Another round of disappointment has compounded the challenges for the organics sector, which is still battling to recover from a tricky few years in which the category has been hit by the economic downturn and its own mixed messages.
It has been a tough period, in which sales are still down even in the context of increasing promotions and attempts to level out prices so that they are more in line with conventional pricing.
Now that home-grown produce is coming into its own, there are new concerns that the British tag will override any pull towards organics for those who dip in and out of the category.
Kantar Worldpanel figures show that organic produce is in decline, falling in both value
(4.4 per cent) and volume (7.7 per cent). Tesco, Sainsbury’s and Waitrose are the only retailers to overtrade in organic produce. Waitrose is leading the way, with value and volume growth of 2.7 per cent and 4.8 per cent respectively as more shoppers buy more produce each time.
At the other end of the scale, discounters such as Aldi and Lidl are showing potential by performing ahead of the market.
“Waitrose is outperforming the market because it has not delivered deflationary pricing,” says one insider. “This means that from a market share point of view, it looks like they are doing better than the others.
“At the same time, the others are lowering prices so it looks like they are performing less well. There have been a lot of aggressive promotions over the last couple of months.”
Tesco, for example, brought in a three-for-two offer across all organics for a few weeks as just one of the “keen offers” that are playing out across the big four supermarkets.
“The figures are disappointing, but they are an improvement on last year,” admits one prominent supplier. “Organics is bottoming out as a sector, but there have been some signs of growth just recently.
“The industry has really flatlined over the last three years but I remain reasonably optimistic, as the values are still very much there.”
The move to lower prices and make organics an option that can be considered as affordable as conventional lines is fast becoming one of the key strategies as the sector seeks to maintain market share in an increasingly competitive market.
“Clearly, there’s a lot at stake at the moment with the austerity measures that are in place,” says one supplier. “That’s obviously a concern. The one thing I can say is that we have been delivering deflationary prices to retailers and if you look at organics pricing on the high street, there is clear downward pressure.”
Organic apple prices, for example, will be around £1.79 at Tesco compared to £1.99 last year and £1.39-1.59 for conventional alternatives, depending on the variety.
“We are aggressively trying to make sure that organics are in touch with conventional lines from a cost point of view,” says an insider. “That seems to be having some effect. The margin gap between organic and conventional fruit has narrowed. This has put returns under pressure.”
A move towards increased retail rationalisation and making the most of the exchange rate have had a part to play as growers and suppliers seek to make organics more affordable by cutting costs in any way they can.
“New Zealand is under pressure because the exchange rate is not helping at all and there has been a bigger switch to Chile, where the prices seem to be sustainable for them,” says an importer. “It is certainly an improved position on last year. There is no get rich quick, but there seems to be some sensible pricing coming in.
“Alongside this, retailers are giving their suppliers more critical mass and that can drive cost savings that are being passed onto the consumer.”
All in all, growers and suppliers agree that it could be worse for organics and they continue to believe in the future of the sector.
In fact, there are signs that the category could gain from a media glow in recent weeks as food continues to be a talking point in national newspapers.
The Telegraph focused on organic box schemes in light of the launch of Riverford Organic’s second cookbook this month, much anticipated among foodies.
This was followed by a Come Dine with Me-style feature in The Guardian examining how well five consumers eat.
BOXING CLEVER ON ORGANIC
Riverford Organic founder Guy Watson launched his second cookbook with head chef Jane Baxter this month. Anna Sbuttoni talks to the man behind the popular vegetable box scheme about his expectations for the category and his favourite recipes.
It has been a busy month for Riverford Organic, with the release of its second recipe collection named Everyday and Sunday and aimed at getting more people to cook from scratch using vegetable boxes.
Guy Watson started growing organic vegetables on his family farm in Devon 25 years ago and set up his box scheme in 1993, delivering to just 20 local friends and families.
Fast forward, and there are now five Riverford farms that grow, pack and deliver 47,000 veg boxes each week in Devon, Hampshire, Cambridgeshire, Yorkshire and Cheshire.
The release of the second cookbook builds on the launch of the Riverford Cooks campaign last year to inspire people to make the most of vegetable boxes.
Why did you choose to move into cookbooks?
Personal enthusiasm, but it makes sense. We have a restaurant here - the Riverford Field Kitchen - that has won a number of awards and has had fantastic reviews, to the point where people were asking for a cookbook. At the same time, it became obvious that what drives sales volume is not necessarily the state of the market but people’s ability and enthusiasm for cooking. Some of our customers wouldn’t buy organic anywhere else, but they are good cooks as opposed to green thinkers.
How can we make people like that? We have to try to make them better cooks. It’s a tall order, and in many cases it’s a major cultural shift in the way people live. To be an authority on cooking seasonal produce is a good place for us, as we have sent out newsletters and had an active website for years.
The first book sold 40,000 copies, which is pretty good going for a non-celebrity cookbook. I think the recipes are better this time around.
What’s your favourite recipe from the new book?
Tomorrow I’m going to make a three-garlic frittata. I was amazed by the amount of garlic in it, with two heads of wet garlic, a crushed clove and wild garlic. You put in the eggs and make a frittata in the normal way; it’s simple and on the table in 10 minutes, using seasonal ingredients but it is interesting at the same time.
I love cooking. In the early days, I used to decide what went in the vegetable boxes on a Wednesday and spend the weekend cooking and then put together a newsletter to send out with my recipes.
How have you tried to make the best of your offer?
I remain reasonably optimistic as I don’t think there has been any loss of interest in the underlying values and people’s interest in cooking has never been greater, but we have to make sure our products taste great and are discernibly different from the competition.
Others have moved towards a mixed offer of organic and conventional, but we have no plans for this.
However, we did have to make a four or five per cent price increase in January and that was unavoidable.
How many people are signed up to your scheme and how has this changed in the last year or so?
We have 60,000 to 70,000 active users and we make around 40,000 deliveries a week.
How do you think the organics category as a whole can reinvigorate sales?
Publicity-wise, it’s much easier to go with the flow but sadly, organics have not had particularly positive press for the last two years. Seasonal produce has, so that’s what we are focusing on now. However, we remain committed to organics. We spend £1 million on marketing each year and most of it goes towards promoting what is grown locally in season. We are moving into the first lettuces and our first strawberries - all outdoor - are a week or so off.
One thing that’s extremely irritating is that magazines are often a month ahead of the season.
How are you supporting the Why I Love Organic campaign?
We haven’t been the biggest supporter but let’s face it, they are up against it. A few million in the food world ain’t a lot of money, but they have been spending it reasonably sensibly.
