SUSTAINABILITY IN SPAIN
The “Catching-Up” of the Organic food
market
Nina Boen
Student number: 1703269
MSc: Business Administration | Business Development
Bloemstraat 20B
9712 LD Groningen
0613849060
nina_boen@hotmail.com
University of GroningenFaculty of Economics and Business
First Supervisor: prof. dr. ir. J.M.L. van Engelen Second Supervisor: dr. C. Reezigt
Grupo HS3 Barcelona, Spain
Supervisors: dr. Holger Sprengel & Gunnar Sprengel
ACKNOWLEDGEMENT
Writing this report, the final Master thesis, was the last step in order to obtain my Master Degree of Business Administration, with a specialization in Business Development. This Master thesis is the final result of my internship at Grupo HS3 in Barcelona. It has been a great learning experience, both on personal and professional level. With the great desire to start an international career abroad, this project has been a perfect practice for the future.
Grupo HS3 S.L. provided me with exciting opportunity to do an internship in Barcelona, to work in an international environment, and conduct my final research for the master. Therefore, I would like to thank Holger Sprengel, for accepting me in his organization, while providing me with great support and freedom during my time there. I would also like to thank Gunnar Sprengel for his interest and expertise in this subject and the guidance that he gave me during my research in Barcelona. Furthermore, I’m happy that I got to know so many nice colleagues at the organization.
Furthermore, I’m greatly thankful to my supervisor of the University of Groningen, Jo van Engelen. His great professional and academic knowledge about the subject, constructive feedback and especially his patience kept me motivated and helped me extensively to reach this final result.
Lastly, I would like to thank my family, especially my parents, and all my friends, all over the world for their on-going support throughout my whole master and during the writing process this final project. Thank you all.
TABLE OF CONTENT
ABSTRACT 5
1. INTRODUCTION 5
1.1 Defining the relation between sustainable and organic food
production 5
1.2 Research context: Company
profile 6
1.3 Business opportunity 7
2. ORGANIC FOOD MARKET 9
2.1 General market trends 9
2.2 Spain’s’ market position 10
2.3 Market trends in Spain 12
2.4 Comparing markets 12
2.5 The market situation in Barcelona 13
3. LITERATURE REVIEW 15
3.1 Theoretical framework 15
3.1.1 Adjusted demand side 16
3.1.2 Adjusted supply side 17
3.1.3 Adjusted theoretical framework 18
3.1.4 Further approach 18
3.2 Demand side 18
3.2.1 Consumer value 19
3.2.2 Customer value structure 20
3.2.3 Value orientation 20
3.2.4 Perceptions & expectations
in Spain 25
3.2.5 Prices and Willingness to pay 26
3.3 Supply side 28
3.3.1 Production 28
3.3.2 Distribution network 29 3.3.3 Premiums & export 30
3.4 Conceptual model 31
3.4.1 Demographic target profile 33 3.4.2 Overview of concepts; the model 34
4. METHODOLOGY: RESEARCH
QUESTIONS &DESIGN 35
4.1 Research design & questions 36
4.2 Research cycle 36
4.3 Methods 37
4.3.1 Research method 37
4.3.2 Data collection techniques 37
4.3.3 Analysis approach 39
4.4 Quality criteria of the research 41
5. ANALYSIS & RESULTS 42
5.1 Consumer analysis 42
5.1.1 Current consumer perspective &
understanding 42
5.1.2 Values and motivations 43 5.1.3 Motivations and the willingness to
pay 45
5.1.4 Rejections & Improvements 46 5.1.5 Current buying behavior 47 5.1.6 Defining the target group 47 5.1.7 Spanish culture & organic food 49
5.2 Supply side analysis 49
5.2.1 Essential aspects on the
supply side 50
5.2.2 Improvements on the supply side 51
6. SOLUTIONS & RECOMMENDATIONS 53
6.1 Designing the solutions to
“Catch-up” 54
6.2 Solutions for the consumer side 54 6.2.1 Reaching the ‘Majority’ 54 6.2.2 Practical implications & target
group 56
6.3 Solutions for the production 56 6.4 Solutions for the distribution
network 57
6.5 Practical organizational implications
& justification 58
7. CONCLUSIONS & LIMITATIONS 59
7.1 Summary and conclusion 59
7.2 Limitations & further research 60
REFERENCES 61
ABSTRACT
This paper provides an analysis of the organic food market in Spain and was initiated by Grupo HS3. The general purpose of the research is to present an approach to enhance the organic food market in Spain. As the production in Spain is the largest in Europe, and consumption is extremely low, the focus lies on increasing domestic consumption. The consumer value and main factors which can stimulate and suppress consumption are investigated. The research starts with a general market analysis where it was noticed that there is a late awareness in Spain about organic products in comparison with the rest of Europe, and the market needs to catch up. A literature review follows, where first the important fundamentals need to be defined, which contributes to this literature stream by proposing a model that combines the literature findings and can be used for future analysis and enhancement of (organic) food markets. This study draws its conclusions based data gained by a) the literature review followed by the conceptual model and case-specific relations, b) a survey with 114 respondents, c) three forms of observations; of the organization, in shops, and an organic fair, d) short interviews with shop owners. Several recommendations are based on this data, which need to be implemented in the future. Survey results show that Health and Taste are the major motivations, and need to be the focal point to endorse organic products. Availability and Convenience needs great improvement, since it is shown that these are the key rejections, e.g. by using more conventional supermarkets. Overall, this aids the enhancement of the willingness to pay of potential consumers by lowering the mental price barrier, which is considered as the first goal that needs to be reached. The main limitation of the study concerns the small sample size, however, the presented model and steps undertaken during this study can function as a guideline for future studies with larger sample sizes to increase the significance and representativeness.
Key Words: Organic food consumption, production, sustainability, consumer values, willingness to pay.
1. INTRODUCTION
This research is initiated by the Environment & Greentech department at Grupo HS3, in order to provide advice for a client, and establish accurate recommendations concerning the enhancement of organic food consumption in Spain. Organic agriculture and products are strongly related to sustainable development, and nowadays “there is a growing consensus in society that, “altering consumption patterns is one of humanity’s greatest challenges” in the quest for environmentally sound and sustainable development” (Agenda 21, action document from Rio Summit 1992 in Thøgersen, 2010). The focus on sustainable development is
increasing tremendously, meaning “the
development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (Quote of John Elkington in Brundtland Commission meeting, 1987). This provides the report with a general definition of sustainability, avoiding unnecessary specifications regarding this issue.
