Soil Association Market Report 2010

The current economic climate is said to be the toughest in the past 20 years, with trading conditions also being very difficult for many organic businesses. In 2009, sales of organic products in the UK were worth 1.84 billion £. Even though this represents a decline of almost 13 % in organic sales, organic milk, baby food and home cooking ingredients resisted the downward trend. Baby food even increased by almost 21 %, and organic beauty products increased by a third to 36 million £.

Despite this drop, sales of organic food were still more than three times higher than ten years before, and 50 % higher than five years ago, the Soil Association Market Report revealed, and organics have started to pick up again in the early months of 2010. The Soil Association predicts that they will return to growth again this year, with market expansion between 2 % and 5 %, and there are already some clear signs that this is happening.

Tesco, for example, reports that its sales of organic vegetables are increasing again after more than a year of decline. Tesco and Waitrose, whose combined share of organic sales is more than 45 %, predict growth this year of 1 % and 3 – 5 % respectively. Rates of decline have slowed significantly in all categories of organic products in the first two months of 2010, with a return to growth for products as diverse as cider, flour, tea, herbs and spices and cooking sauces. (Picture: Tesco in London)
 

Among the three supermarkets with the biggest organic market shares – Sainsbury’s, Tesco and Waitrose – it was Waitrose that proved the most resilient in the recession. Its organic sales fell by only 3.5 %. Multiple retailers accounted for 73.7 % of the organic market (loss in sales compared with 2008: 12.2 %), box schemes/home delivery/mail order for 8.4 % (- 9.8 %), farm shops for 1.8 % (- 13.8 %), farmers' markets for 1 % (- 20 %), catering for 0.9 % (- 10 %), and other independent retailers for 14.2 % (- 17.7 %). (Picture: box from Riverford Organic)
 

Organic land in Great Britain has increased by 9 % and in January 2009 amounted to 743,516 hectares (4.3 % of all agricultural land). The amount of land in conversion to organic fell by 5.6 % to 149,103 hectares, suggesting that the rate of conversion is slowing. Dairy products remained the most popular category in 2009, accounting for 33 % of sales. Fresh fruit and vegetables accounted for 26 %, home cooking ingredients and beverages for 6 %, and red meat for 5 %. The three biggest categories of organic food in terms of retail sales value - dairy, fresh produce and fresh meat - fell by 5.5 %, 14.8 % and 22.7 % respectively in 2009. Meat and fresh produce were among the products where supermarket price differences between organics and non-organics were most pronounced. Price differences for organic milk and organic baby food were relatively modest. (Picture: Planet Organic in London)

Shoppers reduced their spending – the proportion of households buying some organic food fell slightly from 88.9 % to 88.3 %. Leading retailers reduced organic ranges and shelf space. On average, consumers bought organics 16 times during the year, compared with 18 times in 2008, and spent 2.9 % less on organics per shopping trip. Consumers changed their habits – for instance, they went for canned and frozen alternatives to help avoid waste. Consequently, sales of organic fresh fish, for example, fell by 46 % in 2009, while sales of organic frozen fish more than tripled. 

Customers gave three main reasons for buying organics: they preferred natural/unprocessed food (40 %), they emphasised that the restricted use of pesticides was important (34 %), and they enjoyed the better taste of organics (30 %). For 2010, the Soil Association Market Report predicts that organics will again attract shoppers - from across the entire social spectrum.
 

A significant coalition that established itself is Organic UK, with major pledgers like Yeo Valley, Rachel's, Organix and Omsco. The UK organic industry plans to run a three-year integrated marketing campaign to help increase sales of organic products and promote the “organic brand”. The campaign, which will include significant press advertising, aims to drive a 15 % increase in sales per year over the three years. Organic UK has already surpassed their initial target of 300,000 £ funding per year, which shows the enormous commitment from the industry to run a generic campaign. The funding application, which will double the campaign budget to more than 600,000 £, is now with the EU, and we will be advised on the outcome of the application in July 2010. In the meantime, the Organic Trade Board is running a PR based campaign to promote the organic industry, as a kickstart to the main campaign later this year. (Picture: some of Yeo Valley's products)

http://www.organicuk.org/