ORGANIC MARKET 2009-2010

Where will Irish organic food find new markets in 2010 and beyond? It appears that the European market for organic products is surprisingly strong at present.

According to Amarjit Sahota, director of Organic Monitor, the UK based research and consultancy company, estimated overall growth in Europe was between 2 and 6 per cent in 2009. This is a drop from the double-digit growth rates of previous years but it is still unusually strong for a premium priced category.

The picture for organic food sales in 2009 was varied across Europe. Some some countries, such as the UK and Spain, suffered badly, whereas Scandinavian countries fared better.

Both the UK and Spain suffered from the global economic recession badly, and this is reflected in the organic market in each of these countries.

However, according to Sahota, the attitude of retailers played an important part too: expecting a downturn in demand for organic products, many retailers in the UK and Spain discontinued organic lines.

This contributed to a significant reduction in sales figures between August and March, but that since then, the market has stabilised.

There have also been signs of growth more recently in these two countries, which prompted retailers to admit that they were overly hasty in discontinuing organic lines.

For example, a recent survey from market research firm Mintel in the UK shows that nearly 40% of consumers claim they haven�t changed organic product purchasing habits because of the recession and only a mere 3% have stopped buying organic products altogether.

�Heavy users of natural and organic food and drink are most likely to indicate they�ve traded down to less expensive organic options,� notes David Browne, senior analyst at Mintel.

�However, less-frequent consumers of organic products have shown that they haven�t shifted their behavior. This is good news for the organic food and drink market, as this group may begin to buy more once recession-related fears begin to fade.�

Outside of the UK and Spain, many markets held firm for 2009: Italy, Germany and France all posted positive growth in 2009.

And in Sweden and Denmark, Organic Monitor said double-digit growth occurred in 2009 thanks to greater economic resistance to the recession and a more steadfast attitude from retailers.

Organic food sales from supermarkets and department stories in Denmark rose to �671m in 2008, marking a 29 per cent vertical rise on the year before, according to the Danish business daily Borsen.

According to Organic Monitor, growth rates for organic are strong in Scandinavian countries because of a combination of consolidation, culture and the economic backdrop.

�Their economies have not been as affected by the financial downturn as the UK, Germany, Spain and other European countries,� according to Sahota.

In addition, Scandinavians � and the Nordic culture � in general appear to be more conscious about environmental issues, he continued.

"Despite the very high cost of living, they don't seem to mind paying more for good quality products," says Sahota of the Scandinavian consumers. This culture contrasts with the 'discounting phenomena' in Germany and the UK in particular.

Consolidation has also been a factor. Between 2006 and 2007, many product ranges were re-vamped.

"After a period of slow growth and consolidation, growth kicks in and investment follows," explained Sahota, suggesting that Scandinavia is currently at the top of the cycle, an 'upturn' that contributed to the high double-digit growth witnessed in 2008.

The agri-food sector in Ireland is heavily export focused, so it is important for the sector to be aware of the trends across Europe. Traditionally, the UK has been a strong market for Irish organic products.

However, there are signs that the market's focus has begun to change towards mainland Europe. It is likely that another strong Irish delegation will travel to the world's biggest organic food trade fair, BioFach, which runs from 17-20th February in Germany . Last year's event led to significant new markets being accessed by Irish organic companies.

For more, see: BioFach

Soil Association report for the organic market in the UK:

Pic: Jason Horner, organic veg seller at Ennis Farmers' Market

The UK's largest organic certification body, the Soil Association (SA), has just published a report on the market for organics. The news is mixed for the overall organic sector, and in some ways, bad for the UK organic farmer.

The situation in Ireland is different to the UK, with the market here remaining stronger. However the UK remains an export location for Irish organic produce. Along with the market itself suffering, the euro sterling differential is compounding the difficulties for Irish organic exports to the UK.

The UK organic market is worth over �2.1 billion annually. Diary is the biggest organic category (29.5%) followed closely by fresh fruit and vegetables (26.2%).

Growth in 2008 in the SA report was at 1.8%. This represented growth in three quarters, and decline in the final 08 quarter. Compared to 11% growth in Ireland in January 2009, the difference in the figures is significant.

The fairly neutral finding of a 1.8% increase disguises the fact that different categories showed sharper variations.

Sales of organic milk, cheese, meat and poultry grew by 10.6%, 11.5%, 13.3% and 17.7% in 2008. Convenience foods and confectionery fell, by 5.9% and 21% respectively. In part this reflects both cutting back and 'back to basics': sales of organic cooking ingredients were up a considerable 13.5%.

The two biggest growth areas for organic in the UK offer little opportunities for Irish farmers.

Certified organic textiles hit the �100 million mark, with organic cotton sales increasing by a full 40%. The organic health and beauty category rose by 69%. This was, however, partly due to consolidation of the certification and labelling regulations as much as an increase in sales: i.e. consumers were buying what they considered to be organic products previously anyway.

There are more signals of changes in what people eat. As reported by Ray Ryan last week for food in general in Ireland, cheaper cuts of meat are also in for organic in the UK. Worryingly, both fruit and vegetables sales were down. Some consumers are also switching to canned or frozen organic vegetables in place of fresh.

The location of purchase has also changed. This reflects both price and other considerations. ASDA, who spoke about their organic sales growth at a conference in Waterford last year, report growth of 25%. ASDA thus increased its share of the market from 8% to around 10%. Another low price multiple retailer, Morrisons, also reported growth in organic sales.

This reflects both increased organic purchasing by a broader socio-economic range of people and people from higher socio-economic groups changing where they shop.
Supermarkets that traditionally attract wealthier consumers have suffered: Tesco, Waitrose, Marks and Spencers and Sainsburys all reported losses in their organic sales.

In the analysis of the report, the SA point out that organic fruit and vegetables, Tescos largest organic area, have begun to pick up again in their stores.

The Co-op achieved double-digit percentage growth, increasing sales by 15%. This is a slightly unusual retail outlet in the UK. It is a consumer co-op with over 2200 stores, and recently took over the Somerfield supermarket chain.

While non multiple outlets (health food stores, box schemes etc) only reported 1.4% growth, farmers' markets were the exception. Growth in this route in the UK was high, at 18.6% to �23.7 million.

All told, for non multiple retailers, Around �11 million is now spent on organic products through independent retailers every week, or �568 million. This compares to �1.54 million through the multiples.

The report also calls for an improvement in the way the organic movement coveys its messages: a perhaps unexpected example of an underreported fact is the following: organic fruit and veg from box schemes are consistently cheaper than those in supermarkets.

In many ways, the strongest signal from this report from an Irish organic farming perspective point to the need for new markets in mainland Europe. In many EU countries the market remains strong or indeed continues to grow.

To access the report, click here

the socio-environmental weight of air freight

Plenty of organic news out there at the moment, including yet more research to suggest that organic food is better for you than other food....discussion on this research to follow soon....
However, I came accross an interesting perspective on the Soil Association's decision to move towards fair trade for their certified organic air freight produce. (there's more going on there too, in relation to heated glasshouses and the overall caron footprint of the produce
Has the organic sector been hyjacked by greens? Is this one of the ugly faces of protectionism, as the FT suggests? Or is it a socio-ecological synergy, a win-win situation to help consumers whilst improving the planet?