent of consumers recognize organic products are highly regulated and 51 per cent believe labeling something as organic is an excuse to charge more.
Organics are healthy, right?
Overall, 72 per cent of US consumers purchase organic food and/or beverages for health or nutrition reasons, while slightly fewer (69 per cent) factor environmental or ethical reasons in their purchase decision.
When looking specifically at female shoppers, this consumer group appears to choose products that avoid certain characteristics: 43 per cent purchase them because they do not contain unnecessary ingredients or chemicals, and the same percentage do so to avoid food made with pesticides.
However, the biggest selling point for organics – among both men and women – is the perception that the products are healthier; 73 per cent of women and 71 per cent of men purchase organics for health and nutrition reasons. Those numbers fall to 31 per cent of women and 29 per cent of men who purchase organics because they are less processed than their non-organic counterparts, and 20 per cent of women and 16 per cent of men who purchase organics because organic companies treat animals more ethically.
Products at a premium
Over half of US consumers (51 per cent) agree labeling something as organic is an excuse to charge more. Generation X (51 per cent) and the Swing Generation (57 per cent) in particular regard an organic label as a premium price tag.
The distrust many Americans have of organic food and drinks extends beyond issues with the price. Only 39 per cent of Gen X trust that organic-labeled products are actually organic. This number decreases to 35 per cent of Swing Generation consumers. Furthermore, only four in 10 Millennials (40 per cent), the demographic that most supports organics, recognize that organic products are highly regulated.
More than one-third of all consumers (38 per cent) regard "organic" as a marketing term with no real value or definition.
“Our research finds half of consumers say labeling something as organic is an excuse to charge more. Considering the typically higher cost of organic foods and beverages, consumers are increasingly hard pressed to justify the added expense,” said Billy Roberts, senior food and drink analyst with Mintel. “As such, sales have hit something of a plateau, where they likely will remain until consumers have a clear reason to turn to organics. This could come in the form of a growing number of lower-cost organic options, bringing a new degree of competition to the category.”
Mintel’s research also reveals consumers aren’t just asking where grocery products are made or what additives they contain, but they’re also questioning whether their price tags are justified.