Spain: Double-digit growth of the organic market

Spain changes a lot of land into organic cultivation. Photo Karin Heinze

With more than two million hectares Spain has for the first time taken the lead in Europe concerning certified organic land. This is one of the results of a new report by the organic consultancy EcoLogical. The organic market is developing well, the main reasons being increasing demand, better availability and investment on the part of producers. The report  has been compiled from a number of sources and provides data on the current situation in the Spanish organic sector.

In his foreword EcoLogical's CEO Diego Roig is pleased to announce that Spain is now on the “organic world stage”. He attributes this positive development to a number of factors. Among others, the Government (Agriculture Ministry MAPAMA) launched the “Strategy for Organic Production 2018-2020” with the aim of consolidating growth, strengthening the business competitiveness of operators, increasing the awareness of the population and improving marketing and consumption channels. According to the EcoLogical report, another driver of growth is the better availability of organic products. This is down to the growth and development of the independent and specialised channel but equally to food-conscious millennials, who have become the main organic consumers in Spain.

Europe´s front-runner in organic cultivated land

In terms of certified organic land Spain has taken the lead in the European Union for the first time and, with 2.01 million hectares, now occupies fifth place in the global ranking of largest areas or organic agriculture. After a year of strong growth, with an increase of 18.34% in the registered organic agricultural area in 2014-2015, this trend slowed down in 2015-2016,  with growth of just 2.5% - the equivalent of 50,000 hectares. The 2.01 million hectares have ranked Spain as the European leader in production, followed by Italy with 1.80 million hectares and France with 1.54 million hectares. The main crops are permanent pastures (52% of 1.05 million hectares), which is more than half of the available agricultural area, followed by grains with 0.21, olives with 1.96, nuts with 1.35  and vineyards with 1.06 million hectares. The number of national producers exceeds 41,700, an increase of 19.7% in two years.

The Spanish organic market could maintain its high growth rate: with an increase of 12.52% in 2016 to turnover of €1.685bn euros (1.69% market share), Spain ranked globally among  the top ten organic markets. Hence the recent trend for double-digit growth is continuing, contrasting with the flat growth of overall food retail. Per capita consumption rose by 12.58% from €32.27 to €36.33 per person. The organic market share rose by 11.73% in the period 2015-2016 and accounts for 1.69%.

Infographic © Ecological.bio: Spanish Organic Market.

Demand rising -  availability improved

In the past one of the main obstacles in the development of the Spanish organic market was the lack of availability and accessibility of organic products, explains Mr. Roig. He says that this has now been improved in two main ways. The first has to do with the growth and development of the independent and specialised channel and a high level of investment on the part of the manufacturers, plus product launches. The second reason is the better promotion of organics in modern trade companies. Likewise other channels, such as catering, direct sales and online, have experienced notable growth.

The per capita consumption was rising more than 14% from 2012 - 2016. Graphic © Ecological.bio/ source MAPAMA Prodescon.

The new organic consumer is young

A characterisation of organic customers carried out in 2016 shows that 30 % are younger than 35 years of age. This is the generation of people born between 1980 and 2000 – also known as millennials. They have become the most important consumers of organic food in Spain. The younger generation thinks more about health and has a growing social and ecological awareness. The "Consumo Eco y Bio 2017" study conducted by IRi in 2017 shows that the main reason for consuming organic products is that they contribute to a healthier lifestyle. The absence of synthetic chemical substances, the high quality and taste of the products are also important reasons for the purchase of organic products. The trend towards vegetarian and vegan food plays a role too. The expected increase in their disposable income and the fact that the millennials are now starting families who are actively encouraging them to look for healthier foods suggests a further increase in demand for organic products.

Food industry moving towards organics

Traditional organic manufacturers have without exception extended their assortment, says EcoLogical. Additionally, important players have become involved, with many national and international agri-food companies having entered the organic sector in the last two years.

The food industry invests in the Spanish organic market. Graphic © EcoLogical.bio

Challenges: re-organisation of sales channels and balance of trade

According to the EcoLogical report, there are some challenges to growth in the next few years. A part of the specialised and independent channel is undergoing an important restructuring process. The smaller and more specialised  ecoshops and regional distributors are facing new competitors both physically and online, mainly in terms of retail chains as well as the launch of new organic ranges by the agri-food industry. (The second part of our article is dedicated to the development of Spanish retail).

As far as the balance of trade is concerned, there is a clear imbalance between the higher imports of organic products compared to exports. Since imports represent a higher value added than exports, this can lead to competition problems in the long term. Nevertheless "the industry looks to the future from a very positive perspective, which is very likely to continue the growth trend and will reach a market volume of two billion euros in 2018," said Roig.

You can download the Ecological report.