It has been a difficult period for the organics category, with sales taking another blow and cut-throat promotions playing an increasingly big part in pushing the offer and competing with conventional counterparts.
Kantar Worldpanel figures for the year to 23 January 2011 show that the organic produce market has seen value slip by six per cent and volumes sink by 8.5 per cent, in what is shaping up to be a tough 12 months for the sector as it tries to get back on track.
Those who buy organic are putting less in their shopping basket less often, while some are avoiding the category altogether.
This is viewed as a reaction to the austerity measures put in place by the coalition government, which have seen consumers rethink their spending and remain “price sensitive and cautionary about buying organics”, according to one producer.
At the same time, aggressive pricing on conventional lines has meant fierce competition on the shelves and made it harder for organics to match up.
“The key is to try to remain in line with conventional pricing, but it’s not easy,” says an insider. “This is a challenge, but organic fruit will be directed to markets that give better prices if the UK doesn’t pay the right money.”
Marks & Spencer has seen the most dramatic decline in organics value, which has plummeted by 19.2 per cent as an indication of shifting priorities. At the same time, Morrisons is leading value growth at 16.5 per cent, albeit from a low base.
“There has been a high level of promotional activity to capture the eye of consumers and allow organics to stand up to conventional lines, which are increasingly competitive,” says one supplier. “Organics have seen promotions that are deeper and longer, but they are a necessary part of the marketing plan.
“Tesco, Sainsbury’s and to a certain extent Asda’s strategy is based around trying to appeal to the premium shopper who buys organic because they spend more in their overall shopping basket. M&S already has premium shoppers coming through the door so they don’t have that incentive.”
The latest Soil Association study into why people buy organic ranks “naturalness” top, with 40 per cent of the vote, followed by restricted use of pesticides (34 per cent), better taste (30 per cent), better for wellbeing (28 per cent) and better for the planet (25 per cent) among the top 10 reasons.
But rewind to the first link in the chain and there are signs that the organics category could be facing longer-term challenges if the UK market doesn’t pick up soon. Worryingly, some growers and exporters have opted out of organic production as returns have become so close to conventional lines - or in some cases, below that level - that it is no longer worth their while. Others are opting to boost yields and quality by using treatments such as gibberellic acid, which is allowed under US regulations but not in Europe.
The combination of these factors has reduced availability of some organic lines in the UK and in turn, contributed to the setbacks. This comes as the Soil Association has criticised the UK government for offering little support for organic farming compared with its European neighbours and highlighted that while the UK saw sales drop as a result of the economic downturn, European neighbours did not.
In its report, The Lazy Man of Europe, the organisation described UK governments as “diffident, if not lazy” in their support for and investment in organics in comparison with the majority of European countries.
It read: “When it comes to thinking in a truly sustainable way about the future of food and farming, successive UK governments have preferred to sit back and snooze, doing very little to back the organic sector.”
The Soil Association has offered a list of recommendations for the UK government, including considering the organics market as an important growth area for the UK economy.
This was followed by news that the Organic Conversion Information Service (OCIS) for farmers thinking about converting to organic production is to close next month. The service is operated on behalf of the Organic Research Centre - Elm Farm, on behalf of Natural England.
Organic Farmers & Growers chief executive Richard Jacobs described the OCIS as an “invaluable service” and he fears that “without support many potential converts to organic farming won’t begin to explore the organic option for their business”.
BOWLES: WHY I LOVE ORGANIC
Huw Bowles, chairman of the Organic Trade Board, on what the £2 million Why I Love Organic campaign will mean for a category that is fighting to hold its own in an increasingly competitive market.
How did you come up with the Why I Love Organic campaign?
The recession has had a major effect on the desire for value, particularly for essential, everyday purchases. This, coupled with a narrow and confused view on the benefits of organic, have resulted in organic being misunderstood, increasing the risk of being undervalued and vulnerable to price premiums.
Research from Mintel showed that consumers see “natural and “unprocessed” as important when considering the food they purchase. However, organic was less relevant, even though natural food is one of the key benefits of organic.
The Why I Love Organic campaign is designed to help consumers to understand what organic means so they can make informed decisions. We know that people want natural and great tasting food, which is exactly what organic is as well as being better for nature, better for animal welfare and containing fewer pesticides and nasties. We want consumers to understand what organic means and make conscious decisions when they go food shopping.
What is the thinking behind the campaign?
The campaign is all about democratising organic and making organic food more relevant to people’s everyday lives. The characters in our advertising have been created to represent all the different types of people that buy organic food and to highlight all the different reasons there are for buying organic.
We wanted to present a new way of looking at organic and change the image, challenge perceptions and inject some humour.
What are your targets for the £2 million campaign?
The campaign aims to increase sales of organic food by 15 per cent per year over the three-year period. We know that 90 per cent of UK consumers already buy organic and we’d like more people to try different organic foods and drinks when they do their weekly shop.
How do you think the term “organic” came to be misunderstood?
To be honest, I don’t think organic was ever understood by the majority of consumers - it was just thought to be good for you and the environment and nothing more beyond that. Since then, we have seen the emergence or growth of single issue products such as free-range, Fairtrade and local. Organics has a more complex offer but the industry has not been able to get its message across recently, with some people thinking free-range is better than organic.
What is your background?
I studied agriculture at Reading University but I am not from a farming background. My interest in wildlife and the countryside was the motivation to get involved in agriculture. After university, I trained as a chartered accountant to develop my business understanding and feel that my current roles at organic milk co-operative OMSCo and the Organic Trade Board use my skills and experience exactly.
What are your ambitions for the Organic Trade Board?
As the organic sector grows, there is a clear need for a body to work with other groups to help grow the organic market by utilising the commercial skills and experience of the organic businesses in the UK. We share the same objective as the Soil Association and others in wanting to see an increase in organic sales, but our ways of getting the message across to consumers is different.
Will the organics category achieve the growth it enjoyed pre-recession?
Sales data shows that the organic market is holding up well despite the ongoing economic conditions. All the evidence shows that shoppers have not deserted the organic sector and many companies are experiencing significant growth. Waitrose is the fastest-growing supermarket in the UK right now. People are not just looking for value any more, they are trading up.
It is important to note that the UK was one of the few countries to experience a fall in organic sales over recent years, with countries such as France, Italy, Ireland and the US all showing continued organic sales growth. One of the reasons for this in the European countries has been similar generic marketing campaigns to the one we are now running in the UK.
A number of produce categories have brought in a celebrity as the face of their offer. Are you going to take this option?
The Organic Trade Board has chosen DJ Sara Cox to support the Why I Love Organic campaign. As a mum and organic fan with wide media appeal, we felt Sara was the perfect person to support the campaign; helping to make organic more relevant to people’s everyday lives.
Where do you see the organics category in three years’ time?
With the current low level of total organic sales coupled with continued growth in other countries, there is no reason why the organic sector cannot grow over the next three years. We have excellent products with clear benefits over other products at prices that are affordable to most consumers. The comprehensive campaign will address these issues and highlight to consumers that there are lots of great organic products out there for them to buy.
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