Organic Wholesalers in Great Britain

Like other sectors of the British organic food industry, the wholesale structure has undergone rationalisation in recent years. The number of wholesalers has reduced as competition has stepped up across the industry. About ten wholesalers play an important role in the UK organic food industry. The leading companies are listed in the table.

Picture: Community Foods Warehouse

Wholesalers play an important role in the supply of organic products to specialist retailers. They distribute a wide range of organic products to organic food shops and health food retailers. Most wholesalers also double up as importers, bringing in a wide range of organic products from Europe and other regions. Community Foods is the largest importer of organic products into the UK. The company is also an important exporter, supplying a number of European countries.

Some wholesalers specialise in certain product groups. For instance, Clearspring specialises in ethnic foods and has a wide range of Japanese and Chinese health foods. Suma Wholefoods is the only wholesaler that deals in a wide range of chilled products. Essential Trading is a co-operative that focuses on ethical products. The number of wholesalers of organic foods has declined since 2001. Some have ceased operations due to unprofitable enterprises and others have consolidated their businesses. The largest wholesaler, Tree of Life, was formed as a result of a merger of two leading wholesalers in 2002.

A general illustration of the supply chain for imported organic products is shown in the chart. Although all wholesalers listed in the table do import organic products, there are a large number of companies that import. Organic commodities like beans, peas, grains, seeds, herbs, and spices are also imported by specialist importers that deal in non-organic products. Most imported organic products go through at least two intermediaries before reaching organic food retailers and health food shops. Some importers supply the retail trade direct, however the majority of products are distributed to wholesalers. The supply chain is much shorter for supermarkets, which like to deal direct with manufacturers whenever possible. Most of the organic foods made in the UK are supplied direct by manufacturers. Imported goods are usually supplied direct by importers to supermarkets. The lower number of intermediaries in the supply chain for supermarkets is partly responsible for them to market organic products at lower prices.

Chart: Distribution Structure for Imported Organic Products/Source: Organic Monitor

Table: Leading Organic Food Wholesalers in the UK

Source: Organic Monitor

Community Foods

Community Foods was formed in 1978 as a specialist distributor of health foods. It has grown to become a leading importer and wholesaler of organic and natural products. Reporting 65 million Euro sales in 2004, the company is the largest importer of organic foods in the UK. Sales increased by 25 % in 2004. The company is based in north-west London where it has a 4,500 m² warehouse, cash-and-carry outlet and offices. Community Foods is the only wholesaler with its own control laboratory that checks product quality and standards. It distributes organic products across the UK, to specialist retailers, supermarkets as well as food processors. Customers also include other traders, wholesalers, and packers. Commodities like seeds, grains, peas, herbs, spices comprise the bulk of organic food imports. Many of these organic products are marketed under its ‘Crazy Jack’ brand. Community Foods is also the exclusive importer of many organic food brands like Nature’s Path (Canada) and Vitasoy (Hong Kong). Organic foods comprise roughly 40 % of Community Food’s sales turnover.

Windmill Organics

Although not one of the largest wholesalers in the UK, Windmill Organics is a leading importer and distributor of German organic products. The company was formed in 1992 and has developed a strong brand for organic products. The Biona brand of organic products is found in a large number of supermarkets, organic food shops and health food shops in the UK. Windmill Organics is also exporting Biona organic products to countries like France, Norway, Denmark, the Netherlands and Italy. The Biona brand has a wide range of organic products that include pasta, spaghetti, sauces, juices, rice cakes, pizza bases, confectionary products, and dairy products. Nearly all these products are made in Germany.

Tree of Life

Tree of Life is the largest wholesaler of organic & natural foods in the UK. It was formed by the merger of Brewhurst Health Food Suppliers and Nature’s Store in 2002. The Dutch company Koninklijke Wessanen acquired both these wholesalers and then integrated them into one outfit, which operates under the Tree of Life name. Koninklijke Wessanen also owns leading organic food distributors in France, the Netherlands and the United States. The wholesaler has a 85,000 square foot (7800 m²) warehouse in Staffordshire, from where it distributes organic & natural products across the UK. Over 7,500 products are supplied by Tree of Life, which include nutrition supplements, health foods, and organic products.

Essential Trading

The Bristol-based co-operative is one of the oldest wholesalers of health foods in the UK. Formed in 1971, the company specialises in supplying organic, vegetarian, fair trade and specialty foods to independent retailers. Over half its 6,000 plus product range is organic. The company registered a record sales year in 2004 with sales rising by 25 % to 15 million Euro.

The Health Store

The Health Store, formed in 1932, is the oldest wholesaler of health foods & natural products in the UK. It is a workers co-operative that is owned by its 450 shop members in UK and Ireland. Its health food retailers report 20 % growth on average a year with the wholesale & buying division providing support services. Over 6,500 products are supplied that include organic foods, natural products, vegetarian foods and health products. Although The Health Store deals with a wide range of organic products, it does not import.

