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- 1. ANALYSIS OF THE ORGANIC FOOD INDUSTRY IN AUSTRALIA Presented By: Gazal Shah MJAN15CMM036 Harsh Nahata MJAN15CMM010
- 2. WHAT ARE ORGANIC PRODUCTS ? • Subjective definition. • Limited use of chemicals and pesticides. • Follows production standards. • Meets guidelines set by the regulatory bodies. • Different from natural products. • Different for different countries. 2
- 3. GLOBAL PERSPECTIVE Global Organic Food Market Geography Segmentation: $ Million, 2014 Geography 2014 % United States 35,891.90 42.6 Europe 34,800.70 41.3 Asia-Pacific 8,338.90 9.9 Middle East 171.80 0.2 Rest of the World 5,077.70 6.0 Total 84,280.90 100% SOURCE: MARKETLINE 3
- 4. GLOBAL ORGANIC FOOD MARKET TREND 65.60 72.00 76.80 82.70 91.90 99.60 106.60 113.10 0.00 20.00 40.00 60.00 80.00 100.00 120.00 2010 2011 2012 2013 2014 2015 2016 2017 SALESVOLUME('000TONNES) YEAR Organic Packaged Food Retail Volume (Tonnes) 4 Source: Euromonitor Passport, Organic Packaged Food Retail Volume sales Statistics
- 5. CONCEPTUAL FRAMEWORK Accreditations and certifications Perceived Product Quality Price Product Availability Sales Promotions Consumer Perception Consumer Trust Attitudinal Consumer Loyalty 5
- 6. RESEARCH METHODOLOGY • Research Questions: • What hinders Australians from purchasing organic foods in all food categories? • How to increase sales of organic foods? • Research Objectives: • To identify the factors influencing the sales of organic foods. • To identify the factors hindering the purchase of organic foods in all the food categories. • To identify the category in which organic foods sales are low. • To understand influencers in sales of organic foods in those low categories. 6
- 8. LITERATURE REVIEW 8 Certifications Product Price Sales Promotion Product Availability Perceived Quality Types of Organic Certification Details 100% Organic 100% Organic 95-99% Made with Organic Ingredients 70-94% Others < 70% Source: Rehan, K. (2007). Feeding the organic demand. Candy Industry, 172(9), 50-52.
- 9. LITERATURE REVIEW 34% 21% 45% Certificate Recognition Australia Certified Organic NASAA Others 9 70% 30% Decision Influencer Influences No Infleunce 75% 52% 0% 10% 20% 30% 40% 50% 60% 70% 80% Branded Products Home Brand Trust Factor Trust… Source: Australian Organic Report, 2014 Certifications Product Price Sales Promotion Product Availability Perceived Quality
- 10. LITERATURE REVIEW 10 Certifications Product Price Sales Promotion Product Availability Perceived Quality H1: Accreditations and Certifications have boosted the consumer trust towards organic foods in Australia.
- 11. LITERATURE REVIEW 11 Certifications Product Price Sales Promotion Product Availability Perceived Quality • Low barriers to entry. • Correlation between income & purchase tendencies. • Perceived high quality. • Concerns for developing countries.
- 12. LITERATURE REVIEW 12 Certifications Product Price Sales Promotion Product Availability Perceived Quality H2: Price of the product influences the consumer’s trust towards the product. H3: Price of the product influences the consumer’s attitudinal loyalty towards the product
- 13. LITERATURE REVIEW 13 Certifications Product Price Sales Promotion Product Availability Perceived Quality • Lucrative growth rates. • Greater profit margins. • New research models are required. Source: Australian Organic Report, 2014.
- 14. LITERATURE REVIEW 14 Certifications Product Price Sales Promotion Product Availability Perceived Quality H4: In-store marketing campaigns have a positive impact on the attitudinal loyalty the shoppers.
- 15. LITERATURE REVIEW 15 Certifications Product Price Sales Promotion Product Availability Perceived Quality 0 10 20 30 40 50 60 70 80 90 100 Supermarkets Greengrocers Wholefood stores Segmentation of Retail outlets preferred for Organic food Shopping Segmentation of Retail outlets preferred for Organic food Shopping Source: Australian Organic Report, 2014.