The report is divided in several sections. Firstly, this chapter will elaborate on the relation between sustainability and organic farming, due to the increasing interest in sustainable development,
seeing that many environmental challenges are faced as a result of unsustainable production processes (Durning, 1992). Furthermore, the research context will be discussed and the actual business problem and opportunity will be defined, followed by the research questions of this study. Secondly, a general overview of the current organic food market situation is presented, followed by a focus on Spain and Barcelona. Thirdly, the theoretical framework is introduced, where a literature review takes place in order to establish an accurate foundation for the study, resulting in a conceptual model. Based on this, and the established research questions, the conceptual model is designed. Fourthly, the research design and methods which are chosen for this research are discussed. Fifthly, the results and findings are presented. Based on the findings of this study, the solutions and conclusions will follow. Finally, the limitations of this research are outlined, to suggest topics for future research.
1.1 Defining the relation between sustainable and organic food production
A growing interest and importance of sustainable development is noticed during the last decades
(Elkington, 1994; Man & Burns, 2006). However, sustainability remains a complex and confusing concept (Faber et al., 2005). This report stipulates the definition of sustainability stated in the previous paragraph, by John Elkington (1987). Part of sustainability and its complexity concerns the concept of organic production and consumption, which is receiving a great amount of attention in the last years (e.g. Sønderskov, 2009; Willer, 2008; Padel & Midmore, 2005). Sustainability is strongly connected to organic farming, which is a sector growing rapidly in many countries (Rigby & Cáceres, 1998). Sustainable consumption and agriculture are related or seen as a synonym for organic consumption and agriculture (Thøgersen, 2010; Rigby & Cáceres. 1998). Since the main theme of this report concerns organic farming, it is of importance to establish the definition and interpretation that is used in the report.
Since the general definition of sustainability used in this study is already mentioned in the previous section, this part will focus on the role of organic production and its relation with sustainability. According to the US Department of Agriculture, organic food production is “a production system that avoids or largely excludes the use of synthetic compounded fertilizers, pesticides, growth regulators and livestock feed additives” (USDA , 1980, cited in Browne et al., 2000). This makes the organic products more “natural” (Davies et al., 1995), therefore, serving both health and environment better (e.g. Morris, 1996; Tregear et al., 1994; Grunert and Juhl, 1995; Sparks and Shepherd, 1992). Environmental and ethical attributes of food products and their production processes are becoming of increasing importance to the consumer. Organic farming is the first approach that is seen as “environmentally friendly” agriculture and production (Scofield, 1986). The confusion between these concepts arises due to the fact that early motivations and aspects of organic farming are still greatly part of the current debate concerning sustainable agriculture about, e.g. soil, health and artificial fertilizers (Scofield, 1986; Rigby & Cáceres, 1998). One popular definition of organic production was defined by Lampkin (1994) as agriculture that aims to create integrated,
humane, environmentally and economically sustainable production, which maximizes reliance on farm-derived renewable resources with management based on biological processes and interactions. Therefore, this method is considered to be a sustainable production system, on the contrary to conventional systems. However, the fine, yet vague line between sustainable and organic agriculture remains. Even while regulations and standards arise when it comes to “being organic”, for the organic farmers there is more to it than these regulation. The motivations and aspirations are of great importance as well (Tate, 1994). This report sees organic agriculture is one of the oldest manners to enhance sustainable production, thus a sustainable agricultural practice which stimulates sustainable development. Accordingly, organic farming is considered as a sustainable production practice, as it captures the triple bottom line criteria of people, planet and profit. As Lampkin (1999) stated; organic farming is a “viable, environmentally and socially sustainable method of agricultural production”, not using any synthetic chemical fertilizers or pesticides (Pugliese, 2001). When practicing organic farming, the people are taken into consideration seeing that often fair and beneficial business practices take place. Also, it limits or has no negative environmental influence. Finally, when practicing organic farming, both the profit and a fair price is not forgotten. The combination establishes the sustainable production practice of organic farming. This specification is used when trying to establish how to enhance the current organic food market in Spain. During this study the literature review will define the most important aspects to enhance the market in general, resulting in a conceptual model. Based on this model the survey questions, observation focus and interviews are defined. This research and the resulting model can function as a foundation for other organic food market studies and enhancements, as it provides certain steps and an overview of important concepts in concerning market.
1.2 Research context: Company Profile
In order to start the literature review, the precise research context and initiation of the study needs
to be described. This will help to create a focus while reviewing different literature sources. Currently, a German entrepreneur would like to optimize the opportunity of stimulating and enhancing the organic food market in Spain, since there are possibilities for improvements (opportunities) in this area, which are also supported literature (e.g. Hamm and Gronefeld, 2004). These possibilities are mainly related the low consumption Barcelona and Spain, and the differences in the development of the market which can be noticed between countries as Spain and Germany. For instance, small specialized stores in Spain versus large organic supermarkets and brands in Germany provide the first indications of possibilities for improvements. The organization which is supporting the development of this opportunity, and initiating this study, is Grupo HS3 S.L.. This organization is collaborating with the client to work out this business opportunity and create an accurate view of the situation and possible solutions. Grupo HS3 S.L. is a company that helps to develop new business ideas and provides financial support to a certain extent, making them partners and investors in numerous business projects and plans. This concept was started in 2004, and since then numerous projects took place; mainly in Spain, South-America and Germany. So far, Grupo HS3 S.L. is partner and operating in three main sectors: Media, Environment & Greentech and Others (e.g. urban mobility, restaurants). Therefore, the organization can be summarized in the next figure. The organic food project and this study can is part of the Environment & Greentech sector, due to the importance of sustainable development in this sector.
Figure 1: Organizational Business Structure Grupo HS3 S.L.
Concerning this study and project, Grupo HS3 S.L. can serve as a middleman between the German entrepreneur and the actual market, e.g. for large organic food brands and supermarkets. This indicates that the business plan will be either offered to interested parties, perhaps leading to the fact that Grupo HS3 S.L. enjoys a share of the business, or a complete sale of the business plan. The organic food market still offers the possibility to undertake many different directions due to the early stages it finds itself in, especially in Spain. In countries as Germany, the organic food market starts to take on solid grounds (Padel & Richter, 2007), e.g. by establishing stable and believable certification boards and support of the government, which still needs to be refined in Spain. Due to the
early phase of the market, accurate
recommendations are necessary for Grupo HS3 S.L., in order to develop a comprehensive perspective on this project and the organic food market in Spain. Thus, a relatively broad scale of different topics needs to be covered, starting with a market analysis.
