An approach towards explaining market shares of organic food – Evidence from Swiss household data

Franziska Götze,Thomas Heckelei,Stefan Mann,Ali Ferjani,Andreas Kohler

doi:10.15414/afz.2015.18.si.78-80

Abstract

The market share of organic food in Switzerland is high compared with that in other European countries, and has grown notably in recent years. However, little is known about why the market share of certain organic food products is higher than that of others. Swiss household expenditure data distinguishing between organic and conventional products allow an analysis at the product level. As a result, factors which determine the market share level of different organic food products are identified. Based on the results of this study, the driving factors are categorised into three dimensions. First, a low level of processing is positively related to the organic market share. This suggests that communicating the benefits of organic food is more successful for unprocessed than for processed products. Second, products with high price premiums as well as products that are of importance for the household in terms of its food budget have a clear disadvantage on the market. Third, Swiss consumers seem to have a high preference for domestically produced organic food, since the characteristic of being an imported product is negatively related to the organic market share. The results give a first understanding of what is important to Swiss consumers when it comes to the consumption of organic food. The findings imply that supporting organic agriculture in Switzerland is still promising from a policy perspective as long as the price premium for organic quality stays at a reasonable level. Keywords: consumer behaviour, organic food, generalized linear model, Switzerland

Highlights

Organic food products have become an important part of the global food market, especially in wealthy parts of the world
As LEE and YUN (2015) study how consumers in the U.S perceive product attributes of organic food and how this perception influences their buying decisions, we focus on how different product attributes are valued by Swiss consumers and thereby affect market shares
We find evidence that the degree of processing is negatively related to the organic market share

Summary

Introduction

Organic food products have become an important part of the global food market, especially in wealthy parts of the world. The market for organic food in Switzerland is one of the most mature ones in terms of market shares. Even though this market has become an important part of the food industry, there is a lack of studies regarding the driving factors of organic consumption in Switzerland. The literature about market shares of organic food is yet very general. As LEE and YUN (2015) study how consumers in the U.S perceive product attributes of organic food and how this perception influences their buying decisions, we focus on how different product attributes are valued by Swiss consumers (reflected in their buying decisions) and thereby affect market shares.

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Conclusion