The Soil Association is confident that although the financial downturn has affected sales of organic products, the market will grow again when the economy recovers.
According to the Soil Association’s Organic Market Report, published today, food sales have been hit across all sectors, as consumers tighten their belts in the face of the economic downturn.
Fruit, along with bread and bakery products, soft drinks and prepared foodstuffs, has been one of the most affected areas, although some brands are bucking the recessionary trend.
Although overall UK sales of organic products increased by 1.7 per cent in 2008 to more than £2.1 billion, this statistic must be seen in the context of overall food price rises rather than sales volume increases.
Sales through multiple retailers increased by 1.8 per cent to £1.54bn, while sales through independent retailers are up 1.4 per cent to £568 million.
There has been dynamic growth in sales of organic food through farmers’ markets, where figures increased an estimated 18.6 per cent to £23.7m last year.
Out of the multiples, Asda showed the strongest growth, boosting sales of organic products by 25 per cent last year and upping its market share from eight per cent to around 10 per cent. Tesco saw a drop-off in organic sales of 9.9 per cent in 2008, but remains the market leader in terms of value.
Organic shoppers, like all consumers, have been buying fewer premium products and prepared foods, and switching to lower-cost retailers. Cooking from scratch has risen in popularity, with sales of organic home cooking ingredients increasing by a remarkable 13.5 per cent in 2008, while sales of organic prepared foods dropped sharply.
The report shows that there is a core of consumers who may be cutting back but are determined to stick to their organic principles. Thirty-six per cent of these consumers say they expect to spend more on organic food in 2009, and only 15 per cent expect to spend less. Research shows that over a quarter of consumers who do not currently buy organic food “would like to know more about organic products than they do” suggesting potential to broaden the market still further in the future.
While the Soil Association is predicting a volatile market in 2009, the organic certifier remains confident that as farmers are forced to develop more sustainable production methods in the future, organic agriculture will come into its own. The diminishing price differential between organic and non-organic products will also offer further potential.
Peter Melchett, Soil Association policy director said: “This has been a really difficult period for all retail, and organic sales have suffered along with the rest of the economy. This report describes a very mixed picture as consumers react to the financial crisis. But those consumers who are committed to organic products appear to be staying loyal. This shows the underlying resilience of the organic market, which we believe will grow again once the economy picks up.”
Helen Browning, Soil Association director of food and farming, said: “Organic farms, like all business, face uncertainty and volatility. But there are still significant opportunities in some areas - fruit and arable, for instance and in developing genuinely local and regional supply networks. Collaboration will also be key to the success of many farm businesses.”
