Soil Association: Organic Market Report 2009

Sales of organic food in the UK increased by 1.7 % to over 2.1 billion pounds last year. Although there was overall growth in organic sales in terms of value, sales volumes in a few categories of organics declined. The Soil Association’s Organic Market Report revealed an increase in sales of organic food through farmers’ markets and at Asda, and also growth in some new, small organic areas like textiles, health and beauty products. Organic shoppers have been tightening their belts: they shopped less often, bought fewer premium products and prepared foods, and switched to lower-cost retailers. (Picture: Whole Foods London)

According to the Organic Market Report, there is a core of consumers who do not compromise on their organic principles despite the credit crunch. These consumers would rather cut their spending on eating out, leisure activities and holidays and buy cheaper cuts of organic meat or frozen organic vegetables. 36 % of these committed organic consumers expect to spend more money on organic food in 2009, and 15 % expect to spend less. Some organic consumers are turning to independent outlets such as farm shops, farmers’ markets and box schemes. (Picture: Whole Foods Market in London)

Price comparisons over recent year have shown that organic fruit and vegetables are consistently cheaper through box schemes than at the leading supermarkets. The Soil Association’s Market Tools/ZOmnibus opinion poll for The Organic Market Report 2009 asked organic consumers to rate the importance of nine factors in motivating them to buy organic products: quality and taste; avoiding pesticide residues; animal welfare; fair prices/wages for farmers; wildlife conservation; avoiding food additives; avoiding GM ingredients; wanting to know where food comes from; and concern about climate change. All nine factors were regarded as important by more than three-quarters of respondents. Among respondents who were not currently buying organic food over a quarter said that they would like to have better information about organic products.
 

According to TNS data, nine out of ten UK households buy organic food. Organic food attracts shoppers from all income levels and a wide range of backgrounds. The age group who spend most on organic food are people between 35 and 44 - 19% of organic shoppers but 25 % of spend. On average, UK consumers purchased organic products 18 times in 2008 (19 in 2007). The average expenditure per household per year fell from £51.28 in 2007 to £50.55 in 2008. Market Tools found that women (81 %) were more likely to buy organic products than men. (Picture: Tesco fruit and vegetables)

Market Tools/ZOmnibus also found that a bigger proportion of organic consumers (53 %) said they bought more organic products from Tesco than from any other retail outlet. The second most important supermarket was Asda (37 %), followed by Sainsbury’s (35 %) and Morrisons (28 %).

25 % of interviewees stated that they bought organic products from farmers’ markets, 24 % from farm shops and 21% from local greengrocers, butchers, bakers and other high-street independent retailers. 3 % said they had a weekly vegetable box or other home delivery.  TNS reports that 85 % of UK shoppers buy organic products from at least one of the four biggest multiple retailers – Tesco, Sainsbury’s, Asda and Morrisons. The average UK shopper buys an organic item at least once a month from one of these four retailers. TNS Worldpanel data show that the main organic dairy products purchased by consumers are fresh fruit and vegetables, accounting for 29.5 % and 26.2 % of spend respectively. Vegetables account for 16.3 % of spend and milk for 13%. 6 %  goes on fresh red meat, 3.9 % on eggs and 2.9 % on poultry. 
 

Sales through multiple retailers increased by 1.8 % in 2008, and reached about 1.54 billion pounds. Sales through non-multiple retail outlets - including box schemes, mail order, farm and health-food shops, farmers’ markets and catering establishments - increased by 1.4 % to 568 million pounds. Farmers’ markets expanded sales by about 18.5 % to approximately 24 million pounds in 2008. Around 11 million pounds are now spent on organic products through independent retailers every week.
 

Retail sales of organic products in the UK, 2007–08 
 

(Source: Soil Association Organic Market Report 2009)

Asda was the most successful multiple retailer in terms of growth of organic sales, increasing its sales by 25 % in 2008 and its market share from 8 % to around 10 %. It consolidated its position as the fourth-largest retailer of organic food and drink, and hopes to secure a 15 % market share by the end of 2009. Asda’s organic fruit and vegetables increased by 60 % after the decision was taken to abandon a separate organic section and to integrate produce with the non-organic equivalent. A similar process of integration is planned for processed products in 2009. Sales of organic meat, cereals and bakery products increased by 25 %, 16 % and 12 % respectively. Fish sales fell by 14 %. In 2008, organic sales at the Co-operative increased by 15 %. Sales of bread and bakery goods increased by 47 %, organic dairy and eggs by 18 % and organic fruit and vegetables by 36 %. Organic meat sales dropped by 12.5 %, and sales of fish, ready meals and non-alcoholic beverages also fell.
 