1.3 Business opportunity
In order to build the theoretical framework in alignment with the current situation, this section elaborates on the actual business situation and possible opportunity which initiated this study. Until recently, the consumption of organic products was restricted to small (niche) markets, which were often supplied locally (Codron et al., 2006). Nowadays, the focus on sustainable development is increasing tremendously (John Elkington in Brundtland Commission meeting, 1987), and one aspect related to this concerns the organic agricultural and food industry. Production and consumption of organic products are growing gradually across Europe, where several organizations are now reorganizing themselves on promoting organic products more effectively (Codron et al., 2006; Padel & Richter, 2007). However, according to literature (e.g. Thøgersen, 2010; Padel et al., 2008), the percentage of consumption of organic products in comparison with other (conventional) food products in Spain is the lowest in Europe, whereas countries as Sweden
and Germany are ranked fourth and fifth respectively. This is also shown in the next figure.
Figure 2: The market share of organic food
the total food market per country (Adapted from Padel et al., 2008; Thøgersen, 2010; Willer – FiBL.org, 2012).
Many recent articles mention the growth of the organic market, but also the lack of growth in Spain (e.g. Thøgersen, 2010; Gil et al., 2000). This leads to the interest of enhancing the organic food market in Spain. The topic raises even more interest considering the noticeable fact that the
rate in Spain is the highest in Europe, and the rate of consumption one of the lowest (Willer and Kilcher, 2009; Willer - FiBL.org, 2011; CAAE, 2008). This forms the starting point to research a possibl opportunity, noticed by the client, and leads to the study order to discover the influence of these differences in more detail. Therefore, this study will focus on the enhancement of the organic food market in Spain, especially its consumption.
Often, a high share of organically managed agricultural land is positively related to the share of organic food consumption in the total food market, indicating that high production can stimulate consumption (Hamm and Gronefeld, 2004). In order to stimulate the long term growth of Spanish market, the consumption and demand need to increase with the production (Bunte et al., 2010). However, this is not yet the case in Spain. Therefore, this study will discuss the issues related to the low consumption, in order to evaluate the opportunities to enhance the organic food consumption in Spain. There is an
demand for organic food in other countries. This is driven by consumers’ perceptions on the qu and safety of these products and the positive environmental impact they have (Vindigni et a
0 2 4 Spain Netherlands Germany Sweden Switzerland Austria Denmark
Figure 2: Market share of organic food (%)
Germany are ranked fourth and fifth s is also shown in the next figure.
in percentages of the total food market per country (Adapted from Padel et al.,
FiBL.org, 2012).
Many recent articles mention the growth of the organic market, but also the lack of growth in Spain (e.g. Thøgersen, 2010; Gil et al., 2000). This leads to the interest of enhancing the organic food market opic raises even more interest when the production in Spain is the highest in Europe, and the rate of consumption one of the lowest (Willer and FiBL.org, 2011; CAAE, 2008). the starting point to research a possible , and leads to the uence of these . Therefore, this study will focus on the enhancement of the organic food market in Spain, especially its consumption.
a high share of organically managed agricultural land is positively related to the share of organic food consumption in the total food market, high production can stimulate consumption (Hamm and Gronefeld, 2004). In ong term growth of the Spanish market, the consumption and demand need the production (Bunte et al., 2010). the case in Spain. scuss the issues related
to evaluate the opportunities to enhance the organic food There is an increasing in other countries. This is driven by consumers’ perceptions on the quality and the positive have (Vindigni et al.,
2002). So, this “out of the ordinary” situation in Spain is in need for more research. Therefore, first needs to be discovered whether there is a significant difference between the produ
consumption in Spain and the related causes. necessary to define the reasons for this difference and if it is still as significant as is suggested, order to establish whether or not
opportunity exists. When that is the issue that needs to be studied
to and which constructs can enhance the food consumption in Spain
researched while bearing in mind
presented by its high production and low consumption (starting in Barcelona).
The next chapter will focus on the market analysis, to confirm the expected
necessary to place the recommendations into context. the market, the report will focus
growth, size, distribution and trends/ developments; on a global, national and local For instance, the demand side of the market is of importance, e.g. by defining
perceptions and values; but also the distribution and supply side options are
analyzing these topics, the
the best market recommendations market and qualified market.
been discussed in the past (most up to 2003, e.g. Sanjuán et al., 2003; Gil et al., 2000), however lack the direct relation among the
market. Often, they describe the most important motivations, at least up until then
production in Spain is highlighted very often in the last years (Willer - IFOAM.com, FiBL.org, 2009, 2012), however, its consumption was only discussed significantly until 2
the last 9 years. At this time, this in production took place. Th
intends to a) analyze the influences and changes over the last years, b) discover the existe
actual gap, and c) determine can be enhanced.
In order to generate a focus of this study and clarify the important elements
recommendations on, the following two chapters
6 8
Figure 2: Market share of organic food
this “out of the ordinary” situation in Spain is in need for more research. Therefore, it first needs to be discovered whether there is a between the production and n Spain and the related causes. It is necessary to define the reasons for this difference ll as significant as is suggested, in whether or not the actual When that is thecase, the next be studied concerns the extent which constructs can enhance the organic in Spain. These aspects will be in mind the opportunity presented by its high production and low
n (starting in Barcelona).
will focus on the market analysis, expected situation, which is the final results and recommendations into context. When analyzing will focus on the market growth, size, distribution and trends/ global, national and local level. For instance, the demand side of the market is of defining issues as important but also the distribution and supply side options are relevant. After the conclusion can define recommendations; e.g. target market and qualified market. Related issues have been discussed in the past (most up to 2003, e.g. 03; Gil et al., 2000), however lack the direct relation among the attributes of the market. Often, they describe the most important motivations, at least up until then. The high production in Spain is highlighted very often in the M.com, FiBL.org, 2009, s consumption was only discussed significantly until 2003, leaving a gap in years. At this time, this significant growth production took place. Therefore, this study the influences and changes discover the existence of the determine how the consumption
In order to generate a focus of this study and clarify to base the final tions on, the following two chapters
(Ch. 2 and 3) will outline the current situation and existing literature findings. As mentioned, this research is performed in order to establish the actual opportunity and discover how the consumption of organic food in Spain (Barcelona) can be enhanced. The study starts off by trying to discover the concrete existence of the pr
mentioned opportunity by establishing the current market situation on both demand and consumption sides. This will be discussed in the next chapter, by studying the current organic food market world-wide and Europe. Then, a focus
follow, zooming in on Barcelona. Here, the market characteristics, trends and opportunities are discussed and analyzed. As this study is focused on a design-oriented research, since a completely new project and plan has to be constructed (Van Aken et al., 2007), the important concepts concerning the organic food market need to be defined, which will be presented in Chapter 3. Here, essential aspects and criteria of both the demand and supply side are presented, resulting in a conceptual model that can be used for future research concerning this topic. This will help to define which elements need to considered when enhancing and evaluating this market.
