How countryspecific are consumer attitudes towards organic food

1
How country-specific are consumer attitudes
towards organic food?

• Raffaele Zanoli
• Professor of Agricultural Economics Marketing
• Università Politecnica delle Marche Ancona -
  Italy

Wageningen, IBL-meeting23 November 2004
2
Questions I will try to answer

• Organic markets have different rates of growth.
  Which socio-cultural explanation can be given for
  this? Can we relate this to a cultural specific
  belief or value system?
• To what extent are barriers for increasing the
  organic consumption more country specific than
  consumers motives to buy organic?
• If we wish to develop the domestic market for
  organic produce, can we approach the consumers in
  European countries in the same way?

3
A globalised organic market?
4
Organic farming worldwide
5
The global organic food market

• Although organic farmland continues to rise
  across the globe, most sales of organic food and
  drink are restricted to the industrialised world.
  North America and Western Europe account for
  roughly 97 percent of global revenues. Other
  important markets are in Japan and Australia.

Source ORGANIC MONITOR, 2003
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The global organic food market

• Two factors can explain why consumer demand is
  concentrated in the most affluent countries of
  the world
• The price premium of organic products restricts
  demand to countries where consumers have high
  purchasing power.
• The second factor is education and more
  specifically consumer awareness and knowledge of
  organic products. As consumers be come more
  educated and informed of food issues, they are
  more inclined to buy organic products because
  they become concerned about food safety,
  environmental pollution, and health.

7
The European organic food market
Source FAO-ITC, 2001 Fibl, 2003
8
The European organic food market

• Between 1999 and 2002, organic sales and organic
  land areas developed with a different dynamic in
  many European countries.
• 2 countries developed in different directions
• While the organic demand decreased in the last
  three years in Denmark, the organic land area
  conversely increased.
• The opposite development took place in Austria.
• The most well balanced development between demand
  and supply could be observed in France and
  Germany over the last years.

9
The European organic food market
Source Fibl, 2004
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Reasons for different market growth

• Relatively low price premiums for organic
  products are an important factor for enlarging
  demand.
• Penetration pricing vs. price skimming
• Income factor

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Organic Consumer Premium prices
Source Hamm (OMIARD), 2004
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Reasons for different market growth

• Early involvement of general food retailers
• Processors Importers are mainly located in
  Northern Europe, as are the head-quarters of
  large retailing groups.

13
Marketing channels
Source Hamm (OMIARD), 2004
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The North has the market power

• The following Northern retailers have a very
  strong position in Southern countries too
• Ahold (NL) PT, ES
• Aldi (DE) ES
• Auchan (FR) IT, ES
• Carrefour (FR) ES, IT, PT, GR
• Lidl (DE) IT, ES, PT, GR
• Rewe (Billa) (DE) IT
• Spar (NL) IT, ES, GR
• In Italy the largest food retailer is a domestic
  chain (COOP Italia)

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Reasons for different market growth

• Adequate level of consumer knowledge is crucial.
• Importance of common national label well-known to
  the majority of consumers
• Cross-cultural differences in food preference
• Food habits food culture
• Value systems (motivations/barriers)

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Organic product knowledge
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Product awareness

• The basic form of product knowledge is product
  awareness the knowledge of the existence of a
  product
• Without product awareness, the consumer will
  never buy a product simply because it does not
  know that it exists!

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Organic product awareness

• Organic product awareness is estimated to be
  relatively high in most EU countries.
• However, consumer surveys report that in most
  countries still 1-3 people out of 10 do not know
  that organic product exist!

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ORGANIC PRODUCT AWARENESS IN ITALYHave you ever
heard of organic products?
Basis 8225 subjects Representative Sample of
Population aged gt 14
Source ISMEA-AcNielsen for AGER 2001
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Product knowledge

• We will concentrate on what we call General
  product knowledge
• Concerns peoples interpretations of relevant
  information in their environments.
• General knowledge is stored in memory as
  propositions that link or connect two concepts.

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Example of general knowledge
Example
are
Organic products
GMO free
are
Organic products
Certified
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Organic product knowledge

• In the OMIARD project we interviewed a sample of
  749 consumers in 8 European countries (AT, CH,
  DE, DK, FI, FR, IT, UK). These were either
  occasional or regular buyers of organic products.
• General consumer product knowledge (expertise)
  was measured using a reliable 7-item scale.

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ORGANIC PRODUCT KNOWLEDGE IN EUROPERight
answers to a 7-items reliable knowledge scale
RIGHT ANSWERS LOW UP TO 2 OUT OF 7 MEDIUM 3-4
OUT OF 7 HIGH MORE THAN 5 OF 7
Basis 749 subjects Reasoned Sample of Family
Food Purchasers Aged gt25 lt65 All organic buyers
Source Zanoli (OMIARD), 2004
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The role of experience

• Self-reported frequency of purchase was used to
  measure organic product experience and so to
  distinguish between self-reported regular
  consumers and other groups.
• Regular consumers are more knowledgeable about
  organic products, given that a positive
  relationship between expertise and self-reported
  experience exists. Regular consumers represent
  only 23.1 of consumers with low product
  knowledge while they represent 68.5 of those
  with high knowledge.
• Expert organic consumer (experienced and
  knowledegeable) are also better educated.

