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France: significant organic growth across the board in 2015

by Kai Kreuzer (comments: 0)

The ceiling of the Biocoop store “Dada“, opened in Paris in 2015, Photo Kai Kreuzeris made of a large number of glass blocks

The organic market in France has been growing steadily for years. Turnover in the whole organic sector has now reached €5.5bn (preliminary estimate for 2015), which equates to growth of 10% compared with 2014. The number of companies in the organic industry, from organic farmers, processors and wholesalers to retailers, has risen to 42,216, a pleasing expansion of 7.2%. We have also seen a significant development in the conversion of conventionally farmed land to organic management, with expansion of 17% in just one year – more than five time the area of converted land in Germany where the conversion rate was a mere 2.9%. Thus France, with 1.3 million hectares, – 0.3 million in the process of conversion - has surpassed Germany in terms of organically farmed land. The figure for organically managed land in Germany is 1,077,950 ha, and for many years we’ve seen hardly any growth beyond approximately one million.

If the number of new converters is again comparable this year and next year, we can expect France to overtake Germany in organic land as a percentage of its total agricultural land area. At the end of 2015 the figure was 5%, more than double the 2% registered in 2007. Although the proportion in Germany is already 6.4%, low producer prices and high land leasing prices are a brake on the willingness to convert to organic.

Elisabeth Mercier has been the very successful head of the Paris Agence Bio for over a decade. Photo Kai Kreuzer

More than 100,000 organic jobs have been created

It’s also interesting to see the trends in the jobs created by the organic sector. The semi-state Agence Bio publishes this information together with other industry data once a year.  In total, 100,000 people are currently employed. Around 69,000 work on the nearly 29,000 organic farms and they constitute approximately 10 % of all workers in the agricultural sector. 30,000 people work in around 13,500 companies involved in processing and in the import and export trade. Another 2,000 are employed in control organizations, research and consulting.

The clear trend to organic, that is actively supported by Agence Bio, is likely to continue in the years ahead. Nine out of ten French people stated in a survey carried out by the agency that they buy organic products at least occasionally, but 65 % are regular purchasers of organics. An important reason for their decision in favour of organic products is the environment: 78 % of the surveyed people are of the opinion that organic agriculture can help to solve environmental problems.

Carrefour is the number one in the retail food trade in Europe and number three in the retail food trade worldwide. You even find organic products in corner shops in Paris. Photo Kai Kreuzer

 In terms of growth, the specialist retail trade can keep up with the conventional food retail trade

The wholefood trade has always played an important role in the sale of organic products. According to the data of Agence Bio it accounts for a third of the total market. On the one hand, we find increasing sales are down to several mostly rapidly expanding organic chains like BioCbon, Naturalia, Satoriz, La Vie Claire and Eau Vive and the purchasing networks Biocoop and Biomonde. They now have a market share of 28 %. On the other, there are the independent entrepreneurs, whose stores account for 7.5 % of all organic sales.  Together, they and the organic chains are responsible for 35.5  % of all organic turnover in France.

However, if we include direct marketing and artisan food process in the independent sector, we find that with 54 % more than every second euro spent on organic food benefits small and medium size enterprises.

The biggest players in the French organic market are, as in Germany, the big food corporations. In recent years they have listed and advertised more and more organic products. These companies include Super U, Monoprix, Casino, Carrefour and Leclerc, with their thousands of supermarkets and outlets across the whole of France. Their market share in the organic sector is 46 %. An exception is the organic chain Naturalia (approximately 100 organic supermarkets) that was bought up by Monoprix a few years ago. Currently all sales channels in France are developing with similar dynamism, although the starting positions are very different. The specialist retail trade and the conventional food trade are registering the biggest growth.

Clear lines and shapes and white in contrast to the coloured packaging are features of the “Dada” organic supermarket. Photo Kai Kreuzer

While in both France and Germany an increasing number of small organic stores with a retail area under 150 m² are closing because of age and lack of profitability, in the first half of 2015 there was an increase in the number of stores and retail space. Only 30 mainly small shops closed but at the same time 70 new specialist stores were launched. The reasons for a third of the closures were insolvency, in 5 % it was different job prospects and in 63 % of cases there was nobody to take over the business. Bio-Linéaires reports that after deducting the closed shops the newly created retail space in the first half year comes to almost 14,000 m².

The conventional retail food trade is increasingly raising its profile with low-cost organics

Exporting processed organic goods does not play a big role in France. In 2012 it came to only 7 %. The reason is that French products can easily be sold on the domestic market. Second is the fact that they  tend to be high-price goods and this creates problems in markets with high competitive pressure, as for example in Germany. The categories with the highest proportion of exports are beverages (16%) and dairy products (4%).

Dada has a big department with a whole range of basic food products for customers to serve themselves. Photo Kai Kreuzer

For years French manufacturers of wholefoods and natural goods have experienced a good business environment with a strongly growing retail sector. The increase in turnover in the processing sector increased from 2012 to 2013 by 14 % and rose in value to €2.86bn (2013). 42% of wholefood manufacturers brought new products to market.

With a rise of 10%, sales of organic products via the conventional retail trade developed well in the first half of 2015. 2.7% of the turnover of the conventional trade is attributable to organic products and, as we can see from the data  of the market research institute IRI quoted by Bio-Linéaires, a number of product groups are outstanding and constitute a much higher proportion of sales - ]in the case of long-life bread 14.9%, butter/milk/eggs 12.2 %, fruit juices 7.9 % and infant food 6.2 %. However, the conventional trade has been increasingly using the organic sector to raise its profile by means of low prices. This has resulted in a competitive struggle for the best consumer prices, described in a study by Information Resources IRI, and in the medium term is leading to deflation, with prices falling across the board – a dangerous situation that is bound to have an impact on the price policy of the specialist trade.

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