2. ORGANIC FOOD MARKET
In order to establish the actual opportunity, the existence of the gap between production and consumption needs to be confirmed and analyzed. This section will discuss the basic organic food market in Spain, compare it with the rest of the world, with a focus on Europe, to establish some basic trends and developments over the past years. This is important in order to create an accurate perspective on the current market and establish possibilities for the practical enhancement of the organic food consumption in Spain. Firstly, some general statistics are discussed, in order to
precise outlook to estimate the current situation in Spain. Then, some remarkable trends and developments over the years will be discussed concerning the organic food market in Spain and Barcelona. Paragraph 2.4 will zoom in on Barcelona since this is the starting point of the enhancement of consumption, as it is the location of Grupo and their first interest. Thus, in this chapter it will (Ch. 2 and 3) will outline the current situation and As mentioned, this research is performed in order to establish the actual opportunity and discover how the in Spain (Barcelona) off by trying to existence of the previously mentioned opportunity by establishing the current market situation on both demand and consumption e next chapter, by studying the current organic food market; both . Then, a focus on Spain will Here, the market characteristics, trends and opportunities are this study is focused on oriented research, since a completely new project and plan has to be constructed (Van Aken et the important concepts concerning the organic food market need to be defined, which will Here, essential aspects and criteria of both the demand and supply side are , resulting in a conceptual model that can be used for future research concerning this topic. elements need to be and evaluating this
In order to establish the actual opportunity, the existence of the gap between production and sumption needs to be confirmed and analyzed. This section will discuss the basic organic food
the rest of the world, with a focus on Europe, to establish some basic trends and developments over the past years. This is important in order to create an accurate perspective on the current market and establish the practical enhancement of the organic food consumption in Spain. Firstly, some general statistics are discussed, in order to define a to estimate the current situation in Spain. Then, some remarkable trends and rs will be discussed concerning the organic food market in Spain and will zoom in on Barcelona since this is the starting point of the enhancement the location of Grupo HS3 and their first interest. Thus, in this chapter it will
be established if there is an actual opportunity by confirming the significant difference in
and consumption. Then, further sections will discover the reasons for this gap.
conclusions of this chapter
the theoretical framework and literature research, followed by the qualitative
research, which can lead to proper conclusions and recommendations (Van Aken et al., 2007) for this report.
2.1 General market trends
When analyzing the possible opportunities of the organic food market in Spain, an accurate description of the current market is necessary Based on this information,
situation is sketched, and
with help of the related literature
mentioned before, the consumption of organic products across Europe and the US is not only restricted to small niche markets anymore (Codron et al., 2006). The attention given towards org food and sustainable development is increasing enormously, and thus the markets and related productions are growing on average as well (Willer - FiBL.org, BioFach, 2011).
Figure 3: World growth organic agricultural land (Adapted from Willer, 2011 – FiBL.org).
The world production grew from 11,0 million hectares to 37,2 million hectares from
1999 to 2009. Europe’s share in production consisted out of 9,3 million hectares
37.2 million hectares across the world.
evaluating the European consumption and trade of organic food, it can be seen
North trade. This is due to the fact that 11 14,9 17,5 19,8 25,6 29,8 0 5 10 15 20 25 30 35 40 1999 2000 2001 2002 2003 2004 Years
Figure 3: World growth of organic agricultural land in millions of hectares
be established if there is an actual opportunity by confirming the significant difference in production and consumption. Then, further sections will try to discover the reasons for this gap. The practical of this chapter also form the base for the theoretical framework and literature research, itative and quantitative can lead to proper conclusions and recommendations (Van Aken et al., 2007) for this
2.1 General market trends
When analyzing the possible opportunities of the organic food market in Spain, an accurate description of the current market is necessary. Based on this information, a more comprehensible and the analysis can follow with help of the related literature streams. As mentioned before, the consumption of organic products across Europe and the US is not only restricted to small niche markets anymore (Codron et al., 2006). The attention given towards organic food and sustainable development is increasing enormously, and thus the markets and related growing on average as well (Willer
: World growth organic agricultural land (Adapted
The world production grew from 11,0 million hectares to 37,2 million hectares from the year 1999 to 2009. Europe’s share in production consisted out of 9,3 million hectares of a total of 37.2 million hectares across the world. When the European consumption and trade of that there is a South-to-North trade. This is due to the fact that major
29,8 29 30,1 32,4
35,2 37,2
2004 2005 2006 2007 2008 2009 Years
Figure 3: World growth of organic agricultural land in millions of hectares
consumer markets are located in the northern countries, with some exceptions as Italy, and the produce of these products often takes place in the Southern European countries (Zanoli, 2004).
2.2 Spain’s’ market position
The previously mentioned South-to
can also be noticed when focusing on Spain. After taking a closer look on Spain’s market position concerning organic land, it can be seen that
placed 6th of the world, with 1,33 million hectares (Willer – FiBL.org1, BioFach 2011).
Figure 4: Top Ten countries with most agricultural land (Adapted from Willer, 2011 – FiBL.org).
It is also worth noting that Spain is the first European country in this list, therefore, the country with the most organic agricultural land in Europe. Spain counts for 14 % of the total organic agricultural land in Europe, followed by
Germany respectively. It is also experiencing second largest growth in organic agricultural land in Europe in the last years, of approximately (200,00 hectares), after Turkey (Willer 2009).
Figure 5: European countries with the largest increase in organic land in 2009 (Adapted from Willer, 2011 FiBL.org).
1 FiBL = The research institute of organic agriculture
0 2 4 6 8 Uruguay Germany Italy India Spain Brazil China USA Argentina Australia
Figure 4: Top 10 countries with most organic land (in Million hectares)
0 50000 100000 150000 Turkey Spain Italy France Czech Republic
Figure 5: European countries with the largest increase in organic land in 2009
consumer markets are located in the northern countries, with some exceptions as Italy, and the ducts often takes place in the outhern European countries (Zanoli, 2004).
to-North trade on Spain. After market position concerning organic land, it can be seen that Spain is of the world, with 1,33 million hectares
: Top Ten countries with most agricultural land
worth noting that Spain is the first European country in this list, therefore, the country ic agricultural land in Europe. for 14 % of the total organic agricultural land in Europe, followed by Italy and is also experiencing the largest growth in organic agricultural land of approximately 33% (Willer – FiBL.org,
: European countries with the largest increase in ic land in 2009 (Adapted from Willer, 2011 –
FiBL = The research institute of organic agriculture
When looking at the top ten of domestic organic food markets worldwide, Spain comes in second last, with great distance of
which have a market consisting out of Euros and 1,500 million Euros whereas the market in Spain worth 905 million Euros. This is
production numbers and amount of agricultural land in these countries.
overview of the top ten countries and the size of their domestic markets.
