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Italy’s Organic Market in the Process of Consolidation - An Overview of the Market

by Redaktion (comments: 0)

Observers of the market are agreed that the Italian organic market is currently undergoing consolidation, although at the same time positive tendencies are also apparent. This is confirmed both by various statistical studies and the data provided by some important companies. It is in agricultural production that a restructuring process can be seen. The number of organic farms reached a high point as early as 2001, with 56,400 holdings operating according to ecological standards on an area of more than one million hectares. Since that date, a decline has set in:

 

Picture: weekly market in Italy

 

(Pictures can be enlarged by click)

 

In 2003 only 44000 organic farms were registered and in 2004 there was again a drastic decline of almost 8,000 to 36 600 holdings. In total, only 41,000 players are left of the 60,000 on the organic market in 2001. Despite this, in terms of organic agriculture, Italy is still in the lead in Europe, accounting for 30 % of organic production and almost a third of organically farmed land in the EU (1168 million ha). In 2004, turnover amounted to approximately 750 million Euros in production, whilst the market segment as a whole had a turnover of 1.4 thousand million Euros (+ 8.5 %), of which the internal market accounts for 970 million. This constitutes 1.5 % of the food market and an annual per capita consumption of 20 Euros. (Data from various statistics/graphics SINAB, Information System for Organic Farming at the Ministry of Agriculture, www.sinab.it)

 

(Fig. 1 Organic Farms in Italy 1990-2004)

 

Although this development may at first sight appear detrimental, experts do not see it in such a negative light. For them, a concentration process is taking place that brings with it an increase in quality and professionalism in production. This is confirmed by the facts. The organically farmed area has not decreased dramatically, which shows that the existing farms have increased their size and are extending the area of production. However, it is also noticeable that production has dropped by 17 % compared with 2003, whereas imports have increased by 13 %. Even though there are only about 50 importers in the organic sector (120 in 2001), they operate on a large scale. Exports amount to about 430 million Euros.

 

(Fig. 2 Organic Operators, Italy 2000-2004)

 

Operators 2000 2001 2002 2003 2004
Farmers* 51,070 56,440 51,401 44,039 36,639
Processors** 2,817 3,947 4,346 4,422 4,276
Importers 67 122 155 12 50
Total 53,954 60,509 55,902 48,473 40,965

 

(*= farmers with processing facilities included; **= processors with import activities included)

 

According to statistics provided by the state-run institute Ismea, there was a decrease in sales of food in the organic sector of 3.5 % in 2004. Other surveys reveal that organic consumption is stagnating.  Operators in the whole food trade speak of overall stability. Not only are many manufacturers certainly growing but also wholesalers. Their growth may only be slow but it is steady. The important wholesalers like Baule Volante and Ki-Group report stability or slightly positive developments for 2004 and 2005. The growth of Ecor is even as high as double figures. Roberto Pinton (picture) from Consorzio biologico, an enterprise involved in the marketing of organic products, considers that many organic companies had a good year despite the economic crisis in 2004. For example, one of the biggest companies in the organic sector, the fresh produce wholesaler Brio S.p.A. was able to increase its turnover by 16.7 % to 26.6 million Euros in 2004, and for 2005 Brio is anticipating a turnover of 30 million Euros. Brio sells 85 % of its goods to the conventional retail food trade, to catering companies and also abroad. The leading wholesaler of fresh produce Apofruit kept its turnover stable at 32 million Euros. On the other hand, Pinton reports that many small manufacturers, specialist shops and farmers are experiencing problems.

 

The specialist retail trade of about 1,100 stores, “erboristerias“, weekly markets and on-farm direct selling continue to be the most important sales channel for organic food. These forms of selling generate about 60 % of organic turnover. However, the classic organic shops are losing market share compared with the conventional retail trade, which currently has approximately 1,700 outlets for organic products and accounts for 35 % of organic trade. Thus the conventional retail trade commands a large share of the distribution of organic products. (Picture: Il Riccio, Padua)

 

However, different aspects of the whole food retail trade have to be considered. Whereas the traditional specialist shops with up to 200 m² in 2004 suffered a drop in turnover in double figures, Italy’s organic supermarkets increased their turnover by 21 % and the conventional retail food trade by 3.5 %. In its statistics, Ismea assumes a total of approximately 50 organic supermarkets. Of these, 42 are stores belonging to the chain NaturaSi (picture) which has its headquarters in Verona. NaturaSi increased its turnover by 13 % in 2004 and the first half of 2005, and by as much as 19 % in April. In addition, there are a few large-scale stores belonging to retailers who were similarly pleased with the year 2004.

 

Investigations have shown that about 20 million Italians purchase organic products. According to a study by the farmers association Coldiretti, the profile of the Italian consumer of organic products is as follows: between 30 and 39 years old, resident predominantly in the big cities in the north and with a university education. Although this group does more than 50 % of its shopping in supermarkets, its members also buy in specialist shops, in markets, direct from farmers or through purchasing associations. They state that their purchasing motives are quality, taste and the authenticity of products. Almost 80 % of these customers are prepared to pay 5 – 10 % extra. However, 54 % would like to see more accurate labelling of organic products so that they can be more easily identified among all the products on sale.


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