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08.19.2009

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Resolving Confusion in Marketing Foods and Beverages

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Beyond Organic and Natural

Resolving Confusion in Food Marketing

To “make sense” of the tens of thousands of food and beverage SKU’s and millions of consumers, marketers and retailers have this seemingly inherent need to segment them into neat little categories much the same way scientists classify living organisms. This explains why we have the “organic market” classification, which in many cases has superseded the “natural market.” Both categories share distinctions of quality with lines linked to local, artisanal, origin, environmental, healthy and a host of other attributes.

Unfortunately, as with borderline plant and animal species that due to superficial similarities sometimes evade scientific classification, we see today broad scope confusion among marketers and retailers as they struggle to understand consumer and shopper behavior with regard to the purchase of organic and natural products. Common questions include:

Is local replacing organic and natural?

How is the economy impacting organic purchases? What happens when the economy recovers?

Do consumers see a distinction between organic and natural?

What’s next?

These are legitimate questions, especially given the reported slowdown in organic purchases in a market that was growing annually by double digits for the past several years and is now estimated to be around $20 billion annually.

What’s behind the slowdown? The media would have us believe that it is largely due to the economy. Long before the recession became an everyday reality for many households, we were hearing American consumers disparage the term “natural.” They said it was overused and often under-delivered on expectations of what it meant or they perceived it to mean. Yet, each year, hundreds of products enter the marketplace with the “natural” designation. Has this diluted the organic message and cut into organic sales?

Even in survey formats, (such as our Healthy Eating Trends 2009 survey — see Figure One) when presented with a cornucopia of food distinctions that might be preferred when shopping for healthy foods, natural is still "way popular." What gives here?

Some of the confusion arises from issues that are semantic: We have been saying for several years now that in the minds of consumers, quality, when applied to foods and beverages, is being redefined as "fresh." From this perspective of quality distinctions, this would apply to organics and naturals while processed foods would not.There is also the strong difference, logistically and psychologically, between consumers being asked in conversation, say in their kitchens or in a grocery aisle with actual products nearby, what they think “natural” displayed on packaging means (“not much”) compared to a traditional survey format where the term is listed with other food distinctions. Compared to other product descriptions appearing in such a survey list, the long-term familiarity of this time worn term still just seems “more natural” to many consumers.

More recently, confusion also arises because it's been convenient to assume that the slowdown in the organic market can be attributed to simple economics. Conventional wisdom dictates that consumers, hit from all sides in their pocketbooks, are just not as willing to pay a premium for certain products as they were a year ago. We find this to be partly true—consumers are making more considered choices in organics. Yet, the behavioral "why's" behind consumer purchases of organics are still at play, some of which include having children in the household, having been recently diagnosed with a health condition, or going off to college, where new socially-based food experiences often begin. Overall, organics still imply healthy food for shoppers, thus they still seek them out, in part, based on this distinction.

At the same time, and this is important to note, in addition to organics, consumers have been making gradual shifts in their overall shopping to also include greater numbers of fresh products and products that they view as more "natural" (local, artisanal, premium). This brings us back to the issue of trying to classify the behavior of consumers, whose habits are as varied as fishes in the sea, around designations, terms and classification schemes like organic and natural. Is it possible to discern differences in classes of foods that bear resemblance logically, but may have different consumer motivations to buy and use?

Fortunately, the answer is yes, there are clear patterns emerging around distinctions like organic and natural when examined in light of our overall cultural redefinition of quality. These distinctions are being made by consumers increasingly within the context of:

• Where products are evaluated (the retail experience and setting)
• Comparisons between packaged and processed vs. fresh, and real and center of store vs. perimeter of store
• Consumers’ emotional orientation to food companies themselves, and
• Occasions within the household that influence purchase and use in a range of settings

Take Away

We live in an era when quality is being defined in terms of fresh; the distinction between industrial and real foods is changing the way consumers eat in diverse settings ranging from the home to restaurants and grocery stores. Organic and natural food and beverage products have played historic and ongoing roles as cues to quality. There is no reason to believe that these distinctions are being discarded as consumers evolve in their eating preferences. At the same time such distinctions must be examined in light of the influence of diverse influences on purchase, not the least of which include retail settings and the rise of newer quality food distinctions, such as local and artisan products.

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