Figure 6: Largest domestic organic food markets of the world (Adapted from Willer, 2011
As can be seen, Spain is placed on the sixth place, near countries with a remarkable lower production and population size, e.g. Switzerland. Whereas Switzerland has a larger domestic organic food market (little over 100 million Euros more in sales) than Spain, it has a signific
inhabitants; approximately 7,7 million inhabitants, relatively to Spain’s 46 million inhabitants. This indicates the extremely low
occurring in Spain. Moreover, the total market share of Spain is not even wor
10 of Europe, whereas it is rated on the first place concerning production (largest in
In 2009, total sales of organic products in Spain (incl. exports) amounted 905 million Euro, wh the sales Germany, Italy, France and t
much higher than in Spain (Willer
BioFach, 2011). This is also shown by the consumption per capita and expenses made in total per country, stated in table 1
10 12
Figure 4: Top 10 countries with most organic land (in Million hectares)
150000 200000 250000 Figure 5: European countries with the largest increase in organic land in 2009
868 905 1000 1023 1284 1500 2065 3041 5800 0 10000 Austria Spain Japan Switzerland Canada Italy UK France Germany USA
Figure 6: Largest domestic organic food markets in the world
(in Million Euros)
looking at the top ten of domestic organic food markets worldwide, Spain comes in second with great distance of Germany and Italy, consisting out of 5,800 million Euros and 1,500 million Euros sales respectively – whereas the market in Spain only contains sales 905 million Euros. This is opposite to the production numbers and amount of agricultural land in these countries. Figure 6 presents an countries and the size of
: Largest domestic organic food markets of the world (Adapted from Willer, 2011 – FiBL.org).
Spain is placed on the sixth place, near countries with a remarkable lower production , e.g. Switzerland. Whereas Switzerland has a larger domestic organic food market (little over 100 million Euros more in sales) significant lower amount of approximately 7,7 million inhabitants, relatively to Spain’s 46 million inhabitants. This indicates the extremely low consumption that is Moreover, the total market share of Spain is not even worth noting in the top 10 of Europe, whereas it is rated on the first place concerning production (largest in Europe).
total sales of organic products in Spain (incl. exports) amounted 905 million Euro, while the sales Germany, Italy, France and the UK were higher than in Spain (Willer – FiBL.org, BioFach, 2011). This is also shown by the consumption per capita and expenses made in total
in table 1.
17835
10000 20000
Figure 6: Largest domestic organic food markets in the world
Country Organic food expenses mil. € Share in total food expenses % Organic food expense per capita € Denmark 434 3,8 79,8 Germany 5.300 3,7 64,4 UK 2.835 2,7 41,9 Sweden 379 2,2 41,7 France 2.069 1,4 32,4 Netherlands 519 1,8 31,7 Belgium 283 1,3 26,6 Italy 1.387 1,0 21,4 Spain 200 0,2 4,5
Table 1: Organic food consumption, household food purchases in EU (Eurostat, 2008; IFOAM, 2008; ORA, 2008 in European Commission, 2010).
This table shows that the total national amount spend on organic food, the money spend per capita and the percentage of organic food expenses of the total food expenses are all extremely low in Spain. This is comparable with the consumption in countries as Bulgaria and Romania (Eurostat, 2008; IFOAM, 2008; ORA, 2008 in European Commission, 2010), where the production and development are far less than in Spain. When comparing Spain and Italy it shows the tremendous difference these two countries have when focusing on the consumption, while production can be considered as similar. Also, in Scandinavian countries, Austria and the UK, organic products are mostly sold in conventional supermarkets (Dimitri & Oberholtzer, 2005), who also represent the countries with the highest organic food expenses per capita.
Overall, it can be stated that the general production of organic products has been growing over the past 10 years, where Spain is becoming one of the major organic food producers/suppliers of Europe, and even of the world. The percentage of organic food on the market relatively to other (conventional) food products in Spain is the lowest of Europe (e.g. Thøgersen, 2010; Padel et. al., 2007). Seeing this in combination with the large size of organic production and relatively low sales on the domestic market; it can be concluded that there is indeed a noteworthy gap between consumption and production of organic products in Spain. One issue that cannot be overlooked is related to the economic fluctuations which have been present in recent years. When looking at the Spanish economy, it is noticeable that it began to slow down in late 2007 and entered into a recession in the
second quarter of 2008. Spain’s GDP decreased by 3.7% in 2009, and by another 0.2% in 2010, making Spain the last major economy to decline forward in the global recession (CIA Factbook, 2011). Spain’s GDP went from $1.424 trillion in 2008, to $1.369 trillion in 2010 (CIA Factbook, 2011), indicating the decline in GDP. During this period, Spain still experienced the second’s largest growth in Europe of organic agricultural land (Willer, FiBL.org. 2011), showing little economic impact on the production side. However, only in 2006 Spain started to have a significant market quota on consumption, consisting of 0,7% out of Europe, whereas in 2005 it was not worthy of a percentage (CAAE2 Report, 2010). This points out the slow and small market in 2005 and 2006. Also, sales in 2007 remained exactly the same, thus no growth in market share or sales occurred. However, according to research undertaken by the MARM3, the amount of people who are consuming organic food ‘once in a while’ has been growing slightly between 2005 and 2007 (Estudio de Mercado, 2007). On top of that, sales reports of organic food brands in Spain state an increase in revenues in 2010 of 11,7%. In both Italy, also a large producer, and Holland consumption rose with respectively 12% and 17% in 2010 (Irish Food Board, Bord Bia, 2011; DutchNews, 2012). Globally, organic sales grew by 8% in 2011. The UK was one of the few countries that suffered from a fall in sales of 3,7% in 2011, which experienced strong and steady growth until 2008, which was their peak year (Smithers, The Guardian, 2012). This suggests that the impact of the economic crisis on organic food consumption is most likely not crucial or an opportunity killer in Spain. However, the worldwide growth had a minor stagnation between 2009 and 2010 after an increasing growth until 2008 (MARM.es, 2010), mainly in the countries which are seen as the early adopters/buyers.
Generally speaking, it can be concluded that consumption is remarkably less than the production in Spain. Therefore, it is useful to take a closer look to the recent trends on the Spanish organic food market; to create a better
2 CAAE = Comité Andaluz de Agricultura Ecológica 3 MARM = Ministerio de Agricultura, Alimentación y Medio Ambiente
understanding about the phenomenon taking place. This will follow in the next section. 2.3 Market trends in Spain
According to recent studies undertaken by the Spanish government, is the organic food production in Spain growing, where export plays a major (MARM.es, 2010). This is a central
cannot be overlooked, since the export might be a great part of the total (trade) income in Spain, stimulating its current economic situation. Nevertheless, due to the large surface of
land, and still potential to grow, a
consumption is not intending to decrease exports tremendously. However, this report will not get in to great detail concerning these economic aspects. In 2010, slightly more than 3,000 organic companies were registered with an annual turnover of almost 700 million Euros
the industry was employing around 18,000 people, which gives an idea about the size of the industry. Nowadays, around 5.3% of the Spanish agricultural area is organic and 2.4% of the farms
Over the last 18 years, the amount of hectares of organic land has been increasing tremendously in Spain, which is also shown in the figure below.
