Until the mid 1990s, the UK’s organic sector was simply a niche market catering for the most conscientious consumer and organic retailers were specialist shops and farmers that offered home delivery. The size of the UK organic market was well behind the rest of Europe and land dedicated to growing organic produce was scarce; just 48,000 hectares in the UK in 1996.
But this picture has changed dramatically in the last few years. According to organic research specialist Organic Monitor, the UK’s organic industry is booming. Along with Germany, it has the largest market for organic fruit and vegetables and represents over half of European organic revenues. The UK’s fruit market alone is valued at €300 million, the largest in Europe, and as the Journal revealed in August, the market for exotic fruit is expanding rapidly - half of the 80,000 tonnes of organic banana consumption in Europe comes from the UK. The amount of organic farmland has grown by over 500,000 hectares since 1996, and now makes up an area three times the size of London.
The UK is not the only country where the organic market is expanding; the European organic industry looks rosy too, with fruit and vegetables comprising the largest sector worth over €11.5 billion.
Further evidence from leading international market researcher Research and Markets indicates that the total European organic food industry swelled by 26 per cent between 2001 and 2004. In fact, the European demand for organics is so high, it is outstripping the growth of organic farmland and creating a risk of undersupply, say industry watchers. Organic area in western Europe increased by just 14 per cent in the same three-year period, potentially creating a supply deficit.
All these statistics point to a voracious demand for organic produce, and it is little wonder that new companies are entering the market at a steady rate. But the excessive hype surrounding the organics success story could be compromising the industry’s future.
Currently, supermarkets take the lion’s share of the organic market. Successful publicity campaigns have played a key part, a noteworthy example being Sainsbury’s promotion featuring Jamie Oliver. Following the chef’s intervention, organic sales for the month of April 2005 hit a reported all-time-high, helping other supermarkets to also secure their consumer-base.
But despite this favourable publicity, and a reported 48 per cent share of the organic fruit and vegetables market in the UK, indicators suggest that the multiples’ total market share is in decline as sales channels for organic foods are increasing.
According to research by the Soil Association, while supermarket sales of organic produce rose by 10 per cent in 2003/2004, direct sales, including home-delivered box-schemes, increased by 16 per cent, and the number of these box schemes is greater than ever - the leading operator in the UK, Riverford Organic Vegetables, doubled its number of customers over 2004.
Many farms are taking the plunge and converting to organic production in order to tap into the lucrative market. Organic Monitor says growth rates are not sustainable and will eventually taper off - and this could already be in effect. Mintel, the global market research body, indicates the popularity of organic produce may actually be in decline. A survey which asked participants to state whether they agreed with paying more for organic food showed 29.6 per cent in favour - a one per cent drop from last year.
A variety of sources show that knocks in consumer confidence, provided by negative column inches could be contributing to this. Organic Monitor says unfounded claims that organic foods have a greater nutritional content could cause consumers to feel that the sector is untrustworthy. They say that although the claims could be true, many are disproved, which results in putting people off buying the products,
The legitimacy of organic retailers and producers could also contribute to a shift in attitude, a prime example being the Sunday Observer exposé which quoted a source saying that the term organic was ‘abused’ by many.
Organic Monitor explains that companies jumping on the bandwagon and converting to organic farming in lure of fast profits will be the first to suffer a dip in popularity. Smaller independent companies face the threat of supermarkets and large organic retailers swallowing them up as the push to lower prices of organic produce intensifies. The introduction of the disease-resistant potato variety, the Blight Mop, is illustrative of a move towards making organic produce more competitively priced in order to compete with non-organic produce.
The Soil Association told Mintel that driving down organic prices could have serious consequences: “We have a cheap food culture in this country and if this were to spread to the organic sector it would be an unhealthy development,” a spokesman says.
Keith Abel, co-founder of popular organic box scheme Abel and Cole, agrees, and says the industry is separating into two separate components - organics produced by the multiples and locally sourced produce from box schemes and farmers markets: “The latter part is the one that’s got soul. It’s seasonal and local and this is very important - these pegs are what I think consumers are hanging things on,” he says.
“Fresh, local, seasonal produce is why people bought into our market. Now I feel what’s happened in the mainstream is that people have dictated that a proportion of their suppliers have to be organic and you get all these farms converting. The thing is, they are still dealt with in the same way with tight specifications all year round. This results in some crazy things happening like organic French beans from South Africa being flown in. This is why we operate a no-fly policy. It’s the real stuff we sell and consumers need to know it’s possible to have the real stuff.”
Mintel’s research suggests that Abel is on the right lines. According to reports, one in four people actually prefer the option to buy seasonal produce.
One way that supermarkets ensure cheaper organic lines is by sourcing from overseas instead of using local suppliers, a practise which has been criticised by many as increasing the risk of fraudulent organic production and not supporting local farmers. Martin Cottingham, a spokesman for the Soil Association says consumers can rest assured that by buying produce certified by a trustworthy body, such as his, they are getting the real thing: “Organic regulation applies across the European Union but the Soil Association has its own standards which are stricter and more comprehensive.
“Our standards cover a wide range of issues such as separation and traceability of organic and non-organic food. We are the only certifier with a major equivalence programme to ensure imported goods do not carry our symbol unless we can be confident the same rigour and integrity has been applied to inspection as we expect in the UK.”
Abel says he thinks that by striving to compete with prices of conventional produce, supermarkets are missing the point: “Organic produce is not about being cheap; it’s about a fair price for quality, locality, variety and seasonality. Price does not come into organics.”
