Journal of Food, Agriculture and Environment

Influence of the commercial distribution model on the surcharge for organic foods in Spain 

Author(s):

Manuela Vega-Zamora, Manuel Parras-Rosa, Francisco J. Torres-Ruiz

Recieved Date: 2013-01-04, Accepted Date: 2013-04-27

Abstract:

Spain’s organic farming surface area is the fifth-largest in the world and the largest in Europe. This country’s demand for organic food is very low, however. The main factors highlighted in the literature as inhibiting demand for these foods are higher prices than for conventionally-grown products and deficiencies in their retail distribution, which are said to influence consumption independently. The hypothesis tested in this study, however, is that in a low-demand environment such as Spain the surcharge for organic foods compared to conventional ones is influenced by the choice of the retail distribution model through which they reach consumers, so these two factors are in fact related and act jointly on the level of demand. In the high production, low demand context of Spain, this study examined how the distribution model influences the higher prices charged for organic food. For this purpose, data from the Ministry of Agriculture, Food and the Environment’s Food Consumption Panel were examined to relate consumption data by point of purchase to the mean prices for three classes of organic foods: extra virgin olive oil, fresh fruit and fresh vegetables.  The results suggest that in low-demand markets, distribution through self-service channels gives consumers greater access to organic foods but at prices that inhibit their consumption, as a result of the profit margin policies of the volume retailers. The main conclusion drawn from this study in this respect is that the distribution model influences the price levels and, consequently, the consumption of organic foods. As a result, if the demand for organic food in this type of market is to grow, communication strategies need to be designed and implemented in order to arouse the consumers’ interest in and demand for these foods (pull strategy). 

Keywords:

Organic food, retail distribution, surcharge, market, extra virgin olive oil, consumption, vegetables, fruit, distribution channel, price

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Journal: Journal of Food, Agriculture and Environment
Year: 2013
Volume: 11
Issue: 2
Category: Food and Health
Pages: 285-290

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