Agriculture Reference
In-Depth Information
well as by the average travel distance from consumer's home to the store. However, it is
documented that these high-end specialty stores are the major outlets for organic food, as
their organic shopping rates are by far higher than those of the other two formats. In our
selected sample market, traditional supermarkets remain the most important outlets among
the three formats, although increasing market shares of value-oriented stores are observed
in the data.
Regarding to pricing factors, we observe no significant price difference between value-
oriented retailers and supermarket chains, but much higher prices at high-end specialty
stores in both organic and non-organic alternatives. The data of discount use rates suggest
that unlike the other two, traditional supermarkets promote promotional pricing. However,
interestingly, we observed a much higher discount use rate applied to organic purchases at
high-end stores than elsewhere. As to the coverage of product assortments, value-oriented
retailers have broadest coverage but supermarket chains offer more varieties per category
on average. The high-end specialty stores carried a much higher percentage of organic
products in terms of both broadness and variety, but with a much small scale of assortments
in general.
2.5 The consumption of dairy-case products
We select two staple dairy-case products, milk and eggs, as the center of our study. In our
analyzed sample, milk was the most frequently purchased item in grocery shopping trips in
both organic and conventional categories with shares of purchase frequency being about
20% and 3% respectively, while eggs ranked 9th (organic) and 10th (conventional) among all
categories. In terms of dollar amount, the data (table 3) show that the expense shares were
5.5%~9.5% for milk and 1%~2.3% for eggs. As shown in table 3, we observe an increasing
trend of organic penetration on both products - the share of organic food to total food
expense increased from 6.0% to 10.3% for milk and from 0.6% to 1.3% for eggs. In addition,
we observe significant drops in price premium of organic between the two periods of
sample, which are likely to be associated with the market transitions that may have occurred
due to Wal-Mart's market expansion in 2006.
3. The analysis: Consumption choice of organics
3.1 Data overview of consumption choice
Figure 2 depicts the consumption choice for milk and eggs based on actual purchase data
recorded in our analyzed market during the period of 2005-2008. The data show a fast-
growing consumption pattern of organics in the case of milk and eggs. 7.68% of milk
milk
Eggs
2005-06
2007-08
2005-06
2007-08
Ave. share in total expense per trip
5.5%
9.5%
1.0%
2.3%
Ave. product expense per trip
0.93
1.24
0.18
0.30
Ave. % organic in total product expense
6.0%
10.3%
0.6%
1.3%
Ave. price premium (milk $/gallon,
eggs $/dozen)
2.76
2.26
1.69
1.33
Ave. % discount used for purchase
22.8%
17.9%
27.6%
13.8%
Table 3. The Shopping Patterns of Milk and Eggs, 2005-2008
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