2006 year of truth for organic in Dutch supermarkets

Thanks to a shrinking food market, in the second quarter of 2005 the organic food market share grew 0.2 % to a total of 2 %. The dwindling market is the result of the constant price war. In the meantime, the prices in the Dutch supermarkets are some of the lowest in Europe; consequently, the price gap of organic products has increased. Yet the organic market seems to be picking up. Behind the scenes, the Task Force for market development of organic agriculture created by the government is showing moderate results.

Picture: Coop Varsseveld

The Task Force chain managers of fruit & vegetables and meat & dairy expect that the preparations made in 2005 will bring about visible results in 2006. Albert Heijn has rationalized its organic range, but in 2005 as well, with a market share of roughly 60 % it remains the leader in the organic market. In a large number of other supermarkets the brand Bio+ is being introduced with great vigour. Supermarket chain Coop opened a pilot shop, which anticipates the growing general trend toward health. In 2006 it will be clear to what extent the consumer wants to join in with the developments that have been initiated.

With an average turnover share of a good four percent, potatoes, fruit & vegetables are the most popular organic product group. The market share of organic potatoes is as high as six to seven percent. This percentage share continues to grow very slowly, but the organic potato remains a favourite introductory product. A great deal of advertising is made for potatoes, particularly at trade shows. And at the popular (over 19,000 visitors) Eten & Genieten [Eat & Enjoy] trade show (RAI 2-4 December 2005) there was a stand aimed at bringing the organic potato to the attention of the public at large. Following the ‘normal’ potato, the organic potato is also anticipating the trend toward convenience foods. Both Celavita and Oerlemans have included organic products in their range. Task Force chain manager Potatoes, Fruit & Vegetables Kees Rijnhout (picture) expects that “organic convenience potatoes will become an absolute trend in 2006.” Rijnhout also sees a trend toward convenience in the organic segment of vegetables grown outdoors. ‘For vegetables such as white cabbage, celeriac and winter carrot, a number of supermarket chains have already switched over to organic for some time, but now you also see products such as hotchpotch and sliced red cabbage. This is also favourable for the price difference, according to Rijnhout. ‘Organic cabbage is considerably more expensive than standard culture, but the costs of processing are the same. The more added value, the closer the prices come together. At AH I saw that the organic deep-frozen soup vegetables were even a bit less expensive in comparison to the standard vegetables. So the convenience trend is very favourable for organic vegetables.’
 
New products are emerging in the greenhouse and fruit segments. For example, Albert Heijn is introducing various tomato varieties, selected according to flavour, in one package. Apple growers are expanding the culture of more recently developed varieties, such as the “Red Topaz”. Rijnhout is also noticing a growing demand for organic soft fruit. These are not the easiest products to grow organically, however. In the meantime, research is being conducted and standard growers also appear to be interested in applying their experience and expertise to the culture of organic strawberries.

The goal of the covenant concluded between the market parties and the Task Force is to realise a five percent turnover share of organic products at the end of 2007. PVF (potatoes, vegetables and fruit) is now above 4 %. At supermarket chain Dekamarkt, PVF even has a turnover share of 7 %. The chain manager does not think that the continuing price war poses a highly prohibitive factor for the growth of organic PVF (potatoes, vegetables and fruit) in the supermarket. Rijnhout: “Organic offers supermarkets possibilities for profiling themselves in a distinguishing manner. Price differences can be a problem, but the volumes of organic PVF are increasing. This offers me sufficient security to count on the longer term as well. I would dare to put my money on 5 to 6.5 % PVF before the end of 2007.”

Maurits Steverink (picture), meat and dairy chain manager, is also positive about the developments that have been initiated in 2005. “Albert Heijn was a leader with its organic policy for years, but this last year other chains have also started looking seriously at the positioning of organic in their shops. Plus Retail is boosting the development of the brand Bio+,” adds Steverink. “With a new type of store focusing on the themes of health and wellness, Coop is adding an extra dimension to it. Chainwide, we are seeing the move toward professionalisation aimed at reaching the consumer. But organic remains a matter of persistence, and ultimately, it's the consumer who decides.”