From a quite small base in terms of its volume of organic sales, Marks and Spencer doubled organic lines to 590 and increased sales by 40 % in the financial year 2007–08. According to TNS data, M & S organic sales fell by 10 % in the year to the end of January 2009. The retailer remains committed to expanding organic sales as part of Plan A, its five-year eco-plan aimed at becoming a carbon neutral business by 2012. Morrisons is one of the retailers whose sales of organic products have benefited from price-conscious consumers. While some shoppers are sticking with their usual supermarket and economising by cutting out or reducing spending on more expensive products, others are switching allegiance to lower-price retailers. Morrisons stocks over 350 organic lines. TNS data indicate that Morrisons’ sales of organic products increased by 3 % in the year to the end of January 2009.
 

Sainsbury’s stocks around 800 organic lines, of which 450 are part of the Sainsbury’s SO organic own-label range (picture). Organic products account for 2 % of all the food and drink sold by the company. 90 % of the produce packaging for the SO organic range is now recyclable or compostable. Sainsbury’s saw its organic sales decrease by 4 % in 2008. Tesco, the UK’s leading organic retailer, stocks more than a thousand organic lines. After a disappointing year in which sales fell by 9 %, it is planning a renewed focus on promoting organic food in 2009. Organic products accounted for close to 2 % of Tesco’s food and drink sales at the end of 2008. Tesco plans to review its sourcing and packaging strategy in the coming year, to increase local and UK sourcing and to reduce the amount of packaging for its organic lines. Sales of organic fruit, salad and vegetables, which account for 42 % of Tesco’s organic turnover, started to pick up again early in 2009. Tesco sells over 100 fresh produce lines and is currently extending distribution.

Waitrose has the biggest range of organic products among the leading multiple retailers, stocking 1,700 organic lines. Organic products account for about 7 % of food and drink sales. Lower-cost organic meat products such as burgers, mince, chicken wings and drumsticks have grown by 25 %. Vegetables, meat and poultry also grew compared with the chilled or fresh versions. Waitrose has seen growth in organic wine sales, in ice cream, fillet steak and some bakery and chocolate products. Sales of organic products through independent retail outlets were worth an estimated 568 million pounds in 2008, a 1.4 % increase since 2007. Around 11 million pounds are spent on organic products through independent retailers every week.

A report by the Institute of Grocery Distribution published in June 2008 found that farm shops were the fastest growing format for food retailing. FARMA estimates that there are 4,000 farm shops throughout the UK. The Soil Association estimates that the value of organic produce sold through farm shops was close to 38 million pounds in 2008, a 1.5 % increase in sales since 2007. A survey conducted by FARMA on behalf of the Soil Association in February 2009 suggests that organic sales accounted for an estimated 9.5 % of the turnover of farmers’ markets in 2008. FARMA reports that shoppers particularly appreciate the freshness, quality and traceability of produce sold through farmers’ markets and farm shops.

Customers also enjoy the sociability of shopping at these outlets, together with the knowledge that producers are receiving a much bigger share of the retail price than they do in the case of supermarket sales. The market for organic box schemes has become more competitive. Alongside individual producers, bigger operators such as Riverford Organic Vegetables and Abel and Cole have expanded significantly. Abel and Cole increased turnover by 21 % in the year to the end of August 2008.The number of boxes stayed constant at about 35,000 a week. Riverford Organic Vegetables reports that sales increased by 6 % in 2008.

In January 2009 there were 37 businesses licensed by Soil Association Certification Ltd to run organic catering and/or restaurant operations, a 30 % reduction since the last edition of The Organic Market Report was published two years ago. The number of non-licensed establishments serving organic food far exceeds the number of certified businesses, as there is no legal requirement for restaurants selling organic food to be licensed. Licensed businesses include the retailer Planet Organic, London gastropub the Duke of Cambridge (picture), the Penrhos Court hotel and restaurant in Herefordshire, and a number of farm shop cafés.

There are also two organically certified children’s day nurseries in Surrey and Gloucestershire. Some modest progress has been made in procuring food from UK producers to be served in public catering as a result of the Public Sector Procurement Initiative that was launched by Defra in 2003 to support the government’s sustainable farming and food strategy for England. The main public sector food buyers have increased the proportion of domestically produced food they buy from 64 % in 2006–07 to 66 % in 2007–08, although the proportion of organic has decreased from 9 % to 6 %.

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