This is the detailed PESTEL analysis of organic food industry which discusses the political, economical, technological, environmental and legal factors of the industry. The mentioned factors covered in this article could be positive or negative for organize food industry, however determining those factors proactively helps the firms operating in this industry to devise the strategies to capitalize on the available opportunities and eliminate or minimize the threats.
In the recent past, there is growing concern about the quality of food and there are debates over the food products and its quality. There was trend of organic food in late 80s but organic food has become part of daily life and people like to eat it at their usual eating time. Now there are various food brands, which have introduced this new trend of food in the market and made it popular among people especially among the working class, who are hurry to reach their work.
Political Factors
There is great political pressure on the food industry because government stability increases the economic activity in the country and government makes different regulations to control the business activities. The government needs to create awareness in the people about this changing trend as they want to make their population healthy and makes policies for the agriculture sector. If the government has sense of healthy policy in the country, then it will encourage the agriculture sector to grow healthy food products for its people and it will create comparatively easy and convenient legislation to increase the production in the country. The organic food industry is greatly affected by the policies of the government and their business trend can be changed. If it is healthy trend then government should promote it and provide some legislation to make their working easy (Yasemin Oraman, 2014).
Organic food industry has to face some legislations like all other industry in which free trade agreements can give it opportunity to spread its business. It also faces the low labor standards especially in the developing countries and there is great pressure over government to make policies for them and also try to implement them effectively (Pauline Meyer, 2015).
Economical factors
The economic factors, situations and incidents can affect the growth of any industry and it also affects the retail food industry due to various reasons like disposable income, interest rates, inflation, consumer spending, unemployment, taxation, monetary issues, and recent economic recession in different countries. The organic food industry uses some different channels for the sale of their products, which are mail order, super markets, specialized shops and direct sale. There are some economical factors, which can help to grow its business and they can play vital role in increasing the demands of the clients (Yasemin Oraman, 2014).
There is consistent change in the economies of the countries as if they have economic stability, then they can increase the sale of their products and flourish their business rapidly. The governments have to increase the labor cost and make rules for the betterment of their working class, which they companies have to comply with it. When the labor cost is increased, then the supply cost and the selling prices of the products will also be increased. These companies must develop their PESTEL analysis, which can help them to understand the factors to increase their business (Pauline Meyer, 2015).
Social Factors
The social sector has the impact of eating habits of the people and their local trends of food. It is also changed from country to country. The attitude of the consumers is complex about the organic food and they link it with their consciousness, identity, ethics and environment about food. The people look the food as it is healthier and better for their health. Despite of some social and behavioral problems, the trend of using the organic food is becoming popular among the young generation of different countries (Yasemin Oraman, 2014).
People are now thinking about healthy lifestyle and they are turning to the good food, which can give health and meet their food requirements. There is cultural diversity, which is increasing and organic food brands have to take care of it. The food brands have to offer diverse product mix to get the cultural diversity of its consumers, and they also have to touch the middle class, so that they can increase their sale and become popular in maximum number of clients (Pauline Meyer, 2015).
Technological Factors
Technology is used to get the competitive advantage over the competitor brands. They have to face various technological issues from the production of the food products to the packing and supply to the clients. Most of the companies start taking online orders of the products and they supply at the doorstep of their clients. They offer their catalogue to their clients at their home and give contact number with email, which boost the sale of the products of the brand (Yasemin Oraman, 2014).
This food industry has introduced the automation technologies to enhance the sale of their products. They have to comply with the genetic modified organisms (GMO), which threatened the supply of the products in the market but they have to use some strategies to reduce dependency over such products, which have GMO (Pauline Meyer, 2015).
Environmental Factors
When organic food is prepared, it is purified and extracted from various practices like chemical fertilizers, synthetic pesticides, pharmaceuticals, sewage sludge, GM Organisms and synthetic preservatives. Public has also great concern over the organic food like food safety, pollution, human and animal health. Due to various government policies and regulations in this sector, the organic food becomes popular in developed countries (Yasemin Oraman, 2014).
Due to global warming, the production capacity of the farmers is affected but the brands are showing their performance is managing the food disposal and sustainability. It shows the significance of the food market to meet the challenges of food supply chain (Pauline Meyer, 2015).
Legal Factors
The brand has to comply with legal requirements to do their business. They have to focus on company law, investment regulations and environmental law to abide by them as it is necessary for them to comply with them strictly. They also need to check the necessary regulations for production, processing and marketing of vegetable and livestock products, which are shared with the brands to comply with it (Yasemin Oraman, 2014).
The organic food companies need to focus on the environmental protection law, antitrust law, and labor law, which can ensure the safety of the business and the workers. In the developing countries, labor laws are insufficient and they do not help to meet the demands of the clients. If they follow these policies, then they can improve the standard and image of the brand (Pauline Meyer, 2015).
References
Yasemin Oraman (2014), An Analytic Study of Organic Food Industry as Part of Healthy Eating Habit in Turkey: Market Growth, Challenges and Prospects, available at http://www.sciencedirect.com/science/article/pii/S1877042814051647
Pauline Meyer (2015), Whole Foods Market PESTEL/PESTLE Analysis & Recommendations, available at http://panmore.com/whole-foods-market-pestel-pestle-analysis-recommendations