Are organic labels just an excuse to charge more? US consumers think so

Organic labelling: an indication of environmental responsibility, or just an excuse to charge more? Many Americans reportedly find organic labelling confusing, perceiving the organic label as nothing more than an excuse to sell products at a premium, according to new research from Mintel.

Interestingly, only 29% of consumers surveyed recognised that organic products are highly regulated, which may explain why they are suspicious of organic products’ higher prices.

Women are more likely to buy organic products for what they don’t contain, rather than what they do, with 43% purchasing organic because the products do not contain unnecessary ingredients or chemicals. A similar proportion buy organic to avoid foods made with pesticides.

But the overwhelming reason for buying organic is the perception that the products are healthier: 73% of women and 71% of men buy organic for health and nutrition reasons. Just 20% of women and 16% of men purchase organics because organic companies treat animals more ethically.

It seems some consumers are quite cynical about organics. Generation X and the Swing Generation in particular see organic labels as premium price tags, while only 39% of Gen X trust that organic-labelled products actually are organic. More than a third of all consumers (38%) say that organic is a marketing term with no real value or definition.

“Our research finds half of consumers say labelling something as organic is an excuse to charge more. Considering the typically higher cost of organic foods and beverages, consumers are increasingly hard pressed to justify the added expense,” said Billy Roberts, senior food and drink analyst at Mintel.

“As such, sales have hit something of a plateau, where they likely will remain until consumers have a clear reason to turn to organics. This could come in the form of a growing number of lower-cost organic options, bringing a new degree of competition to the category.”

Limited regulation of terms such as ‘natural’ and confusion over ‘natural’ versus ‘organic’ claims are confusing consumers and leading them to question whether higher price tags for such products are justified.

This could affect sales, Roberts said, and companies will need to counter this scepticism by being transparent and proactively making green and sustainable practices part of their business model.

“Consumers likely focus on the short-term impact of purchasing a product, but brands could help shift consumer perception to be more about a longer-term and holistic approach to a healthy lifestyle,” said Roberts.

Image credit: ©iStockphoto.com/Jim Jurica