Market segmentation and willingness to pay for organic products in Spain

TLDR

Consumer concerns about environmental and health issues have increased demand for organic food, yet higher production costs create a price gap between actual prices and what consumers are willing to pay. The study analyzes consumer willingness to pay for organic food in two Spanish regions. Markets in both regions are segmented based on consumer lifestyles. Consumers prioritizing health and environmental concerns are most likely to buy organic food and pay a high premium, especially for perishable items such as meat, fruits, and vegetables where organic attributes are easily identified.

Abstract

In recent years, consumer concerns on environmental and health issues related to food products have increased and, as a result, the demand for organically grown production has grown. Higher costs of production and retailer margins generate a gap between real prices and those that consumers are willing to pay for organic food. In this article, consumer willingness to pay for organic food in two Spanish regions is analyzed. Markets in both regions are segmented considering consumers lifestyles. Results indicate that consumers concerned about healthy diet and environmental degradation are the most likely to buy organic food, and are willing to pay a high premium. Organic attributes are easily identified in perishable products as the premium consumers would pay for organic meat, fruits, and vegetables is higher.