Research shows that all these factors are important to consumers. Some of the people previously attracted to organics simply for the environmental benefits and the perceived greater nutritional content are now making sure their food comes from local suppliers. They are realising that food miles from imported organic produce not only damage the environment, but also have a negative effect on the nutritional content of food that has to be transported across the world. There has been an attitude shift towards local sourcing and Mintel suggests that provenance and seasonality are increasing in popularity.
But a concentration on seasonal, locally produced foods is also proving to be good news for non-organic fresh produce companies, which are emerging and threatening to make a dent in the organic market’s consumer base. Organic Monitor says these conventional companies are a major development in the fresh produce sector and are showing a large rise in market share. It says that its success is linked to encouragement from supermarkets which are forging strong relationships with the companies and allowing them to ride on the back of their solid distribution networks.
Fairtrade produce is also looking like it could steal some of the spotlight from the organic industry. Mintel’s report shows that the percentage of people who claim to buy Fairtrade when available reached 30.7 per cent in 2004 - an increase of five per cent overall. But Abel points out that Fairtrade is not just about farmers overseas. He says the real way to support legitimate organic companies is to buy from retailers that locally source their produce: “Fairtrade is part of that same, strong organic message. It’s very much our market because our organic produce is all about a fair deal for producers, and I mean producers in the UK. Giving a fair deal to farmers is a very important message, and one I think that the multiples find difficult to convey because they’ve eked every cent out of it and closed down a load of farms.”
All this evidence suggests that the consumer is wising up. It appears that the allure of budget organic produce is not always the consumer’s first priority. If this consensus remains, independent organic retailers using box schemes and farmers markets as an outlet for produce will continue to increase in popularity, and Abel is optimistic about the future: “There is still a long way to go in the home-delivery/box scheme market, there are small operators dealing with small producers but the demographic of our customer base is broadening all the time, which I think is really encouraging.”
NEW ON THE COUNTER
Pro Natura is a fresh produce specialist based in France, which supplies organic fruit and vegetables to multiples, retailers, industrial manufacturers and caterers in Europe. This year, it began efforts to produce counter-season produce from sites in developing countries and it says this system, coupled with its long-term commitment to legitimacy in organics and Fairtrade, has enabled the company to go from strength to strength.
It aims to provide a stable and regular supply of counter-season products from developing areas like Morocco and countries in West Africa. Working with, and learning from, contracted farmers, this year it hopes to produce around 6,000 tonnes of vegetables - mainly courgette, tomato, red green and yellow peppers, cucumber, and 1,000t of citrus in Morocco. In addition, its sites in West Africa will yield 1,200t of mango and 500t of pineapple from February to July. Leopold Hugo, Pro Natura’s marketing director, explains the company’s approach is based on being able to supply quality lines out-of-season: “Counter-seasoning means we can offer our clients a stable supply chain, but it also allows us to stabilise demand, which leads to a better level of remuneration and security for all involved. Importations do not replace local organic produce, they complement it.”
In Morocco, Pro Natura produces on 220 hectares of certified organic land, part of which is also EurepGAP certified, and growing methods are strictly in accordance with this. This includes embedded irrigation to conserve water, planting palm trees and shrubs between growing areas to encourage bio-diversity, and using a simple wash of soap and water to discourage insects. Hugo says that UK multiples set a high standard in their product requirements: “The UK multiples are generally considered to be the most stringent, so if you can sell to the UK industry, you can sell anywhere.”
In developing countries, Pro Natura is entirely committed to providing a fair deal for farmers, he adds. Its West African mangoes are certified Fairtrade and pineapples will be completing the Fairtrade certification process in the coming weeks. At the moment, Pro Natura only supplies directly to packers and wholesalers in the UK, but Hugo says that with progressive annual success he is looking to increase the amount of sales channels it supplies to, including areas like independent retailers. He says the organic industry is rapidly expanding: “It’s something you experience very strongly when you see it from the inside of the industry. We need to adapt constantly to keep up with demand... Our business is growing by about 25 per cent each year.”
FRESH ORGANICS GET HIP
It seems that hip Londoners prefer naturally-grown fresh produce to designer clothes, as the UK’s first natural and organic supermarket replaces Barkers department store in Kensington.
Barkers, the 135 year-old House of Fraser-owned outlet, is being bought out by American company Whole Foods Market, which plans to open a 75,000 square foot flagship store by 2007. The move follows the American company’s takeover of the UK chain Fresh and Wild in 2004. It is expected that the new London store will employ up to 500 staff and will offer a range of interactive features from cookery demonstrations to product sampling in-store.
The company also say there is a particular focus of using local growers and suppliers. Langridge Organic Products, based at New Covent Garden Market, is one of the company’s main fresh produce suppliers, and managing director Alex Pearce says the new store is exciting for all involved: “As a company that already has a strong supply relationship with Whole Food Market, we are really excited about the opportunities that this presents,” he says.
“All eyes will be on the new store and it’s a really bold move to go for such a large store. The new figures are suggesting that this one new store could double the (company’s) spend on fresh produce.”
Whole Foods say they will further extend its commitment to the Kensington community by donating food and funds to local causes and by sponsoring local events. It even goes as far as to suggest that its London premises will become a community-gathering place.
AGREXCO UPS ORGANIC OFFER
Israeli supplier Agrexco exported 26,000 tonnes of organic produce in 2004/05, 6,000t more than last year, making the latest season its best to date.
The successful export results from high yields, the right climate and good European markets, says the firm’s organic product manager Eitan Kurnat.
“The most successful items were vegetables, both roots and greenhouse-grown products. The season just ended represents our largest export volume of potatoes and carrots.”
Extending the season to June also bolstered sales, especially of tomatoes and capsicum, as several European countries failed to produce local goods.
Kurnat adds that Agrexco increased its export of avocados
this year and plans to branch out into exotic fruits, such as figs and Sharonfruit.
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