Figure 7: Evolution of production in organic land 1991-2009 (Adapted from MARM, 2009)
Also, the amount of operators (people working in the industry) grew, reaching almost
in 2008. Worth noticing is that this number consisted out of 25,291 producers and 2,465 processors (MARM.es, 2009), which also indicates the high number of exports of the basic
0 200.000 400.000 600.000 800.000 1.000.000 1.200.000 1.400.000 1.600.000 1.800.000 2 0 0 9 2 0 0 8 2 0 0 7 2 0 0 6 2 0 0 5 2 0 0 4 2 0 0 3 2 0 0 2 2 0 0 1 2 0 0 0
Figure 7: Production’s growth in organic land (hectares)
phenomenon that is ext section.
According to recent studies undertaken by the nic food production growing, where export plays a major role central aspect which cannot be overlooked, since the export might be a great part of the total (trade) income in Spain, thus its current economic situation.
surface of production potential to grow, an increase in to decrease exports tremendously. However, this report will not get in to great detail concerning these economic aspects.
more than 3,000 organic companies were registered with an annual Euros. At that time, the industry was employing around 18,000 people, which gives an idea about the size of the industry. Nowadays, around 5.3% of the Spanish agricultural area is organic and 2.4% of the farms are organic. he amount of hectares of organic land has been increasing tremendously in Spain, which is also shown in the figure below.
: Evolution of production in organic agricultural 2009 (Adapted from MARM, 2009).
Also, the amount of operators (people working in y) grew, reaching almost 28,000 people in 2008. Worth noticing is that this number consisted out of 25,291 producers and 2,465 processors (MARM.es, 2009), which also indicates basic produced
products. The export of organic food in 2009 was around 450 million Euros. Furthermore, around 85% of this turnover was sold to Germany, France, United Kingdom, Italy, Switzerland, Holland and Belgium, indicating the popularity of organic food in these countries. On the contrary, organic imports are estimated to be around 190 million euro’s in 2009, however, most of the imported products are processed and packaged organic products (MARM.es, 2010). In addition
of organic foods and beverages in S 900 million Euros, which is abou
domestic market. This leads to an average per capita consumption of 19,5
(MARM.es, 2010). In 2003, the
devoted to organic products was only 0,5% of the total food expenditure. Due to the growth of the production, an enlargement of the domestic market is also necessary for the producers’ survival, because the competition among producers
is rising (Sanjuán et al., 2003).
Spanish consumption needs to catch benefiting from its high production, enhance the domestic organic food market. 2.4 Comparing markets: c
production
Often, a high share of organically managed agricultural land is positively related to the share of organic food consumption in the total food market, indicating that high production can stimulate the consumption (Hamm and Gronefeld, 2004). This situation also appeared in Italy, where a sudden high production was followed by
increase in consumption (Thøgersen, 2010)
of the same large growth in production, both Italy and Spain are experiencing industrial and economic activities concerning organic products in the north of their countries, and farming and production takes place in the south, leading to a stimulation in consumption in Italy, but the growth consequences in Spain are not as positive (Pinton & Zanoli, 2004; Updated by Willer, 2007
difference that needs to be considered is that Italy’s production started to grow tremendously in the 90s, whereas Spain’s increase in production started approximately a decade later (Lampkin, 2003, in “Organic Agriculture: Sustai
1 9 9 9 1 9 9 8 1 9 9 7 1 9 9 5 1 9 9 1
Figure 7: Production’s growth in organic land (hectares)
The export of organic food in 2009 was 450 million Euros. Furthermore, around 85% of this turnover was sold to Germany, France, United Kingdom, Italy, Switzerland, Holland and Belgium, indicating the popularity of organic food in these countries. On the contrary, organic imports o be around 190 million euro’s in 2009, however, most of the imported products are processed and packaged organic products n addition, the average turnover of organic foods and beverages in Spain is around uros, which is about 1% of the domestic market. This leads to an average per-capita consumption of 19,5 Euros in the year2009 (MARM.es, 2010). In 2003, the amount that was devoted to organic products was only 0,5% of the total food expenditure. Due to the growth of the uction, an enlargement of the domestic market is also necessary for the producers’ survival, because the competition among producers globally is rising (Sanjuán et al., 2003). Therefore, the Spanish consumption needs to catch-up by production, in order to enhance the domestic organic food market.
2.4 Comparing markets: consumption follows
Often, a high share of organically managed agricultural land is positively related to the share of organic food consumption in the total food market, high production can stimulate the consumption (Hamm and Gronefeld, 2004). This lso appeared in Italy, where a sudden was followed by a significant increase in consumption (Thøgersen, 2010). On top of the same large growth in production, both Italy and Spain are experiencing industrial and economic g organic products in the north of their countries, and farming and production takes place in the south, leading to a stimulation in consumption in Italy, but the growth consequences in Spain are not as positive (Pinton & Zanoli, 2004; 007 – FiBL.org). The main difference that needs to be considered is that Italy’s production started to grow tremendously in the 90s, whereas Spain’s increase in production started approximately a decade later (Lampkin, 2003, in “Organic Agriculture: Sustainability, Markets and
Policies” by OECD; Willer – FiBl.org, 2009). This is also shown in the next graph.
Figure 8: Growth in organic land (Adapted from MARM.es, 2009; FiBL.org, 2009 & IFOAM.org, 2009)
As can be seen, the largest growth in Italy took place between 1995 and 1999. Spain experienced a similar growth from the year 2000 until 2009. This might indicate why the market in Italy is more developed than the market in Spain. Furthermore, three years after the major rise in production (in 1998), sales in Italy already started to boom (Hallam, 2003, in “Organic Agriculture: Sustainability, Markets and Policies” by OECD). However, the rise of production in Spain already lasts for more than a decade, and consumption still did not catch up. Figure 9 provides a comparison of the growth of agricultural land between Italy and Spain.
