Why does it cost so much and why are people buying it?. Image 1.

JD DiGiovani

Author

PHOTO: 
Lia Bekyan for Hopes&Fears

$11 for dried mango? $24 for almond butter? Health food stores often position themselves as friendly and approachable, but the prices they charge can leave a person feeling a little incredulous.

While mark-ups happen for a number of different depressing reasons - from dramatic shifts in temperature and droughts to corporate greed (or "mislabeling") - the force driving consumers to the register with their carts full of $4 lemon tap water is a bit more nuanced. Why are people “willing” to pay such high prices for organic food? And, is it making a difference?

Perceived contribution
to society

  

“Economists don’t generally interrogate why people have the preferences they do or what may cause them to change,” Dr. Helen Scharber, Associate professor of Economics at Hampshire College tells Hopes&Fears. “De Gustibus Non Est Disputandum. [There’s no accounting for tastes].” 

She guesses that there’s a variety of factors that determine if people are willing to pay so much money for a single product, “including their ability to pay, its perceived contribution to social status or well-being, their values” and because, maybe, “we become used to paying high prices for certain foods and assume that is the ‘right’ price.”

And this 'right' price has a lot of factors that go beyond a food's health benefits, leading to the Marxist focal point of 'the means of production', as “most food is artificially cheap because workers are paid very poorly, environmental costs are not [accounted] for and/or governments subsidize them.”

The hope then would be that, some of these ‘health foods’ are produced in more humane ways and that their high prices reflect their actual cost of production. But while a company like Whole Foods aggressively sells this feeling with in-store ads featuring model happy farmers, the company has been under scruntiny after it was revealed they were using cheap prison labor to produce some of those goods, specifically selling cheese made for $0.60 a day. And recently, their shrimp providers are being investigated for using slave labor in Thailand.

The food industry is frought with labor abuse, with the U.S. Department of Labor citing that 136 different goods from 74 countries are produced with child labor or forced labor. You'll just have to do your own research instead of buying into a corporate image of humanity.

NUTTY TRENDS

According to Bloomberg, the amount of almonds we consume has doubled over the past seven years to two pounds per person, per year.

Almond butter itself has increased its presence in the nut-butter market by 6% this year, up from 20% in 2014, while peanut butter’s market share has dropped down to 45%.

 

Green (juice) activism and the corporate paradox

 

Dr. Eric J Arnould, anthropologist and professor of marketing at University of Southern Denmark, makes the point that certain consumers are aware of, and unhappy with, the food system as a whole and see purchasing food that is grown in alternative ways as a form of activism. Explaining how ethics enter the commerce, Arnould says, “as some become more aware of global inequality and the exploitation of agricultural workers, the pitiful treatment of industrial livestock, and the environmental costs of the industrialized food system, they are engaging in consumer democracy and voting with their pocketbooks for alternatives they believe are more benign and deliver greater value to themselves, their families, and their communities.”

Dr. Maura Troester Nunez, principal at brandluv.net, also saw buying-as-activism as a key motivator, and proposed a way of thinking about the reasons why people buy expensive health food in terms of levels. Dr. Nunez tells us, “some people consciously spend more money on health food because they believe that markets are the most powerful drivers of social change.” Nunez gives consumers credit, saying that “these people know that natural and organic foods are more expensive due to market dynamics (such as channels of distribution and economies of scale) and are willing to spend more money because they believe that their purchases help build markets that better support the health of people, animals, and the planet.” But for all the beliefs we hold dear about free range chickens, does buying-as-activism actually work? Are we tipping the scales with our locally produced grapefruit?

Talking with University of San Francisco professor and food activist Beth Hoffman, she explained how the answer is yes and no. “When you look at the market for things like local food and how many people are actually purchasing at that level, it’s kind of minuscule, it doesn’t have the impact we would like because the bulk of people are still shopping at Costco. People are not, for the most part, at farmer’s markets.” This isn’t to say that trends aren’t developing and Big Food's already reacting with, as Arnould puts it, “new, more expensive, 'organic' alternatives and CSR [corporate social responsibility] campaigns,” including public pushes by large corporations such as Chipotle, Panera Bread, and Whole Foods.

