Organic Food: Marketing label or real value proposition?

While the overall US food industry contracted by -1.4% in 2011 to reach $664.1bn, after a period of unexciting growth, the organic foods market increased by 9.5%, reaching $29.2bn. India too has emerged as one of the largest potential markets for organic food consumption globally, owing to the fact that organic foods or products are healthy, contain no chemicals or preservatives, and are completely natural. With growing awareness towards healthy food, surging income levels, and shifts in consumer behaviour, the country’s nascent organic food market is fast transforming into the world’s fastest growing organic food market. In addition, increasing export market coupled with government’s support has driven the market that will further boost the demand for organic food products in the country.

Even through the prospects of the organic food industry looks great in the future with an expected CAGR of 15% there have been a lot of debate going on :” Whether the organic food are really adding value to the food or they just  used as a marketing label to attract customers?”
Let us look at both the sides of the Debate:

Organic food is just a marketing Label

Economist Tyler Cowen, author of the book, “An Economist Gets Lunch,” states: “Organic food as a label means a lot of things to a lot of people, but eating them won’t make you healthier.” If anything, “it’s a lot of hype” and “people don’t look at the science closely”.  Such a comment coming from a well known economist has created a lot of Buzz. Not only this, Stanford’s study found “no significant differences in the vitamin content of organic and conventional fruits and vegetables” . The study States that although Organic farming is a completely different process of farming as compared to conventional farming but it has not been able to make any significant impact or improvement in the nutrient levels of the food. Additionally both types of foods are “at similar risk for bacterial contamination” despite costing more to grow.

The Organic food are 20-25% more expensive as compared to the normal food products. Like a Tur dal 1kg pack costs Rs.90/- as compared to Rs140/- of its organic variant. The High price of Product is charged on the basis of its perception of high quality and Hygiene. But if the above reports are to be believed then it completely Negates the whole Purpose of organic Foods.

Organic food Adds Value:


Organic India(a Indian company) spokesperson Mr Lev says that the chemicals present in the conventional food makes it difficult for the body to absorb vitamins and other nutrients, ultimately reducing the nutrient value of the food

53% of consumers are willing to buy organic foods if that means avoiding toxins and pesticides, according to a 2010 Nielsen study. The production process of organic food involves following:

ü  Training Of Farmers

ü  Processing(Without any chemical additives)

ü  No chemical Fumigants (Used in inventory storage to exterminate pests or disinfect)

ü  Unique Packaging  ( to Ensure Quality)

The process Highlights that Non use of chemicals, pesticides and Fertilisers has proved to be a value proposition for the people. Increasing Health consciousness of people has Impelled them to pay more for Products which adds value to their Body and health. Indian consumer who are price conscious have started changing their preferences when it comes to their health. Earlier the 75% of the revenue of Organic food Industry Came from exports but Slowly and gradually the domestic market has levelled the export market in terms of revenue.

Conclusion:


Although the debate seems to continue in future but the current market trends are in the favour of organic food industry. In India a number of players in the industry have successfully sold their organic products at a premium price. Srestha Natural Bioproducts and Morarka organic are among the big players in this Industry. The growing demand for Hygienic products and Growing levels of income definitely augurs well for the future of Organic industry in india.

 

Technorati Code : NEZU7A38QWSB

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