Organic Foods: Niche Markets

Background and Methodology
The organic food industry has been growing at a remarkable rate during the past several years (Dimitri & Richman, 2000). According to Dimitri and Richman, sales of organic commodities in natural foods stores approached $3.3 billion in 1998, compared with $2.08 billion in 1995. Sales of organic products in conventional supermarkets are also rising. The paper stipulates that buyers of organic food products, both business and consumers make purchasing decision based on perceived social and environmental benefits that organic production presents besides price and quality. Consumers shopping for organic foods look for taste, appearance and freshness at the top of the list. A survey of 600 consumers was commissioned in 1994 by the Food Alliance in Portland, Oregon.

The following eight qualities of organic foods were rated as very important by at least 50% of the sample: absence of 1) synthetic pesticides, 2) synthetic herbicides, 3) e-coli or other harmful bacteria, 4) artificial ingredients or preservatives and 5) synthetic fertilizers and production facilities 6) in compliance with their environmental permits, 7) using only earth-sustainable techniques and 8) using techniques that protect water resources. Well over half the respondents indicated that they were willing to pay more for an eco-labeled product.

Dimitri, C. & Richman, N. J. (2000). Organic foods: Niche marketers venture into the mainstream. Agricultural Outlook/June-July. Economic research Service/USDA. Henry Wallace Center for Agricultural & Environmental Policy Winrock International.