- Industry hit by recession as sales fall 13% in a year
- Ambitious campaign aims for growth of 50%, or £1bn
Organic firms harness the power of superfoods to boost flagging fortunes | Business | The Guardian.
It will be wellies at dawn in London tomorrow as the big names of the organic food and farming business launch a bid to reverse their sales, which have tumbled during the recession.
Top organic food firms including Green & Blacks, Rachel’s and Yeo Valley are holding a summit in the City of London to launch a campaign with the goal of boosting organic sales by 50%, or £1bn.
It is a big ask for an industry which has been badly battered. The latest data from analysts TNS – which monitors sales through supermarkets – shows the market for organic food was down 13% in the year to 9 August. Sales of organic vegetables are down more than a third in the last year, and demand for fertiliser-free fruit has fallen nearly 16%. While organic milk is now the fastest growing organic foodstuff, sales were up only 2% over the last 12 months.
The fightback is being organised by the Organic Trade Board (OTB), and is the first show of solidarity by an industry riven by passionate individualism. “We had to get the industry to ‘own’ the problem, it is very principled but quite fragmented,” said Huw Bowles, the OTB’s chairman and an organic milk producer, of the need to get the sector back into growth.
The trend towards organic eating was expanding rapidly until the recession set in. Three years ago, Tesco boss Sir Terry Leahy declared the UK was turning into a nation of foodies as shoppers traded up and put more emphasis on food quality, provenance and environmental issues. Organic food had moved into the mainstream and sales were motoring up 30% a year, while cheaper value ranges were in the doldrums. Asda doubled its organic range and Tesco’s sales of organic produce hit £1bn in 2007. Leahy grumbled that Tesco had to source 70% of its organic food from abroad because UK farmers were not expanding fast enough to meet the new demand.
Then the recession hit, and in the space of just a few months shopping habits changed as consumers once again made price their top priority. Suddenly the fastest growing grocers were the discount chains, such as Aldi and Lidl, and the big supermarkets were forced to emphasise price in a bid to halt the exodus of shoppers to cheaper rivals. By Christmas last year, organic sales at the major supermarkets – which account for three-quarters of all organic sales – had gone into reverse. Some organic food was cleared off supermarket shelves to make room for more economy lines. “The organic industry hasn’t done a good enough job of informing consumers about the benefits, so it was vulnerable in recession when the choices we make are based on price,” said Andrew Baker, chief executive of Duchy Originals, the Prince of Wales’s food brand, which recently signed a major licensing deal with Waitrose.
Organic farms and organic box schemes have been hit by a sharp increase in the number of consumers choosing to cut their costs by growing their own fertiliser-free food. Demand for allotments has soared, and last week DIY chain B&Q reported a 19% increase in sales of vegetable seeds.
In July, the organics business suffered another blow when a study funded by the Food Standards Agency concluded that organic food is no healthier than non-organic. The report, conducted by the London School of Hygiene and Tropical Medicine, said “there’s no good evidence that consumption of organic food is beneficial to health based on the nutrient content”.
Now the industry is putting on a united front for the first time. At the City summit, Bowles will pitch a plan to grow the £2.1bn market by 50% over the next five years.
A national consumer campaign is planned to spell out what organic means for ordinary shoppers. It is estimated that 10% of organic shoppers account for 57% of sales: the movement has a hardcore following, but most consumers do not understand its principles, which go beyond health to sustainability, animal husbandry and pesticide-free production, said Bowles.
Analyst TNS divides organic shoppers into three categories: evangelists, dabblers and accidentals. Evangelists “fully understand the message”, while accidentals “don’t think they buy organic but we have electronic evidence that they have”. Dabblers buy organic, sometimes, for “what it implies in terms of taste, safety, sustainability” – and they are the sector the OTB wants to convert to regular organic shoppers.
The OTB is also applying for match-funding from the EU to assist with its marketing of the brand “Organic”, in what would be the first European campaign led by the industry rather than government. Officials are currently thrashing out the claims it can make with the Advertising Standards Authority.
Big organic brands such as Green & Blacks, baby-food maker Organix and drinks firm Rocks Organic all insist they are bucking the downward trend. Kellie Fernandes, global marketing director at Green & Blacks, where sales are up 4% this year, said: “We have very loyal customers.”
And Duchy boss Baker insists the recent downturn is only a blip. “Organic, sustainable food won’t go away – the day is coming when alternatives to intensive farming methods, with their reliance on oil, will have to be found.”