ANALYSIS OF THE ORGANIC FOOD INDUSTRY IN AUSTRALIA Presented By: Gazal Shah MJAN15CMM036 Harsh Nahata MJAN15CMM010
ANALYSIS OF THE ORGANIC FOOD INDUSTRY
IN AUSTRALIA
Presented By:
Gazal Shah MJAN15CMM036
Harsh Nahata MJAN15CMM010
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
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
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GLOBAL ORGANIC FOOD MARKET TREND
65.60
72.0076.80
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
SA
LE
S V
OL
UM
E (
'00
0 T
ON
NE
S)
YEAR
Organic Packaged Food Retail Volume (Tonnes)
4
Source: Euromonitor Passport, Organic Packaged Food Retail Volume sales Statistics
CONCEPTUAL FRAMEWORK
Accreditations and
certifications
Perceived Product
Quality
Price
Product
Availability
Sales Promotions
Consumer
Perception
Consumer Trust
Attitudinal Consumer
Loyalty
5
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
LITERATURE REVIEW
7
Certifications
Product
Price
Sales
Promotion
Product
Availability
Perceived
Quality
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.
LITERATURE REVIEW
34%
21%
45%
Certificate Recognition
Australia Certified Organic
NASAA
Others
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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
LITERATURE REVIEW
10
Certifications
Product
Price
Sales
Promotion
Product
Availability
Perceived
QualityH1: Accreditations and Certifications
have boosted the consumer trust towards
organic foods in Australia.
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.
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
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.
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.
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.
LITERATURE REVIEW
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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
LITERATURE REVIEW
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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.
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
LITERATURE REVIEW
19
Certifications
Product Price
Sales
Promotion
Product
Availability
Perceived
QualityH7: 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
foods.
RESEARCH DESIGN
Research Methodology
Secondary Research
5 Forces Analysis
Category Segmentation
Primary Research
Discussion Guides 20
SECONDARY RESEARCH
Porter’s Five Forces
Organic Food Category Segmentation
21
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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
5 F
OR
CE
S A
NA
LY
SIS
CATEGORY SEGMENTATION
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PRIMARY RESEARCH
• Qualitative Analysis: Interviews
• Thirteen 1-on-1 and three telephonic interviews
• Place of Interview: Burwood Plaza. Westfield Mall
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FINDINGS
25
Does It
affect?
Price
Perceived quality
Certifications
Availability
FINDINGS
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Yes
Price
Perceived quality
Certifications
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.”
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”
FINDINGS
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Yes
Price
PerceivedQuality
Certifications
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.”
FINDINGS
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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.”
RECOMMENDATIONS
• Lower the prices.
• Provide more options.
• Deploy informational advertising.
• Add an emotional value preposition.
• Opportunity for industry leaders.
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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.
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