Rise of the Multinationals
The organic food industry is becoming global in that large Multinational Corporations (MNCs) like Heinz, Danone, and PepsiCo are wielding increasing influence. Most of these companies have entered the organic food industry via the acquisition route or by investing in dedicated organic companies.
Another facet of globalisation is convergence of consumer demand and this is also becoming increasingly evident in the organic food industry. Although consumers buy organic products for a range of reasons that vary according to geographic region, culture and socio-economic factors, there is becoming some commonality in consumer behaviour.
The latter attribute is very important and it is why demand for organic products is largely confined to the industrialised world.
Two trends are dampening the rate of globalisation of the organic food industry. The growing importance of regional markets is causing an increasing number of consumers to shun organic products with high air miles. There will always be a need for imported organic fresh produce because of seasonality and product variety however the transportation distance is becoming increasingly scrutinised during the buying process.
The formation of trading blocks is having a positive and negative effect on the organic food industry becoming global. Greater integration of regional markets is facilitating trade between member countries however it is also making the trading block more fortified against non-member countries.
In conclusion, globalisation of the organic food industry is to continue. The speed of globalisation is however to be at a slower rate than other sectors of the food industry, especially as differences continue in terms of organic standards and consumers prefer ‘to think local rather than act global’ when buying organic products.
Posted by : Natural & Organic