Are Organic Foods Getting Too Pricey for the Middle Class?  

Posted by Big Gav in , ,

AlterNet has a look at the impact of rising oil prices on organic food sales - Are Organic Foods Getting Too Pricey for the Middle Class?.

It's no secret that food prices are going up. Bloomberg News reported this month that we are experiencing the highest rate of food inflation in 28 years, and both corn and soy hit record high prices during July.

Consumers are doing what they can to cope with these rising prices -- but does that mean staying away from organic food that may already be pricier? And if so, could a lull in organic sales make farmers and retailers shy away from the organic market as a result?

What better place to look for trends than the poster child for high food prices: my local Whole Foods. Referred to by many as "Whole Paycheck," Whole Foods made headlines in the New York Times this month for seeking to change its high-priced image: "Now, in a sign of the times, the company is offering deeper discounts, adding lower-priced store brands and emphasizing value in its advertising. It is even inviting customers to show up for budget-focused store tours like those led by Mr. Hebb, a Whole Foods employee."

A year ago I left a job in the Whole Foods bakery, where I served coffee, baked bread and scooped gelato. Now, I visited the same store where I worked to discover that the bakery's "Every Day Value" items (whole wheat bread and blueberry bran muffins) rose in price by a dollar each in the last year. I also remembered that the store occasionally put items on sale and frequently posted signs advertising value when I worked there, so I wondered if the New York Times was correct.

Carolyn Kates, the marketing assistant at my local Whole Foods, had some answers. With company profits falling 13 percent in the third quarter this year, Whole Foods sees the need to move away from its "Whole Paycheck" image. And now that even its upper-middle-class customer base is feeling the pinch, the store needs to convince shoppers to try its lower-priced grocery items, particularly its private-label brands, 365 and 365 Organic.

Why the drop in profits?

While the price of oil is apparent when people go to the pump, folks are now beginning to realize that filling up at the grocery store is getting more expensive too, and for similar reasons.

As recent studies such as "Diet, Energy, and Global Warming" by Gidon Eshel and Pamela A. Martin show, we almost literally eat oil. It takes oil to plant, harvest, transport and process the wheat in the wheat bread and bran muffins that rose in price; fertilizers used in conventional agriculture are often petroleum-based as well. When oil prices rise, food prices are soon to follow. This affects consumers, retailers and farmers.

Sure, Whole Foods may have taken a hit last quarter, but will these rising oil and food prices actually keep consumers from organic and health foods?

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