Goodness Foods

The wholesaler has a range of other 5,000 products of which around 2,000 are organic products. Health foods, natural products and organic foods are distributed by Goodness Foods to specialist retailers across England. The company has a wide range of chilled and frozen foods.

Marigold Health Foods

The London-based wholesaler distributes to specialist retailers within a 60-mile radius of the capital. The product range includes organic foods, health foods and natural products. Over 4,000 products are supplied by Marigold Health Foods, of which 60 % are certified organic. The company has a large warehouse in Kings Cross.

Infinity Foods

Infinity Foods is based in Brighton, East Sussex. The co-operative has over 30 years experience in wholesaling organic & natural foods to specialist retailers. It has over 5,000 products with many products marketed under the Infinity Own Label. The co-operative reported 23 % sales growth in 2004.

Suma Wholefoods

Formed in 1977, Suma Wholefoods is the leading co-operative wholesaler in England. The workers co-operative deals in a wide range of ethical, vegetarian and organic products. Based in West Yorkshire, it supplies over 6,000 products to organic food shops, health food retailers and independents across the UK. Suma Wholefoods reported 30 million Euro sales turnover in 2004.

Clearspring

This London-based company is a wholesaler of organic foods as well as producer / distributor of Japanese foods. It specialises in authentic Japanese foods like miso, balsamic vinegars, green teas and soya sauces. Many organic & ethnic foods are marketed under its Clearspring brand.

A growing Fresh Produce Market

The UK market for organic fruit & vegetables is the second largest in Europe. The market is characterised by a large number of conventional fresh produce companies and with just one dedicated organic food company having large market share. A large number of conventional wholesalers and pre-packers entered the organic fruit & vegetables market in the late 1990s. Their entry was encouraged by the supermarkets, which faced issues concerning product quality and supply. Most of the fresh produce suppliers to the supermarkets now deal in organic products. Although this arrangement suits the supermarkets well as they have fewer suppliers, organic growers feel that they are not well-represented by large conventional food companies. They state the large companies lack commitment to organic products and do not always have the technical knowledge required to effectively market their products.

Organic Farm Foods (www.organicfarmfoods.co.uk) has maintained market leadership although its market share has halved from over 50 % in the mid 1990s. Important conventional food companies in the organic fresh produce sector are MBM, Worldwide Fruit, and Mack’s Multiples. The company is the largest supplier of organic fruit & vegetables in the UK. Organic Farm Foods started as a farmers’ co-operative in 1984 and grew to become a large private wholesaler of organic fresh produce. Since the 1990s, it remains the single largest supplier of organic fresh fruit & vegetables to British multiples. The company has grown in line with demand from the retail trade, supplying over 20,000 tonnes of organic fresh produce in 2004.

High retail demand led Organic Farm Foods to acquire Congelow, the second leading wholesaler of organic fresh produce, in March 2001. Congelow was a pre-packer to the supermarkets. Since 2002, Organic Farm Foods has been consolidating its operations to give it a greater competitive edge in the organic market. It has vegetable packing facilities in Leominster and fruit packing facilities in Honeybourne. The Lampeter (Wales) packing facility closed in June 2005. Organic Farm Foods deals with a wide range of domestically grown produce that include organic potatoes, carrots, onions, cabbages, apples, pears and salads. Organic fruit and vegetables are also sourced from across the globe. It has a close sourcing arrangement with the Dutch company Eosta. The bulk of organic fruit & vegetables are supplied to supermarkets by Organic Farm Foods. Its customers include Tesco, Sainsbury’s, Waitrose, Morrison and Co-op supermarkets as well as organic food shops. Sales turnover of Organic Farm Foods was estimated at above 30 million Euro in 2004.

Future Outlook: healthy growth rates

Although the wholesaler’s role mainly involves supplying organic products to specialist retailers, most companies are reporting healthy growth rates. Sales from organic food shops and specialist retailers are expanding at a faster rate than the supermarkets and this is where most industry growth is occurring. Companies like Community Foods and Essential Trading are reporting sales growth in excess of 20 % per annum. With the number of chained retailers continuing to expand, the outlook is rosy for organic wholesalers. ‘The Whole Foods Market effect’ is expected to give the wholesale market a big lift from 2007 when the American retail giant opens its first organic supermarket in London. The possible opening of more supermarket store formats could give wholesalers much needed to impetus to expand their businesses. Companies with strong brands like Biona are likely to benefit the most as their brands build customer loyalty in an expanding market.

Picture: Amarjit Sahota is the director of Organic Monitor, a business research & consulting firm that specialises in organic & related industries. Since its formation in 2001, Organic Monitor has been continuously tracking the global organic products industry. Mr. Sahota has been involved in business research since 1996. He has assisted a wide range of clients in realising their business potential in emerging market sectors. The clients range from multinationals, government organizations, to small dedicated organic food companies. Mr. Sahota is also a visiting lecturer for a West London institution where he lecturers Strategic Marketing at postgraduate level.