Heavy Lifting - thoughts and web finds by an economist
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Monday, October 16, 2006

Extra!! Extra!! Demand curves slope downward

Advertising Age reports that the attempts to mass market organic food products is starting to look less feasible, at least at current prices. From the article:
Some marketers are spending more to introduce organic versions of mainstream foods than they are earning from sales of organics, as consumers balk at paying double the price for organic versions of their favorite products. It's all mounting evidence that the trend, like the low-carb craze before it, is hurtling toward a crash.
The whole organic, local harvest, industrial food, it's relationship to health, wealth, and happiness, is of interest to me for a number of reasons. However, it is true that organics are expensive and people tend to substitute into lower priced goods. Why this is a surprise to executives at Fortune 500 companies is disconcerting.

Even more disconcerting is that in the same e-mail blast, the very next article carries the title: "Critics Blast Wal-Mart for Low-Priced Organic Foods: Small Farmers Say Retail Giant Cheapens 'Organic' Brands" Well, can we have it both ways? The argument being made is that Walmart is not selling true organic but products that comply with the Federal standards for "organic," which have been tampered with lately - of that there is no doubt. More Walmart bashing is not surprising.

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