Figure 9: Growth in organic agricultural land and forecast (Adapted from MARM.es, 2009; FiBL.org, 2009 & IFOAM.org, 2009)
The year 2015 shows a forecast of the growth of the agricultural land, based on the growth rates in recent years. When Italy started introducing
0 500000 1000000 2009 2005 2000 1999 1998 1997 1995 1991
Figure 8: Growth in organic land: Spain & Italy (in hectares)
Italy Spain 0 500.000 1.000.000 1.500.000 2.000.000
Figure 9: Growth in organic agricultural land and forecast
Spain Italy
FiBl.org, 2009). This is
: Growth in organic land (Adapted from MARM.es,
As can be seen, the largest growth in Italy took lace between 1995 and 1999. Spain experienced a 2000 until 2009. This might indicate why the market in Italy is more developed than the market in Spain. Furthermore, three years after the major rise in production (in es in Italy already started to boom (Hallam, 2003, in “Organic Agriculture: Sustainability, Markets and Policies” by OECD). However, the rise of production in Spain already lasts for more than a decade, and consumption still ides a comparison of the growth of agricultural land between Italy and
: Growth in organic agricultural land and forecast (Adapted from MARM.es, 2009; FiBL.org, 2009 & IFOAM.org,
The year 2015 shows a forecast of the growth of the agricultural land, based on the growth rates in When Italy started introducing
organic products in the market, the products were marketed in traditional food distribution channels, without being promoted or labeled as organic (Helfter, 2003 in “Organic Agriculture: Sustainability, Markets and Policies” by OECD). The use of these conventional channels and no great focus on “being organic” led to a fast increase in consumption as well. This needs to be taken in to consideration when conducting
distribution in Spain mainly concerns specialized producers and suppliers. Furthermore, even when it might be slightly outdated, it remains worth mentioning that, Kafka & van Alvensleben (1998) state that the index of “food concern” in Eur countries is extremely lower in Spain than it was in Italy. Italy is placed in congruence with the total of Europe, having an index of 100. Spain on the contrary, is placed last in their list, and has an index rate of 63, (where the highest index rat
Germany, indicating the highest “food concern”). This can be a cause of the slow adoption of organic food consumption, when it is assumed that the food concern is relatively unchanged. Therefore, it is important to study the aspects which are r
the supply and demand (perceptions) create an understanding of both approach to enhance the market.
elaboration concerning the theoretical grounds will be given (in Ch. 3) in relation to the organic market to create deeper insights and a better understanding.
2.5 The market situation in Barcelona
Since both Grupo HS3 and the entrepreneur want to start off with the Barcelona
is their location, this report will zoom in on specific situation in Barcelona regarding organic food in order to align the final recommendations with Barcelona specifically. When taking a closer look to Barcelona (Catalonia), it
they encompass the most manufacturing companies, counting 518 in total. The
agricultural land in this area is not significantly higher than other provinces. Out of the total amount of organic agricultural land, 4,48% was located in Catalonia in 2009 (M
next figure presents the perc
agricultural land in each province in Spain, showing that Catalonia is the province with the fourth
1000000 1500000
Figure 8: Growth in organic land: Spain & Italy (in hectares)
Figure 9: Growth in organic agricultural land and forecast
Italy
organic products in the market, the products were marketed in traditional food distribution channels, without being promoted or labeled as organic n “Organic Agriculture: Sustainability, Markets and Policies” by OECD). The use of these conventional channels and no great focus on “being organic” led to a fast increase in consumption as well. This needs to be taken in to conducting this study as the distribution in Spain mainly concerns specialized Furthermore, even when it might be slightly outdated, it remains worth mentioning that, Kafka & van Alvensleben (1998) state that the index of “food concern” in European countries is extremely lower in Spain than it was in Italy is placed in congruence with the total of Europe, having an index of 100. Spain on the contrary, is placed last in their list, and has an index rate of 63, (where the highest index rate is 143 of Germany, indicating the highest “food concern”). This can be a cause of the slow adoption of organic food consumption, when it is assumed that the food concern is relatively unchanged. Therefore, it is important to study the aspects which are related to (perceptions), in order to create an understanding of both, and establish an approach to enhance the market. A more extensive elaboration concerning the theoretical grounds will in relation to the organic food to create deeper insights and a better
The market situation in Barcelona
Since both Grupo HS3 and the entrepreneur want Barcelona area, given that this is their location, this report will zoom in on the arcelona regarding organic the final recommendations with Barcelona specifically. When taking a closer look to Barcelona (Catalonia), it can be seen that encompass the most manufacturing nting 518 in total. The organic agricultural land in this area is not significantly higher than other provinces. Out of the total amount of organic agricultural land, 4,48% was located in Catalonia in 2009 (MARM.es, 2009). The the percentage of organic agricultural land in each province in Spain, showing that Catalonia is the province with the fourth
1,92% 3,79% 0,38% 0,89% 7,18% 4,48% 1,38% 15,00% 0,36% 0,26% 1,84% 0,87% 4,16% 54,08% 2,00% 0,09% 0,54%
Figure 10: Percentage of organic agricultural land in each province Navarra Murcia Madrid Galicia Extremadura Cataluña Castilla y León Castilla Cantabria Canarias Baleares Asturias Aragón Andalucía Comunidad Valenciana País Vasco La Rioja
highest percentage, out of 17 provinces. Therefore, it can be assumed that the situation in Catalonia is not out of the ordinary from the rest of Spain, since it does not have an extremely low or high percentage of organic agricultural land, but important province.
Figure 10: Distribution of organic agricultural land over the provinces in Spain (Adapted from MARM.es, 2009)
The industrial activities related to organic agriculture and farming are the highest in Catalonia, with a percentage of 21,60% in 2009 of all activities (MARM.es, 2009). This provides another reason to start in Barcelona, and enhance sales in Catalonia, as it indicates that processing and other related tasks take place in Cataloni which is considered as the next step after producing. Due to the relatively high ranking on the organic land and the high ranking of other related industrial activities, Barcelona (Catalonia)
good starting point for enhancing consumption. The main organic food provider in Barcelona is EcoVeritas, an organic supermarket chain with 17 supermarkets in Barcelona, and around 17 million Euros revenues in 2009 and 19 million in 2010. So far, EcoVeritas has not reached a larger market (after starting in 2002), and is not optimizing the possibilities of the large production. Th
Figure 10: Percentage of organic agricultural land in
Navarra Murcia Madrid Galicia Extremadura Cataluña Castilla y León Castilla-La Mancha Cantabria Canarias Baleares Asturias Aragón Andalucía Comunidad Valenciana País Vasco La Rioja
highest percentage, out of 17 provinces. Therefore, it can be assumed that the situation in Catalonia is rest of Spain, since have an extremely low or high percentage of organic agricultural land, but is an
: Distribution of organic agricultural land over the provinces in Spain (Adapted from MARM.es, 2009).
