The organic food market stands out as one of the biggest casualties of the economic downturn. Positioned at higher price points, the organic label suddenly became a luxury many cash-strapped shoppers could no longer justify.

However, Mintel predicts a turnaround in the market’s fortunes in 2016, when it is expected to return to positive growth, albeit at a slow rate. This will be supported by increased GDP and higher levels of consumer spending, which is expected to start gaining momentum this year.

Fresh vegetables and fruit are the most popular items in Britons’ organic shopping baskets, in line with the widespread availability of these products and the pesticide-free guarantee of the organic certification likely to be perceived to be most relevant for these items. Together fruit and vegetables account for approximately a third of the total organic food and drink market.

Interestingly, despite the older generation’s disinterest in organic produce, purchasing of organic fresh vegetables peaks among over-45 consumers. This suggests that for many older shoppers this may be the one area in which they see tangible benefits for choosing organic, according to Emma Clifford, senior food analyst at Mintel.

“The organic market has had a challenging few years since its peak in 2009. High prices combined with increasingly price-conscious consumers, and in particular the view that these prices are not justified, has been the core reason behind the market’s downfall,” she says.

“It is also clear, however, that many shoppers find organic a vague and confusing concept because it spans a diversity of issues and lacks one strong focal message.”

The latest multiple retail sales figures from Kantar Worldpanel show a value decline of 7.6 per cent and a volume drop of 11.1 per cent. To rectify this, the organic market needs to clearly communicate its tangible benefits of individual product types to overturn the damaging perception that organic food is overpriced or merely a fashion statement for the exclusive few who can afford it, according to Clifford. “It needs to engage with shoppers on an emotional level if it is to compete with other ethical foods such as free range or fair trade, which currently resonate more strongly with shoppers.”

So how come the produce sector in particular has been struggling more than any other sector in the wider organic category? Finn Cottle, trade consultant at the Soil Association, says it all comes down to the communication, marketing and availability of organic on supermarket shelves. “Unfortunately there has been little to no focus on organic produce outside the Soil Association’s Organic September period; potential customers are not being prompted to consider organic options within their shopping trips. The availability of organic options has also decreased within the supermarkets, with less shelf presence devoted to organic and less choice.”

Still, she says, there is a loyal organic consumer who spends at least twice as much money in the supermarket as the average shopper. “Organic consumers are very valuable customers. There is an opportunity for retailers to draw attention to the values of organic product and to re-engage their consumers in the benefits of organic. Some investment in communicating in store is overdue.”

Going forward, Cottle thinks the online channel is key to attracting more customers. “The recent launch of the Tesco box scheme shows that retailers are reacting to current trends and trying to maintain their organic consumers by adapting their ranges and availability through online sales,” she says. “Online sales will become even more important – customers know that they can be guaranteed to get the organic product that they want rather than being disappointed with availability in store.”

So the future of the organic market is certainly not bleak, according to the industry. “The UK is unique in having a shrinking organic market; the rest of northern Europe continues to grow even though the organic share is already higher than the UK, and we have every reason to believe that it will get back into growth in the future,” says Produce World’s Mark Phillips. “The future success of organic is dependent on retailers working with their organic suppliers to ensure that the benefits of organic remain top of mind for consumers.” —

THE RISE OF ECO LABELS

The number of eco-labels in the food industry is expected to continue to mushroom in 2013, a trend insiders say could have adverse implications. Lisa Kjellsson reports

Consumers are being bombarded with different eco-labels, causing confusion over which organic products are most sustainable, new research shows.

Over 200 seals and logos represent ecological or ethical ingredients or sustainability attributes in the global food industry. The majority of eco-labels are for organic products.

Organic products comprise the bulk of the estimated $75 billion global eco-labelled food and drink market. Most sales are from producer countries in Europe and North America with legally protected organic logos. However, many new organic labels are being introduced in Asia, Latin America and other regions. The lack of harmonisation between these standards is leading to multiple certifications and an exponential rise in organic eco-labels.

“The proliferation in eco-labels is creating consumer confusion. The same organic product – say an organic apple – can have different organic logos according to retailer and country, although it is produced according to the same standards,” says Amarjit Sahota, president of Organic Monitor, a specialist research consultancy focused on the global organic industry. “We are seeing a proliferation in eco-labels in the food industry. This is happening across product categories, however it is most evident for agricultural commodities.”

In the fresh produce category, organic and Fairtrade are the most popular marques. However, the global fair trade movement is fragmenting. The departure of Fair Trade USA from the umbrella organisation and a growing number of new schemes are increasing the number of fair trade logos and symbols.

In Europe there has been a single EU organic logo since July 2012, however this can be used in conjunction with existing organic logos and symbols like those of the Soil Association or Ecocert. There are also a number of national organic logos and symbols. Packaged organic fresh fruits and vegetables can therefore have more than two or three labels on pack.

In addition to well-established eco-certifications like the Rainforest Alliance, growing consumer awareness of food production methods and sustainability issues mean eco-labels are now also making headway in the industry. Numerous carbon-labelling schemes have been introduced, while some companies are experimenting with water-footprint labels.

However, you only have to visit the fruit and veg aisle in your nearest supermarket to see just how the situation has progressed. “Most supermarkets in Europe are marketing organic fruit and vegetables under their own labels,” explains Sahota.

“It is therefore common for packaged products to have the supermarket own-label logo – like Sainsbury’s SO Organic – an EU logo, plus various certification logos, for instance from the Soil Association. We are therefore seeing multiple organic logos on a single product.”

In addition, since many organic fresh fruit and vegetables are packaged in compostable packaging, they can also carry the biodegradable bud logo on product packaging. “This phenomenon is only happening in the fresh produce sector, since the sector is the main user of plant-based packaging,” comments Sahota. “This also contributes to the confusion about eco-labels, since a product can have multiple logos that represent organic production methods, Fairtrade sourcing and biodegradable packaging.”

With the number and types of eco-labels proliferating, there is a concern that food producers could be discouraged to adopt them because of the growing disparity between standards and multiple certification costs.

“With most eco-labels representing some ethical or sustainability attributes, the wider question is whether a new umbrella eco-label will eventually emerge and unify existing ones,” concludes Sahota. —

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