An organic eggplant for 1.69 euros, or just a normal one for 99 cents? Two luxury veggie burgers from Beyond Meat for 3.99 euros, two vegetarian private label burgers for 1.59 euros or four beef burgers for 3.79 euros?
Food prices have risen sharply in the past six months; food was 14 percent more expensive in October than twelve months earlier. Consumers spend 11 percent of their disposable income on food, according to Statistics Netherlands, and almost half of that goes on meat, fish, vegetables and fruit. Do they now choose sustainably less often? Do they often leave organic or another brand and meat and dairy products lying around?
Sustainable food has been on the rise in recent years. Last year, the share of ‘sustainable’ in food and beverage spending rose from 17 to 19 percent. But it is also known, for example from research from Wageningen University & Research, that consumers ultimately find so-called ‘egocentric’ values such as price and taste more important than sustainability.
ABN Amro asked consumers in January what they would do if prices rose by 15 percent. Half answered that they would more often choose cheaper products, a slightly smaller proportion more often chose discount stores, such as Lidl and Aldi, and a quarter would pay less attention to sustainability.
At the time, few would have thought that prices would go so quickly. But now that food has really become so much more expensive, the question is whether consumers really choose the organic eggplant or the more luxurious veggie burger less often. In short: it seems to work.
Market researcher IRI, looking at supermarket sales, saw the turnover of products with a quality label – such as organic, Fair Trade and Better Leven (for meat and dairy products) – still growing in the first half of 2022, even stronger than average food turnover. “So the sustainability of our food will continue,” IRI concluded, although the research agency called it “exciting” whether the development would continue in times of price increases.
There are signs that organic sales will remain stable this year. Looking at fruit and vegetables, dairy products and meat, IRI only sees a shift from organic to conventional meat in kilograms for fresh meat. GfK, which examines household consumption, sees that the number of buyers and the amount of organic goods continued to grow until mid-October (last measurement). It is striking that growth is even stronger at lower incomes. “The choice for organic is to a lesser extent influenced by income,” says Norman Buysse from GfK. Beliefs also play a role in choosing organic foods. An important factor: higher incomes have already bought organics more often, households with low incomes still show growth despite inflation.
The supermarkets in particular seem to be reacting to this and taking advantage of it. While spending in supermarkets is still growing, organic shops are having a harder time. “This may be due to the growth in supply,” says Buysse. “Supermarkets can still excel with an organic range.” For example, Albert Heijn customers with a ‘premium subscription’ get a discount on organic products, Plus only has organic private label milk and the discount store Lidl profiles itself with non-packaged organic products. A growing supply can thus also stimulate demand.
Also read: What’s left of good intentions when everything gets more expensive?
There is also recent data on plant-based dairy products (such as soy milk) and meat substitutes. The sales value of plant-based dairy continued to grow through mid-October, according to IRI. In relation to animal dairy, turnover fell, but IRI explains this by the fact that cow’s milk has become more expensive than vegetable varieties. With the same amount of volume, more revenue is therefore achieved.
IRI sees a decrease in meat substitutes, both in revenue (-3.2 percent) and in volume (-5.2 percent). But, says IRI, it’s not like consumers are switching en masse from substitutes to meat: “Both are selling less.”
As with dairy products, meat substitutes have become cheaper compared to the animal variety. Meat became 17 percent more expensive last year. Since spring, the cheapest vegetable chicken pieces, minced meat and burgers are on average even cheaper per kilo than the cheapest meat varieties. GfK sees a difference between higher and lower incomes: the first group continues to buy meat substitutes, while consumers who have less to spend are more likely to leave them behind.
You might think that consumers who keep their wallets will go back to cheap meat. That doesn’t have to be the case, says Rob Morren, market analyst at ABN Amro. “People meet their needs differently, and you can’t just give up on plant-based food. Some choose cheaper versions of the same products or go to a discount store more often, but people can also add other proteins to their meal – in the form of legumes or eggs.”
Morren already noticed that less meat substitutes are being sold than before the price increases. “After the corona lockdowns, people have eaten out more often, and many consumers still choose meat or fish, even though there are more and more alternatives. In addition, new markets must be exploited in order for the category to continue to grow. Customers still expect better products in terms of for taste, texture and sustainability of ingredients.At the same time, innovation budgets are under pressure due to rising costs.”
