'All Market are not the Same' for Organic

Organic Agriculture Centre of Canada

With the Canadian market for certified organic products topping $ 2 billion today and climbing, knowing what drives consumer purchases has become increasingly important.

Producers and marketers need to know what approaches are most effective in influencing different types of customers.

One way of doing this is to assess consumers’ buying preferences and then group them according to common characteristics.

That’s what researchers did in the “Purchase Drivers of Canadian Consumers of Local and Organic Produce” study, recently published in HortScience.

“The big message is that all markets are not the same,” says Benjamin Campbell, lead author of the study and research scientist at the Vineland Research and Innovation Centre of Vineland, Ontario. “You’re going to have different segments.”

Much of the research focused on how various icons promoting organic or local produce affected consumer decisions. A total of 278 Ontario consumers were surveyed.

One of the key findings was that logos could increase the likelihood of purchase even if they don’t increase the willingness to pay (WTP).

“This increase in likelihood is perhaps just as important as increasing WTP given traditionally niche markets for local produce can now expand to other consumer segments … ” states the study.

“Everything isn’t just about getting a premium,” says Campbell. “If you give someone information and they buy your product, you may be as well off as if you were paid a premium.”

After reviewing the responses, researchers identified three consumer segments: “Confident in Produce Produced in Ontario,” “In Organic We Trust,” and “Socially Responsible Locavores.”

In the study’s consumer profiles, the first group is characterized as having a lower income, higher local food knowledge, higher purchases of produce but less of organic, with a strong interest in foods but less willing to try new foods. These consumers are also more likely to shop at warehouse stores than farmers’ markets. They’re also willing to pay a small premium for “environmentally friendly” fruits and vegetables.

For this group, the “Foodland Ontario” logo was the most effective. This provincial logo, which has been used for more than 30 years, also had the largest effect within the overall sample on likelihood of purchase and increased willingness to pay.

The second group – “In Organic We Trust” – is made up of higher-income consumers, not very knowledgeable about local produce while more likely to shop at a farmers’ market. These consumers believe food purchase choices matter a lot. These consumers are willing to pay a large premium for foods with an organic logo.

For this second group, the “Canada Organic” logo, which was introduced in June 2009 and guarantees that products are grown based on Canadian Organic Standards, has the greatest impact. Following closely behind for impact is the “Verified Organic” logo.

The “socially responsible locavores” group is consumers characterized as having a lower education who are organic purchasers, with differences in local buying habits. These consumers are willing to try new recipes and new foods and are more likely to shop at a mass merchandiser. This group is more likely to seek price discounts, particularly at holidays or other special occasions.

For this third group, the “Canada Organic” logo attracted a premium.

For all groups, in general, women are more likely to be affected by logos than men in their buying choices.

Campbell says the value of the research to producers and consumers is that knowing preferences and characteristics should result in better services.

“By finding out more about the consumer, we are helping the producer to better refine their needs to better service the consumer,” he says. “We’re saying when consumers go and purchase something, they make choices.”

He says certain consumers value certain logos. “If you can find out who these people are, then you can identify where these markets are,” he says.

States the report: “Through identification of market segments and the characteristics that drive segment membership, producers and policymakers now have a clearer understanding of which consumers are most likely to value a certain logo and which external factors drive purchasing of fruits and vegetables.

This article was written by Steve Harder on behalf of the OACC with funding provided by Canada’s Organic Science Cluster (a part of the Canadian Agri-Science Clusters Initiative of Agriculture and Agri-Food Canada's Growing Forward Policy Framework).  The Organic Science Cluster is a collaborative effort led jointly by the OACC, the Organic Federation of Canada and industry partners
. For more information: oacc@dal.ca or 902-893-7256.

Posted February 2011