MARGIN MATH

“In a retail environment, there are usually category specific margins that your brand has to hit in order to be accepted as part of the set. For example, if you are trying to get your all-natural frozen pizza into Whole Foods, you will have to provide them with 40% margin. At Target, you might have to provide them with 35% margin…So when determining the retail price of your items, you have a few variables in hand: ingredient cost, labor cost, the % margin you have to provide the retailer, the % margin you have to provide your distributor, your overhead, and the % margin you’d like to keep for yourself.”

KAT KAVNER, assistant brand manager
at a notable organic food and drink company

 

The flip side to that, as Hoffman puts it, is that some of these companies, like Nestle, General Mills, and Kraft (to name a few), are only jumping on the bandwagon after creating a lot of these problems in the first place. “It’s nice that Nestle is concerned about the sourcing of their chocolate in West Africa, but that’s a problem that is now a hundred and whatever years old.” Hoffman added, “this was the problem for Cadbury, there’s really great documentation about them [using slaves] to grow cocoa in Africa [as recently as the early] 1900s,” adding that corporate change has less to do with consumer spending and more to do with political pressure.

 

Between fast food and $10 juice

 

To Arnould, a more interesting question is how and why people in OECD [Organization for Economic Co-operation and Development] countries have been sold on the idea that inexpensive food is a positive good. "Consumers in these countries pay a historically and comparatively low share of household income for food. So two issues here; on the cultural/ideological side; cheap food is embedded in the modernist project of endless scientific and technological progress: cheap food is a symbol of the success of a modern capitalist democracy. The other is a stark power play for competitive dominance by Big Food as evidence in Big Food’s indefensible arguments for endless deployment of GMOS, and redoubled commitment to ecologically perilous ‘green revolution’ ideas about ‘feeding the world’ at the cost of genetic diversity and farmer independence. This is coupled with Big Food’s lack of transparency about the true social and environmental costs of the sterile shiny packaged ‘food products’ found in all grocery stores in the OECD.”

Even with Arnould’s point on the dubious merits of cheap food taken, it doesn’t take the sting out of certain products you see on the shelves.

Kat Kavner, Assistant Brand Manager at a natural foods company get’s that reaction, to a point. Kavner wrote to Hopes&Fears saying that,  “…it seems like there are these two extremes — processed crap and elitist green juice,” but in reality, “there is a very important middle ground between fast food and $10 juice”.

While it’s easy to find jaw-dropping examples of overpriced foods at boutique markets, Kavner argues, there are more accessible ways for people to eat better whether by buying in bulk, or getting food via CSA [Community Supported Agriculture]. Kavner maintains that “it is absolutely worth spending more on good, real food”, but ultimately, in order to create a sustainable and just food system, “...it’s not as simple as spending more money on our meals.” 

Though there is difference between one meat provider's chicken and another as far as treatment of animals, or labor practices from one orange grower to another, "organic" is not synonumous with "ethical"; it's just sold that way. As far as the "elitist crap", like juice cleanses that are proven pointless and various so-called superfoods that are trendy throughout the decades - magical brain-inhancing goji berries, the ancient grain quinoa, and buzzing leafy green kale - like any market, sometimes it sells because it's in vogue.

JUICE BY THE NUMBERS

Whole Foods
"Green Drink"

$11.14

whole ingredients

$5.29

Partial ingredients

   

1/4 lemon

$.24

$.99 for whole

   

Spinach

$.99

bunch of spinach — $2.99

   

1/2 a Cucumber

$1.00

$1.99 for whole

   

1/4 lime

$.12

bunch of spinach — $2.99

   

3 celery rigs

$1.50

$1.00 for 1 celery heart $.50 at most for a rig

   

3/4 apple

$0.69

   

1/2 bunch of
parsley

$.50

$.99 for bunch

   

2-3 chards

$.25

$1.99 ?

Cold-pressed juice a $100 million a year industry 

ADDITIONAL REPORTING: Mike Sheffield