Are Organic Foods the New Luxury?
Due to increasing health consciousness, knowledge of genetically modified foods and pesticides, and an overall more-conscientious consumer, organic and natural foods are being seen as a luxury purchase, according to a report from IBISWorld.
The overall report, The New Luxury, found that as the economy rebounds out of the Great Recession, Americans have opted for "more subdued, conscientious and functional versions of luxury" instead of splashy purchases such as jewelry or sports cars. The researchers also tracked trends around an increasing price consciousness and more personalization as new luxury components.
The organic and natural food appeal closely links to how ‘luxury’ is supporting the burgeoning green movement, which includes both eco-friendly and good-for-you items.
"Although not all of these are new habits, people’s willingness to pay for such luxuries despite still-tight budgets demonstrate the importance of maintaining a high-end lifestyle for many consumers," the report stated.
The obvious reason organic food purchases from either grocers or farmers’ markets stand out as luxury items is because they are being bought despite their higher prices. In Los Angeles, for instance, a 48 count of green onions cost $48.00 for organics versus only $10.00 for conventional, according to the Rodale Institute.
"Because of the trend toward organics, vegetable markets, supercenters and grocery stores are experiencing skyrocketing demand for organic products, with companies such as Kroger and Walmart increasing their organic offerings just to satisfy customers," the researchers state in the report.
The trend on the food side has also spread, with higher priced organic items now available in frozen food, cookies and crackers.
Discussion Questions
Discussion Questions: Do you think consumers view organic and natural food items as personal luxury items? To what degree are typical luxury perceptions supporting the overall green and good-for-you movement?
Hmm….no comments yet? (I’ll try to encompass the range of emotions and wisdom the full complement of correspondents display.) The simple answer is “yes” (and quite literally as a definition of “luxury item” is something that one wants but doesn’t really need). Spending a dollar for an onion that can be obtained in quite suitable form for 20 cents is simply silly. And that to me sums up (much) of the organic/local/”green” fadism: not so much “knowledge of genetically modified foods” as pseudo-knowledge of misinformation and alarmism… Herr Mendel is having the last laugh.
Organic and “natural” foods are definitely seen as luxury items by the majority of consumers. This is largely a byproduct of the trend over the last few decades of food becoming a smaller percentage of the average household budget. If consumer spending fatigue and a recession hangover keep overall consumer spending down, then there may be an opportunity for healthy (and more expensive) foods to capture more market share if consumers decide to spend more of their budgets on food and less on “stuff.”
Also, major retailers are helping to later the luxury perception by bringing more natural food choices to the broader market at lower costs and better availability.
I am of the opinion that this is a trend coming from the informed consumer. In my observations “the customer” is not just reading the labels but they are now reading the definitions of ingredients and their known or suspected side effects. This is perhaps a search for products both needed and desired that come with full satisfaction for the desired purpose without providing negative side effects to the user or the environment at a price point that is within their market threshold.
In Hong Kong, a very affluent market, food safety is a big concern for many. The purchase of organics “luxury” food items is very popular for those in the often concerned expat market. Organics as luxury is a trend for those that can afford it.
The evolution of the term ‘luxury’ disallows a simple yes or no answer to this question.
Organic and natural foods have generally been more expensive. But, this doesn’t mean the primary purchasers were affluent. It does mean their personal values elevated the importance of organic and natural foods.
Often, organic and natural foods didn’t taste as good. But, that seems to be changing too. This opens a broader market.
As the population gets older their values will change to keep themselves healthier. This too doesn’t make it a luxury — it simply means the values of consumers is changing.
Lastly, the sale of luxury products has historically been driven by the aspirational customer rather than the affluent consumer.
Many believe the aspirational customer no longer exists. Seems to me they haven’t visited their local grocery store.