The most important trend within the meat segment is that organic meat is now actively brought onto the market. The customer is actively approached with attractive ranges. Examples of this new approach include the organic meat range under the Bio+ brand and the range of Commandeur Vlees. Meat products / sliced cold meat are doing particularly well. It is expected that organic sliced cold meats will become a “normal” part of the supermarket range.

A shift in consumer approach is becoming evident in the organic dairy sector as well. Anticipating the normal dairy trends, organic ranges are being expanded with drink yoghurt and fruit yoghurt (picture). Albert Heijn is taking a lead in this dimension. Specialty shops still have an advantage over the supermarkets in terms of organic cheese, but organic cheese is also starting to advance in the supermarket. "The figures of the third quarter show a turnaround, according to Steverink. Organic cheese is now displayed in great quantities under the brand name Bio+ at the supermarkets Plus, Dekamarkt, Coop and Konmar. Albert Heijn has also devoted more attention to the basic range." Consideration is also given to the packaging of both organic ‘wet’ dairy and cheese. ‘With an improved presentation, organic dairy can easily tackle the competition with more traditionally marketed products,’ according to Steverink. "To summarise, it is not yet visible in the figures, but preparations for growth have been taken."

As regards future developments, Steverink mentions the possibility of creating existing health concepts on the basis of organic raw materials. "A fine example is the Viva Natura cheese from Aurora. Health drinks based on organic dairy are also possibilities. We stimulate this development, also especially because you reinforce the concept of “health” - so organic serves as a concept reinforcement rather than a concept."

Originally developed as a supermarket brand for the products of De Groene Weg/Vion butcher, Bio+ is developing itself into the brand for organic fresh products in many supermarket formulas. In 2006 popular grocery products such as tinned vegetables and jam were added to the range. In principle, the Bio+ target group comprises all Dutch supermarket chains, with the exception of Albert Heijn and the discounters. Plus Retail broadened the brand into a totally fresh brand for organic products. At the beginning of this year the brand became independent; it later entered into cooperation with fresh food producers who were willing to exchange their own "biobrand" for “Bio+”. Reinier Heijenberg, Secretary of the Stichting Merkartikel Bio+ (Bio+ Brand Article Foundation), says this about this cooperation: "Together we want to create a platform for Bio+ so that we can be more successful than any other participants could alone. For the consumer, we want to make Bio+ just as clear as Minister Kunast did in Germany with the Biosiegel. Research has shown that within a short time, the Biosiegel quality mark had sixty-nine percent name familiarity among the shopping public, much higher than individual brands such as “Bioland”."

Increasing the purchasing frequency is high on the agenda for 2006. In order to realise the highest possible efficiency, size of scale will have to be applied. As a new brand in 2004, Bio+ was experiencing growth percentages up to a good forty-five percent. “Enthusiasm among entrepreneurs is high, but it will only remain so if we are all able to ensure that the consumer will continue to buy Bio+ next year”, according to Heijenberg, who puts it into perspective. “But we can definitely expect to double the current out-of-factory sales of roughly 3.5 million euros next year.”

Sources: Environmental Protection Society and EkoMonitor (www.biologica.nl/eko-monitor/)

The sale of organic foods in the supermarket channel dropped 6 % in the second quarter of 2005 compared to the same period in 2004. Yet according to spokesperson Els van Dijk, the sale of organic products (picture: milk) at Albert Heijn is steadily growing. As to whether that will also apply to 2005, Van Dijk cannot say. According to Albert Heijn, it has a market share of 63 % of the organic products that are sold via the supermarket channel. This makes AH the undisputed market leader. The organic range currently comprises 270 articles. According to Van Dijk, the range is regularly expanded with new products, while articles that consumers do not need or want, such as organic candy, are abandoned. Next year organic products will also remain a spearhead within the supermarket chain. "Over the last few years, we have invested heavily in this range and we are going to continue to focus on organic products," according to Van Dijk. "But if the consumer doesn't buy it, we may have a problem. The big price difference remains; many people consider organic meat, for example, to be too expensive."