Effects of Product Category Inflation on Purchase Shares of Organic Products

Policymakers seek to achieve higher organic shares, but despite growth over the past decade, current levels remain relatively low. There is ongoing debate about whether rising category prices make it more difficult to sustain organic purchase shares. This study empirically investigates this issue by analyzing household scanner data from 2018 to 2022 across 23 food and beverage categories in Germany. The authors examine how Product Category Inflation (PCI) – the rate of increase in prices within a product category over a year – affects the share of organic products in shopping baskets of more than 9,000 households. Contrary to popular beliefs, organic purchase shares do not universally decrease when category prices rise. Drawing on goal theory, we suggest that the effect is shaped not only by the feasibility of buying organic products but also by their desirability. Specifically, PCI is associated with reductions in organic purchase shares among lower social class households and non-core organic households, but not among higher social class and core organic households. Additionally, PCI has a stronger impact in categories with a higher organic price premium, but a weaker impact in categories with higher organic product penetration. These results identify PCI as a novel barrier of organic purchase shares and provide insights into its nuanced effects, underscoring the need for targeted strategies to sustain organic purchase shares amid rising prices.