February 1st, Steve Lutz, Vice President of U.S. and Canada West for the Produce Marketing Association, took the stage at the 2019 Global Organic Produce Expo in Hollywood, FL. The take-home message of Lutz’s presentation, “Understanding the Organic Consumer Opportunity,” was this: the continued growth of the organic market will be fueled by moderate users.
Organic Produce Growth is Bridging the “Green Gap”
This may sound like an underwhelming exclamation, but it is actually big news for producers and marketers of organic produce. 10 years ago, Lutz says, “non-users represented 80% of the total population, and they were driving [only] about 20% of the total organic volume. And the converse was true as well. You had 20% of the people driving 80% of the organic purchases.”
The small, but committed adoption pattern of organic produce lined up with the overall adoption of other products marketed for their sustainability. In her book, Green Giants: How Smart Companies Turn Sustainability Into Billion-Dollar Businesses, Freya Williams reveals a decade of analysis (starting in 2006) of what she calls “green segmentations” In her keystone research, a study of 1,800 demographically representative Americans, she closely examined consumer attitudes and responses towards environmental and sustainability issues:
We found that most of America is smack dab in the middle ground—not hard-core green, but not completely unaware or unappreciative of issues surrounding sustainability either. In fact, about two-thirds of Americans characterized themselves as “somewhere in the middle” when it comes to living a green or sustainable lifestyle.
Williams broke down the population this way: 16% were early adopters—the “Super Greens”—committed visionaries willing to make sacrifices to live out their ideals. The two-thirds majority—sympathetic to environmental causes, but lacking follow through—made up the “Middle Greens.” The last 16% were the late adopters, or “Green Rejectors.”
“The Middle Green area is where the Green Gap lives,” Williams wrote, “and if you are anything more than a niche brand, this is most likely where your consumer lives too.”
Current data from the Organic Trade Association shows that organic produce is bridging the Green Gap. “That’s exactly what we’re seeing,” Lutz says. “And it’s actually what we predicted when we did our first comprehensive organic study back in 2008.”
“What you’re seeing now,” Lutz explains, “is that you’ve got probably about two-thirds of the population that are driving about 44-45% [of organic produce purchases]. So the base of that business has broadened significantly.”
The maturation of young buyers was one of the reasons Lutz and his colleagues rightly predicted the shift. “You can look back at 2008-09 and say, ‘see all these young people, how they’re inclined to buy? Well guess where they’re going to be in 10 years?’ They will carry their organic purchase preference with them,” Lutz says.
A second aspect has been increasing production. “It sounds simplistic,” Lutz recognizes, “but it’s true—people can’t buy what we don’t grow as an industry. The only way they can pick it up from the store is if our production is growing and we’re producing more organic products. For a lot of categories, a big part of the challenge has been the availability of products. It’s not on the shelves. The assortment’s not there, or the quality may not quite be right.” As global production of organics has increased, so has the market.
Finally, the increase in available product, which has made organic prices more accessible to price-sensitive consumers, and increased visibility of organic products in retail stores have also fueled recent market growth.
For organic producers, Lutz offers three pieces of advice to continue the current growth:
1. Stay committed—“[producers] have to recognize where the opportunities are within their own products and evaluate whether it makes sense to increase the assortment and supply to get these products on the shelf.”
2. Take another look at packaging and value-added organic products—“ People think organic buyers don’t like packaging. That’s somewhat true. The hardcore minority organic buyers, the committed ones, they’re probably less enamored with packaging, but the growth is going to come from the people who are not users and those people like packaging. Organic and packaging for many of these consumers is actually a benefit; it’s an upside.”
3. “Really have a strategy for working with retail partners for how to decrease pricing at the shelf level.”—Lutz notes that this doesn’t necessarily mean selling produce at a lower price; it often means packaging in smaller units so there is a comparable option for price-sensitive consumers looking to stay on budget.
For many consumers, organic produce is the gateway to the organic market, and that, Lutz says, puts growers in the driver’s seat: “The place where consumers discover organic foods is the stuff that we grow . . . We’re the entry point, we’re the introduction piece—it’s a really powerful message for produce.”