- 16. LITERATURE REVIEW 16 Certifications Product Price Sales Promotion Product Availability Perceived Quality Consumer trends with regards to Product Availability • Maximum consumers earlier comfortable with direct buying • Transition to Supermarkets as point of purchase • Supermarkets preferred due to wide variety and perception of assured quality Source: Organic Packaged food in Australia, 2014
- 17. LITERATURE REVIEW 17 Certifications Product Price Sales Promotion Product Availability Perceived Quality H5: The location of purchase influences the consumer trust towards organic foods. H6: The place where the product is available affects the attitudinal loyalty of the consumers towards organic foods.
- 18. LITERATURE REVIEW 18 Certifications Product Price Sales Promotion Product Availability Perceived Quality Perceived Quality includes: • Actual Quality of Product • Health Benefits to consumer • Environmental benefits to society Conventional and Organic food quality almost the same. Perception is contrary to facts Two types of intentions: • Egoistic- Self Benefit • Altruistic-Benefit to Environment
- 19. LITERATURE REVIEW 19 Certifications Product Price Sales Promotion Product Availability Perceived Quality H7: Perceived Quality of organic foods increases the consumer trust towards purchase of organic foods. H8: Perceived Quality of organic foods increases the attitudinal loyalty towards purchase of organic
- 21. SECONDARY RESEARCH Porter’s Five Forces Organic Food Category Segmentation 21
- 22. 22 Industry Competition Substitutes Non Organic “Regular” Foods Natural Foods Genetically Modified Foods Frozen Foods Ready-to-eat Packaged foods Suppliers Local Farmers Multinational Co-operations Supermarkets Whole foods Stores Co-operatives New Entrants New companies entering Existing food giants making a move in the Organic Foods market Existing giants willing to enter the organic food market Supermarkets and suppliers forward integrating NGO/ Co-operative Society Buyers Health conscious people Environment conscious people Medically Prescribed audience Taste driven consumers B2B Restaurants serving organic food Status Conscious Consumers 5FORCESANALYSIS
- 24. PRIMARY RESEARCH • Qualitative Analysis: Interviews • Thirteen 1-on-1 and three telephonic interviews • Place of Interview: Burwood Plaza. Westfield Mall 24
- 26. FINDINGS 26 Yes Price Perceived quality Certification s Availability Subthemes: • Choice of Organic Foods to be purchased • “Why purchase an organic Pizza when I have it only once a month?” • Renowned Brand • “How to decide which brand is better than the other? I’d rather go for a brand I know.”
- 27. FINDINGS 27 Mixed Price Perceived quality Certifications Availability Subthemes: • Premium consumers • “I don’t mind paying extra if I can get better quality food items for me and my family” • Conservative consumers • “I have always been an advocate of organic food but it is too pricey for me to buy a lot of them…I have to restrict myself to the basic fruits and veggies”
- 28. FINDINGS 28 Yes Price Perceived Quality Certification s Availability Subthemes: • Consumption Adaptability • “I don’t want me or my family to eat too much organic over a long period of time. If we get accustomed to it, the normal non organic food may not suit our body anymore.” • Ease of Usage • “I don’t understand why organic rice takes a lot longer to cook as compared to the regular rice.”
- 29. FINDINGS 29 Mixed Price Perceived quality Certification Availability Subthemes: • Believing Consumers • “I don’t believe that it’s organic unless it’s specified on the label, loud and clear. Of course, its matters. After all, I’m paying a premium for it.” • Suspicious Consumers • “Who knows how the certifications process works? I’d rather trust my neighbour when she recommends something.”
- 30. RECOMMENDATIONS • Lower the prices. • Provide more options. • Deploy informational advertising. • Add an emotional value preposition. • Opportunity for industry leaders. 30
- 31. REFERENCES Global Organic Food Industry Profile. (2015). Organic Food Industry Profile: Global, 1-33. Organic Federation of Australia,. (2015). Organic Federation of Australia. Retrieved 4 June 2015, from http://www.ofa.org.au/ Organic packaged food in Australia. (2014). Euromonitor International. Stanton, J., & Guion, D. (2015). Perceptions of "Organic" Food: A view through Brand Theory. Journal Of International Food And Agribusiness Marketing, 27(2), 120-141. Organic products are popular in Australia. (2007). Market: Asia Pacific, 16(12), 3. 31
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