Organic products would seem tailor-made for shoppers seeking foods and beverages that are healthier for them, their families and the planet, but a new analysis reveals that most Americans perceive the organic label as nothing more than an excuse to sell products at a premium.
71 percent of consumers don't even think that organic products have a labeling standard. 51 percent believe that labeling something as organic is just an excuse to charge more. 72 percent do believe that the products are probably healthier.
More worrisome for the $105 billion industry is that while sales continue to go up, consumer penetration has plateaued. All of the people likely to buy it are likely to already be buying it unless the marketing gets more convincing.
Organic Is Healthier, Right?
When looking specifically at female shoppers, 43 percent purchase them because they believe organic food contains unnecessary ingredients or chemicals, and the same percentage do so to avoid food made with pesticides, even though organic food has the same ingredients - which are "chemicals" - and some studies have found organic food has more pesticides.
31 percent of women and 29 percent of men purchase organics because they believe they are less processed than their non-organic counterparts, and 20 percent of women and 16 percent of men purchase organics because they believe organic companies treat animals more ethically.
Premium prices for organic - and a lot of distrust
Generation X at 51 percent and the Swing Generation at 57 percent regard an organic label as just a premium price tag. The distrust many Americans have of organic food and drinks extends beyond issues with the price. Only 39 percent of Gen X believe that organic-labeled products are actually organic. This number decreases to 35 percent of Swing Generation consumers. Only 40 percent of Millennials, the demographic that most supports organics, think that organic products are part of any regulatory standard.
38 percent of all consumers 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 at 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.”
Organic still has potential
Though $105 billion is clearly Big Ag, there is still plenty of room for organic to grow, if they can shake off the perception that it is a meaningless designation. Only 33 percent of consumers have purchased a food or beverage labeled as organic within the last three months but it does better with Millennials, where 49 percent have chosen organic for at least 50 percent of their food/beverage purchases.
Among other demographics, it is not doing so well. 43 percent of Gen X, 51 percent of Baby Boomers, and 58 percent of the Swing Generation consume no organic products at all. Unlike Millennials, over half of whom say buying organic makes them "feel" better, only 24 percent of Baby Boomers feel that way.
Skepticism that the price is justified
The new research also reveals that 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. “Our research shows that only 29 percent of shoppers recognize that organic foods and beverages are highly regulated, and an even greater percentage (38 percent) regard organic as a marketing term with no real value or definition,” continued Roberts.
Get the new report here.