The industrial activities related to organic agriculture and farming are the highest in Catalonia, with a percentage of 21,60% in 2009 of all activities (MARM.es, 2009). This provides another reason to start in Barcelona, and enhance it indicates that processing place in Catalonia, which is considered as the next step after Due to the relatively high ranking on the organic land and the high ranking of other related (Catalonia) forms a good starting point for enhancing consumption. The main organic food provider in Barcelona is EcoVeritas, an organic supermarket chain with 17 around 17 million llion in 2010. So far, EcoVeritas has not reached a larger market (after starting in 2002), and is not optimizing the possibilities of the large production. The organic
food brand and supermarket remain around the existing niche markets, started in other European countries as well. aspects can also be observed by noting simple elements. For example,
EcoVeritas is using, Catalan, indicat focus lies solely on Catalonia European countries are moving
stage” and reach larger market shares, e.g. Netherlands, Germany and even Italy (Thøgersen, 2010). Furthermore, other brands
are trying to introduce their organic product line, e.g. Carrefour (Arregui, Capital.es, 2011). And yet, the organic products are still not
adopted as in other European countries. This is contrary to the fact that Spain is the leader of organic farming in Europe, has a high number of suppliers and production of org
high growth in this area (Willer and Kilcher, 2009; Willer - FiBL.org, 2011; CAAE, 2008). Thus, the market can offer great possibilities and it can create an advantage, e.g. by
because of decreasing transportation cost Even though EcoVeritas is relatively the provider in Catalonia, the
organic food market consist
owned shops. Often, they only have and limited offer of food, of
retailer. EcoVeritas started
privatized shops joined together and build a more successful business chain (EcoVeritas.es). Often, producers sell their products to a few small stores which sell them directly on the market.
suppliers do not have their own store, or even their own production materials, leaving the distribution chain long and inefficient due to the many different small shops and producers
Furthermore, these shops lack any marketing or promotional activities, and
word of mouth promotions
with the market in other countries, e.g. Germany and Holland, where it started to rise around 10 years ago, starting off with small, private shops with limited offerings as well
the same line and stages of growth, it
there is still great potential to enhance the market, reaching the same size as e.g. Germany
trends and statistics give a general
brand and supermarket remains revolving around the existing niche markets, how it all started in other European countries as well. These observed by noting simple the main language EcoVeritas is using, Catalan, indicates that their solely on Catalonia. However, other countries are moving out of this “start-up stage” and reach larger market shares, e.g. the Netherlands, Germany and even Italy (Thøgersen, 2010). Furthermore, other brands/supermarkets are trying to introduce their organic product line, egui, Capital.es, 2011). And yet, the organic products are still not comparable adopted as in other European countries. This is contrary to the fact that Spain is the leader of organic farming in Europe, has a high number of suppliers and production of organic food, plus a high growth in this area (Willer and Kilcher, 2009; FiBL.org, 2011; CAAE, 2008). Thus, the market can offer great possibilities and it can by lowering the prices transportation costs.
though EcoVeritas is relatively the leading , the largest part of the organic food market consists out of small, private owned shops. Often, they only have a specialized and limited offer of food, offered by one privatized started when a few of these privatized shops joined together and build a more successful business chain (EcoVeritas.es). Often, producers sell their products to a few small stores which sell them directly on the market. In general, do not have their own store, or even their own production materials, leaving the distribution due to the many different and producers (BioCultura, 2011). Furthermore, these shops lack any marketing or and often solely rely on promotions. This can be compared with the market in other countries, e.g. Germany started to rise around 10 years ago, starting off with small, private shops as well. If Spain is following of growth, it indicates that there is still great potential to enhance the market, reaching the same size as e.g. Germany. These trends and statistics give a general idea about the
current market; of the world, Europe and Spain, and introduce the current situation in Barcelona. Here, the manufacturer numbers are rising, but the shop-level and offerings stay “old-fashioned”, relating to the relatively low consumption in Spain. In short, Catalonia can be considered as a province with no extraordinary exceptions, and possibilities to take the market one step further (e.g. due to the many processors). Catalonia, and herewith Barcelona, encompasses low consumption and limited product offerings, similar to the rest of Spain. This can imply a straightforward implementation, possibly easy generalizable throughout the rest of Spain.
3. LITERATURE REVIEW
The literature review sets the theoretical framework for the rest of the study. It provides an overview of the relevant elements concerning the consumption (e.g. values, motivations) and production (e.g. distribution). Then it combines the findings of these parts by creating a conceptual model that functions as guidance and base of the field research.
Many recent articles mention the growth of the worldwide organic food market, (e.g. Thøgersen, 2010; Gil et al., 2000; Thompson & Kindwell, 1998), however, also state the lack of consumption in Spain. Where Spain is often mentioned when discussing the growth in production (e.g. Willer – FiBL.org, 2011; MARM.es, 2009), it is rarely brought up when considering consumption. Although it is often cited that the consumers are looking for more diverse, better quality and healthier food products; organic food products are subjected to difficulties concerning product acceptability, development of new products, high prices and deficiencies in distribution channels (Roddy et al., 1994; Gil et al., 2000). According to Insa-Ciriza (2000), Spanish consumers know little about organic food products, and do not specifically look for organic products, since they are often only to be found in specific, unknown stores. The perceived high price is considered as one of the main rejections towards organic food products. Whereas health and the environment are believed as the major motivations to buy organic food products. However, these statements were made
more than a decade ago. This in combination with the lack of attention on the low consumption stimulates the interest of enhancing the organic food market in Spain in a successful manner. Thus, it needs to be discovered which main difficulties are experienced in Spain.
3.1 Theoretical framework
This study will research the phenomenon of the large production rates and low consumption of organic food in Spain, in relation towards the market - supply and demand side -, and the related elements on both sides; e.g. consumer value/ perception and the production/distribution possibilities. The final aim is to enhance the consumption and general organic food market in Spain. Even though many efforts are made to establish and communicate the overall values, e.g. environmental and social attributes consumers have, the perceptions are still not aligned across countries, and between consumers and other parties (e.g. suppliers), resulting in a divergence of the logic of consumers and the actions taking by producers/suppliers (Sabara, 2009). This results in great differences in the organic market across these parties and different countries. Organic food might be viewed as positive in one country, or even in one group on the market, e.g. producers, and as negative in other countries or groups, e.g. consumers.
In Europe, organic food production and consumption has experienced various stages, where in the 80s and 90s major growth took place. However, the pace of this growth in production, consumption and awareness cannot considered to be equal across all European countries. For instance, while the market of organic products has been growing tremendously in the last 3 years in UK and Italy, in other countries, the market seems to have reached maturity (e.g. Germany) or still experience a slower rate of growth (Zanoli, 2004), as in Spain. This is an important aspect to address in the development and enhancement of an existing product (organic food) to a yet unsuccessful marketplace; here the domestic consumption in Spain (Codron et al., 2006). In Spain the benefits are known on the production side, however, other parties (consumers) might not perceive the same