Morren expects supermarkets to adjust, but not reduce, their plant-based offerings. If only because many supermarkets have included in their sustainability goals that they will sell customers more plant-based instead of animal proteins. He is excited about what will happen when the price increases end. “Consumers want to choose more sustainably. But what will they do when prices fall? Will those few percent go to sustainability or will they remain in savings mode?”
Volkert is English director of Eosta
As an importer and distributor of organic fruit and vegetables, Eosta cannot escape the consequences of rising prices. “Costs are going up and demand is going down somewhat.”
Engelsman does not want to mention turnover figures, but he sees that the demand for organics is quite recession-proof. “The small trend-setting minority that generates the lion’s share of our revenue is used to buying sustainably, even on a limited budget.”
“Conny Concern” or the “awareness elite”, as the English call consumers, do not see organic as a luxury to be given up when prices rise. The situation is different for the great mass of occasional buyers. “That group is more sensitive to recessions.”
There will always be a group that wants to continue doing everything with a smaller budget and so chooses less sustainable. But Engelsman is convinced that more and more people are becoming aware of the need to combat climate change, water shortages and insect mortality. After all, the “boomerang of our behavior” is getting closer.
As far as he is concerned, the momentum for sustainability has not been exceeded now that the economy has worsened. It was not. As an example, he cites European laws that combat deforestation and force companies to tackle abuse in the production chain. “A different wind is blowing. Focus on things like water, CO2emissions and living wages go against the recession. A turnover dip is not that important. Organic is the breeding ground for the new normal, supermarkets are discovering that sustainable products can make good money. I look at the larger developments.”
Peter Schouten director of Schouten Europe
Schouten Europe has produced meat substitutes since 1990, among other things for supermarkets. It makes both private and A brands. A growth of up to 25 percent was not unusual in recent years, says Peter Schouten. This year, his company, which does not disclose figures, experienced declining turnover in Dutch supermarkets for the first time. Since mid-August, there has been a cautious recovery.
One good thing, says Schouten, is that the price difference between meat and substitutes has narrowed. “If you buy ground beef now, you will be more expensive per kilo than with vegetable ground meat.” At the same time, he says, you see that in times of crisis consumers “return to old routines and return to meat. With the idea: if you’re in red, it’s hard to go green. It is not true, but in the consumer’s view, plant-based products are still more expensive.”
Still, Schouten sees a positive development. At Lidl, the meat substitutes are catching up with more expensive supermarkets. At the same time, the A brands are also doing well. “A brands invest a lot in campaigns.” For example, AH gave a discount on vegetarian Unilever products, a campaign organized with the Postcode Lottery. “This means that more A-brands are sold. That more consumers are drawn to the shelf is good for the whole category of meat substitutes.”
Although some subsidies still go to the animal chain, Schouten expects that the government will further promote plant-based production. “Now that the meat is getting more expensive, the moment is getting closer true pricing”, he says: prices that include the costs to people and the environment. “It is difficult to change behaviour, but more and more attention is being paid to the impact of our diet on the environment. When you eat kilo bangers, you think: who pays the price?”
Mark Kulsdom founder of The Dutch Weed Burger
As a former animal rights activist, Mark Kulsdom has a mission to turn the tide for animals and the planet. “I’m impatient, I want to change radically.”
As a producer of kelp burgers, nuggets and sticks, he has to deal with the reality of the market: “The shelves are busy, there is a lot of the same stuff, and big brands try to bind customers by inhibiting prices. We all want to get rid of the meat industry, but now we are competing with each other.”
The Dutch Weed Burgers have been available at Albert Heijn since March 2021 and are at the top of the market at 3.99 euros for two. “It is difficult to attract loafers as customers. Anyone who has already tasted it remains a customer. But skeptics and people with ingrained patterns are harder to persuade.”
At AH, and especially places “where vega is not yet very widespread”, starters are more likely to choose chicken pieces than the innovative niche that Kulsdom’s seaweed products belong to. The seaweed burger is doing well with delivery companies Picnic and Crisp. “That’s where our target audience is.”
According to Kulsdom, there is still a need for innovative products, but “the shelf is also a bit saturated. You have to come up with a good story. We were just in time for that.”
Kulsdom cannot assess whether price increases will pressure demand. His product is too short on the market for that. In any case, he still sees many consumers who are financially “not hurting”. “Economically, it can be against it, but people also come in their own way. It should be cheap and tasty. It doesn’t always go together. There are people who just don’t want us to change.”