Sunday, July 19, 2009
The Price and Profit Factors: Status Matters
Even with a lack of real evidence of its superiority, people do pay more for organic produce, mainly because they believe it to be healthier as well as tastier than its counterpart. Depending on various factors, the prices can be on par with conventional produce and go up to 30% higher.
Because of the regulation/certification, lower production volumes and the fact that fewer organic products are mass produced, the price of organic can be higher. But the increase in demand recently for these products has caused greater production, thus driving down the price. Retailer Shaskin says that organic strawberries, for example go for almost the same price as the conventional ones, and that even though some organics will stay higher, many types of organic products will go down in price in the future.
Ontario-based organic wine producer Martin Malivoire believes the prices will even out and conventional food producers will find their market to be less profitable as the costs for pesticides and other conventional growth methods go up. "It will become a healthier world out of necessity because we won't be able to expend the energy and organic foods will actually be the cheaper choice," he said.
Malivoire's critically acclaimed wines are seeing an increase in sales in Ontario so his company is expanding production as well as distribution to Quebec and Alberta, among other new markets. He feels that the labeling claims no small part in his success. Though his grapes were always organic, he got the official accreditation in 2004 as he saw it made a difference to his consumers. And now he sees that his products are believed to be of higher quality for that reason.
Though he has been advised to raise prices due to his organic status he chooses not to at this point. “I think the impact is those that are not organic are going to have to reduce their prices in order to compete with us," Malivoire says.
Incorporate in Canada with CorporationCentre.ca
Click. You're incorporated ®