UK: New Analysis shows great potential

The popularity of the organic food and drink sector was revealed in a report from the Soil Association. UK customers spent more than 2.3 Billion Euro on organic food and drink in 2005, which is a rise of 30 % on 2004. This is much faster than the global growth rate of 7.7 % and ahead of the 3 % overall rise in food and drink sales. In 2005, two thirds of the questioned customers stated that they have bought organic food during the year. The education of the mass and PR are showing effects.

Picture: Planet Organic

The Research Company YouGov questioned almost 6500 people over a four week period in June. Their study showed that organic items were no longer the domain of the rich; 31 % of lower income households stated that they were buying organic food. But households with a gross weekly income of more than 1100 Euro were most likely to buy organic. It also revealed that one of ten customers will buy organic fast food like pizza and ready meals, 14 % will pick up organic peanut butter and 11 % organic chocolate and biscuits.

Tesco introduced organic products in 1992 and tried to confirm its leading position with a redesign of the packaging of its 400 own-label products. Their organic products are being moved for easier comparison of organic and non-organic products, reflecting the Soil Association’s findings that consumers prefer shopping that way. Tesco has a share of 31.1 % of all supermarket organic sales.

Sainsbury’s relaunched their “So Organic” range last September, adding 100 lines to its established 500. With a share of 27.7 % of all supermarket organic sales, it is behind Tesco. The share of organic sales is twice as much as its share of the overall grocery market. There are attempts to stretch the market by expanding the organic range into ready meals for the first time. Pizzas and soups are added to their own label. The YouGov study commissioned by Sainsbury’s found that sales in organic biscuits rose by 89 % over the last year.

Waitrose has over 1300 lines in offer, including meals-to-go and snacks. Even though it only has a 3.7 % share of the total retail market, it sells 18.3 % of all organic food bought in supermarkets. In 2005, its customers spent 20 % more on organic purchases. Dairy and meat products were especially popular.

Both Sainsbury’s and Waitrose see themselves as organic pioneers, fighting over being the UK’s first supermarket group which has offered organic products to customers. Waitrose claims to have launched them in 1983, Sainsbury’s states it has made the category its own since 1986. The other battle going on is between Tesco and Sainsbury’s, both launching organic product box schemes, testing the effects on customers.

Even Asda has got in the organic sector. Its parent Wal-Mart has announced plans to get into the organic game. A new series of sustainable initiatives is to be announced. This led various lobby groups to the concern that Wal-Mart will destroy the ethical ideals of the movement.

According to TNS Worldpanel, organic is not only important to supermarkets just because of the premium. It also attracts high-value shoppers. Though retailers’ own-label organic products are more commonly found in stores than branded versions, the report found that only 13 % of consumers prefer to buy them, 44 % would choose the branded versions. Yeo Valley is one of the biggest organic food brands, with a growth of 23 % in the past year. Their market leader natural yoghurt is beating retailer alternatives.

But the supermarkets’ organic sales are not as rosy as it seems. 76 % of organic products were bought from multiples in 2005, but their market share only increased by 1 %. A bigger growth was achieved by the independent sector, including box schemes and farm shops, with 50 % of customers preferring to buy from small, local suppliers. Riverford Farm, delivering boxes of organic food across Southern England, experienced a 70 % sales surge.

If the organic market is to experience an even stronger growth, it is necessary to communicate more clearly about organic food. There is evidence that food miles are now more in the mind of consumers than the organic message. If they are to choose between a locally non-organically grown product and an imported organic one, over 80 % opt for the non-organic one. As a response of the supermarkets, stock of locally grown organic food was increased. This is considered to be a good chance for further success.

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