Perceptions of “Organic” Food: A View Through Brand Theoryby Julie V. Stanton, Deirdre T. Guion

Journal of International Food & Agribusiness Marketing

About

Year
2015
DOI
10.1080/08974438.2014.897667
Subject
Food Science / Business and International Management / Marketing

Text

Journal of International Food & Agribusiness Marketing, 27:120–141, 2015

Copyright # Taylor & Francis Group, LLC

ISSN: 0897-4438 print/1528-6983 online

DOI: 10.1080/08974438.2014.897667

Perceptions of “Organic” Food:

A View Through Brand Theory

JULIE V. STANTON

The Pennsylvania State University, Media, Pennsylvania, USA

DEIRDRE T. GUION

North Carolina Central University, Durham, North Carolina, USA

Globally, the organic food industry has experienced impressive growth rates, especially in the United States and Europe, yet still accounts for a relatively small portion of total food sales. In the

United States, it constitutes less than 5% percent of food sales despite a decade of support by the U.S. National Organic Standard.

Using the United States as a context, the authors show through survey data and confirmatory factor analysis that when “organic” is examined through the lens of brand theory, it is clear that it has yet to attain brand equity. There is evidence of brand awareness and perceived quality, suggesting that the industry has moved in the right direction. Yet negative perceptions of value and no evidence of brand loyalty undermine the industry’s goals. Because “organic” carries different significance to different consumers, the industry will have to develop a cohesive strategy to reestablish “organic” in a unified way. For country markets of similar experience with organic food, and for markets just beginning to consider consumer interest in organic food, these lessons from the United

States offer guidance for policy and marketing strategy.

KEYWORDS brand theory, organic food, marketing strategy, consumer confusion, confirmatory factor analysis

INTRODUCTION

Globally, the organic food industry grew into a $67.2 billion industry by 2011 (NewsRx, 2013) and is expected to reach $104.5 billion by 2015

Address correspondence to Julie V. Stanton, Department of Business, The Pennsylvania

State University, 25 Yearsley Mill Road, Media, PA 19063, USA. E-mail: jvs11@psu.edu 120 (MarketsandMarkets.com, 2011). These figures reflect double-digit growth rates sustained for the past decade. More than half of the global market is found in the Americas, with the U.S. market alone accounting for $29.2 billion in 2011 (Smith, 2012), and Canada accounting for an additional $3 billion (Canada Organic Trade Association, 2013). Growth rates elsewhere in the Americas, especially in Brazil and Argentina, are in the range of 16% to 17% per year (MarketsandMarkets.com, 2011). The European market for organic foods, meanwhile, reached over $28 billion in 2011 (Scott-Thomas, 2012) with growth rates of as much as 20% in some member countries (Dermody, 2012).

This impressive status of the organic food industry is matched only by its potential in emerging markets. China and India are prime examples, expected to grow by nearly 20% per year through at least 2017, even while other developed markets slow their growth rates (PRNewswire, 2013).

Yet many of these markets do not have the elaborate, regulated standards that apply in the United States, Europe, and Canada. Just in 2012, the

European Union and the United States agreed to recognize each other’s standards, a “historic game changer” for potential growth in both markets (Vosburgh, 2012). Indeed, by contrast, much of China’s consumer interest in organic foods is motivated by fear that food safety standards are not sufficiently applied, and even organic foods have faced controversy (see

Martina, 2011, for coverage of Wal-Mart selling tons of pork wrongly labeled as “organic”). There is much work to be done to realize a global marketplace where “organic” stands for a credible and meaningful consumer option, and sales reach levels that truly compete with conventionally grown foods.

Even in the United States, the largest country market for organic food where reportedly 8 of every 10U.S. consumers have purchased organic food (Organic Trade Association, 2013), industry sales have yet to reach 5% of all food sales, and growth rates have fluctuated in recent years (Amith, 2012).

This is despite the creation of the U.S. National Organic Standard in 2002 and the associated U.S. Department of Agriculture (USDA) organic seal shown on packages and ads. Because consumers make varying connections to “organic” (Hughner, McDonagh, Prothero, Shultz, & Stanton, 2007; Stanton & Guion, 2010), additional work is needed to develop strategies that could bring the organic food industry into market prominence.

Brand theory may offer insight on consumer valuation of the federal organic standard. Using the United States as an example, after 10 years of a national standard, is “organic” simply a category of foods, much like a “dairy” aisle joins cheese and eggs? Or does it instead carry a meaning regardless of the type of food so labeled? If “organic” could be regarded as akin to a brand, a host of marketing strategies emerge as tools to not only the individual companies who provide organic food products to the market but also to the industry associations that represent them, as well as the federal agencies

Perceptions of “Organic” Food 121 such as the USDA that regulate use of the term and its seal. Viewing “organic” through the lens of more customary brands can reveal its strengths and weaknesses, the effort still needed to bring in new consumers, and the overall value of the policy effort itself. Indeed, it may help us better understand if the USDA’s efforts to reduce consumer confusion about “organic” have generated any real value to consumers. Any or all of these lessons could help generate real growth both in the United States and other developed countries, and meaningful guidelines for other countries considering their own organic standards.

In this study, we use brand theory to test the value of “organic” among

U.S. consumers. In the next section, we take a look at the U.S. National

Organic Standard in order to identify the characteristics that lend “organic” a brand-like status. We then review brand theory, specifically consumerbased brand equity and what aspects of a brand have been identified as relevant to its success. Then, we review our methodology including adapting brand equity scales from the literature to fit the context of “organic” food, and a survey of U.S. consumers. Results of testing those scales are then given. Conclusions and implications for both today’s industry and the future of similar labels and other country markets follow.