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ORGANIC PRODUCT KNOWLEDGE IN ITALYRight answers
to a 7-items reliable knowledge scale
Non organic consumers 5810 subjects
RIGHT ANSWERS LOW UP TO 2 OUT OF 7 MEDIUM 3-4
OUT OF 7 HIGH MORE THAN 5 OF 7
Basis 8225 subjects Representative Sample of
Population aged gt 14
Source AcNielsen in Zanoli Marino, 2002
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ORGANIC PRODUCT KNOWLEDGE IN ITALYRight answers
to a 7-items reliable knowledge scale
Regular Occasional 2415 subjects
RIGHT ANSWERS LOW UP TO 2 OUT OF 7 MEDIUM 3-4
OUT OF 7 HIGH MORE THAN 5 OF 7
Basis 8225 subjects Representative Sample of
Population aged gt 14
Source AcNielsen in Zanoli Marino, 2002
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ORGANIC PRODUCT KNOWLEDGE IN ITALYRight answers
to a 7-items reliable knowledge scale
RIGHT ANSWERS LOW UP TO 2 OUT OF 7 MEDIUM 3-4
OUT OF 7 HIGH MORE THAN 5 OF 7
Basis 78 subjects Reasoned Sample of Family Food
Purchasers Aged gt25 lt65 All organic buyers
Source Zanoli (OMIARD), 2004
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Experience Expertise

• Regular organic consumers are in general highly
  knowledgeable food buyers and are less prone to
  be influenced in their buying behaviour by price
  considerations, though the cost of organic food
  have a relevant impact on their budgets.
• Occasional organic consumers are in general less
  informed less knowledgeable about food and
  organic food production, buy often accidentally
  organic or only one certain product. Price is the
  main reported barrier.
• Often conversion to organic consumption is due to
  critical occurrences in life, not by fashion or
  accident.

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Cross-cultural differences in habits values
system
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Types of Product Knowledge
Bundle of Attributes Bundle of Benefits/
Consequences Values
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Types of Product Knowledge
Bundle of Attributes
Healthy
Abstract
Organic products
Natural
Abstract
GMO free
Concrete
No pesticides
Concrete
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Types of Product Knowledge
Bundle of Benefits
make me feel healthier
Psychosocial
Organic products
taste good
Functional
Benefits Anticipated positive
consequences Risks Potential negative
consequences functional, financial,
psychosocial, physical risks.
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Types of Product Knowledge
Values Broad goals in life
Take care of family
Organic products
Have good health
Live a long life
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Means-End Chains of Product Knowledge
Values
Consequences
Attributes
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Dairy products knowldege structure of the
health motivation
Quality of life AT, DK, IT
Own health
Well-being AT, DE, FI, IT
Family health AT, DE, DK, FI, IT, UK
Avoid worries DK
Feel active capability AT,CH, IT
Avoid health problems
Feel good AT, DE, CH, FI, IT, UK
Children eat/stay healthy AT, DK
Staying healthy
Not homogenized, DE, FI
Less hormones/ drugs DE, FR, IT, UK
Contains more vitamins, minerals DE
Wholesome AT, DE, IT
Tastes good AT, FR, IT
Appropriate husbandry AT, DE
Healthy products AT, CH, DE, DK, FI, IT, UK
Naturally produced AT, DE, CH, FI, FR, IT, UK
Full fat DE
Local/regional products AT
Good quality AT, FI, FR, IT
Good texture AT, FR
Information about production/origin AT
Less pesticides/fertilizers AT, DK, FI, FR
Natural/healthy fodder AT, DK, FR, IT
Real/genuine taste AT, FR, IT
Less additives/ chemicals
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General motives for buying organics
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Differences in general motivations

• Health is coupled with environmental animal
  welfare issues in Northern countries.
• In Latin countries animal welfare is of no or
  minor importance, while French consumers appear
  little interested to the environment.
• Family values are common to both groups of
  countries.

38
Taste enjoyment of eating food

• In Latin countries food has a high social
  connotation, in the sense that people consider
  socially important to serve/eat good food and
  have pleasure in eating.
• Organic is accepted as long as it tastes good
  and is often not recognised as such.
• In Northern countries organic food is generally
  accepted as having a genuine taste and a
  better texture.

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General barriers for buying organics

• Rational
• Prices too high
• Lack of convenience
• Insufficient range/availability
• Emotional
• Lack of Enjoyment
• Lack of Interest
• Lack of Trust

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Lack of trust

• In all countries, consumers think that the
  certification system is not enough transparent
  and there is not enough information.
• People fear that controls/inspections are not
  strict enough.
• In Northern countries often people trust only the
  national logo/inspection system.

41
Trust Logos

• In general public logos should act as
  trust-builders but appear to be of little
  self-relevance to consumers.
• In general they communicate
• the nature of the inspection system (EU-wide,
  private/public, national/regional)
• sometimes they try to relate organic to nature
• Brands are generally linked to consumer values
  and try to be emotionally motivating by
  activating the links between product and self.

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What is the meaning to communicate?
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Too many organic logos?
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Too many organic logos?
45
Trust Logos

• Most of the public/private organic\labels have
  low brand image equity.
• Besides
• Consumers usually orientate themselves on
  national labels.
• Despite the large number of national and private
  organic labels, most consumers know and trust
  only few ones (if any).
• The development of consumer recognition and
  credibility for organic labels needs a lot of
  time finance.

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Concluding remarks
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Key factors for market development

• Organic farming is a question of personal values
  and lifestyle for both consumers
  farmers/producers.
• Consumer information education ? awareness,
  knowledge
• Value for money
• Trusted labels/logos
• Stronger brands
• Fair prices (quality signalling)
• Taste should not given for granted (country
  specific)

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Open critical issues

• Nutraceutics functional food
• Integrated food and other substitutes
• Local vs. Global
• GMOs (will organic food be GMO-free?)
• Quality (what is organic quality?)
• Standards, inspection certification (incl.
  logo)

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Which Organic Future?

• Original
• Reassuring
• Gourmet
• Assisted
• Natural
• Informative
• Concerned

• Fast
• Urban
• Tribal
• Universal
• Radical
• Ethical