Finland’s Best Sellers Abroad Oats And Liquorice

The Finnish organic industry has cornered a stable niche market in the last few years. However, the market is certainly not functioning perfectly, partly because the logistics are a special challenge in a country whose land area is roughly the size of Germany but whose population is only around 5 million.

Picture: Finland at BioFach

‘Consumers really are interested in organic products, but because the market is so small there are many critical points on the way from the field to the table.’ This is the view of Minna Kanten who is the  manager of Finfood Luomu. This is an independent organisation that is financed by the Finnish  Ministry of Agriculture and which supports the development of  the organic sector with information and marketing and also, for example, organises the national organic weeks every year in October. Luomu is the Finnish word for organic and is an abbreviation of the word ‘luonnonmukainen’ which approximates to ‘natural’.

Last year 6.6 % of agricultural land in Finland was farmed organically. However, according to A.S.Nielsen, organic products had a market share of only 1 - 1.5 % in the case of food. 40 % of organic food and 30 % of all food was sold in Helsinki and the surrounding region, where more than a million of the 5.2 million Finns live. Approximately 20 % of consumers always buy some organic products, 40 % buy organic products from time to time and a further 40 % are not interested in them at all. A group consisting of only 4 % of consumers is responsible for half of all organic purchases. Minna Kanten explains that even in their case organics represent only a part of their overall consumption. "This means that if these people with the most interest in organics spent a few extra Euros each month, we could achieve considerable growth", she says, and points out that the whole Finnish organic market shows a turnover of about 73 million Euros.

In a survey commissioned by Finfood Luomu, the majority of consumers stated that they would not buy more organic food this year than  previously. But, according to Minna Kanten, this is not the whole story because "may be people simply do not believe that the trade will make new organic products available." In fact, the supply of organics varies greatly from one supermarket to another, depending on whether  the management are committed to organic products or not. Nevertheless, even where there is some commitment the choice remains limited. This state of affairs applies above all to fresh fruit and vegetables but organic meat is difficult to find and ready-to-serve meals are still rarely seen. There is a complete absence of snacks and organic poultry.  There is therefore capacity to increase the proportions of organic products in individual product groups.  As a proportion of total turnover, organic products account for 6 % of cereals and cooking oils, 3 % of vegetables and about 2.5 % in the case of eggs and milk.

The usual retail chains are responsible for almost 90 % of organic turnover in Finland. The company that is most involved in ecology is the Kesko concern, that with its K-stores has a market share of about 35 % in the Finnish food retail sector. In 2004 Kesko stocked 450 organic products, 32 under its own brand Pirkka Luomu. The proportion of organic products in the total food turnover (3.8 thousand million Euros) is estimated to be approximately 2 % by the enviroment expert Merja Saarinen from the associated company Ruokakesko that is responsible for food.  She describes the state of affairs: "In the case of all product groups apart from coffee, tea and cocoa we have problems in finding sufficient quantities for all our branches across the country."

The strongest competitor is SOK, that increased its market share to about 40 % through the acquisition in September of the Finnish Spar retail chain. The S-stores and Sokos department stores sell the considerable figure of 620 organic products. In reply to enquiries, organic turnover is given as approximately 20 million Euros, which is however less than 1 % of total turnover. In a comparison of a number of branches in the capital, there are fewer organic products to be found in the S-stores than in the K-stores of Kesko. The latter also have clearer shelf  labelling to indicate that items are organic as well as  hanging signs  and  shelf advertising to catch the eye of passing customers. You find a good selection and wide variety of products that you can normally only  buy in organic shops, in the food department of Stockmann, a department store chain located in the big cities in Finland (for example, Helsinki, Tampere, Oulu, Turku).

In 2004 the organic turnover of the supermarkets decreased slightly. At the same time, however, the market outside the conventional retail food trade grew by 29 %. It was, above all the organic shops (Minna Kanten estimates that there are about 30) together with direct selling by small producers to, for example, canteens and restaurants that helped to create growth. In her view, a growth rate of 10 % in organic sales can be expected in the next few years  in the conventional and whole food retail trade, with purchases by catering  kitchens rising by as much as 15 %. "The retail trade sees organic products in a very positive light. Unfortunately, the processing industries are not really interested", she says. A note of regret: last year hundreds of farmers changed from organic to conventional farming because they could only sell their produce as normal products without the organic premium. The large meat concern Atria had already abandoned organic meat and left the market to smaller producers who, however, are often too small to supply the trade. Now consumers are complaining that not enough organic meat products are available.

The dairy company Valio, the largest food producer in Finland, has a total turnover of 1.6 thousand million Euros, with the organic share accounting for a mere 0.8 %. "Because there is not sufficient demand for organic products, we have to sell 40 % of organic milk that comes from our farmers as conventionally produced milk", says Pia Kontunen, the head of communications. For this reason, innovative products are more likely to come from smaller enterprises. An example is Sunspelt: the products (picture) of this one-man operation have made Finns more familiar with spelt, and the company is now planning to export products as well.

Currently Finland exports organic food to a value of ca. six million Euros a year, with the most important markets being Britain and Germany. Almost half of exports consist of oats that are of excellent quality due to the northern climate. Grain is exported mainly by the companies Pohjolan Luomu and Helsingin Mylly with its subsidiary Polar Mills. The second important product is organic liquorice. According to Erkki Poytanieme, the head of the export ring Organic Food Finland, the two Finnish companies Makulaku and Halva produce half of world output of organic liquorice. Potatoes in the form of potato flour and starch are exported by the company Finnamyl and as flakes by Norrgard. Among other exporters are Riitan Herkku (wild berries) and Bioferme (Yosa, an oats product comparable to yoghurt). Sysman Luomuherkut is a small enterprise that produces muesli, veggie burgers ingredientsand onion soup. There are also two exporters of natural textiles: ecological knitted clothes are produced by Anne Linnonmaa and baby clothes, underwear and bed linen by  Ruskovilla.

Links:

www.organic-finland.com
www.pohjolanluomu.fi
www.helsinginmyll.fi
www.makulaku.fi
www.halva.fi
www.riitanherkku.fi
www.bioferme.fi
www.sysmanluomuherkut.fi
www.sunspelt.fi
www.annelinnonmaa.fi
www.ruskovilla.fi