Wednesday, 1 May 2019
The organic market, along with other premium categories such as free-from, is showing resilience to economic uncertainty and low consumer confidence. The total organic market* grew by +5.3% in 2018, according to the Soil Association Certification (SAC). This trend mirrors that seen during the 2008 financial crisis where the organic market also saw strong growth, showing consumers are still happy to trade up where they see a benefit. The organic food market remains small, with size estimations varying; Kantar approximate its worth at 1% of the total food and drink market. Price is the main barrier for purchasing organic for 59% of consumers (Kantar Worldpanel/AHDB LinkQ, 52 w/e 25/02/2018), highlighting the need to justify its price premium.
Research by AHDB in early 2018 highlighted that there is a general consumer understanding of what organic means, with 89% linking it to goods free from chemicals, such as pesticides, and 81% linking it to goods free from antibiotics. However, beyond these overarching themes, perceptions linking to the environment, animal welfare and personal benefits (health and taste) are much lower. As consumers become more demanding in terms of quality, the organic market has an opportunity to educate consumers on what it stands for.
What channels and foods are driving performance?
Delivery is the biggest driver of organic growth, with online players such as Ocado and home delivery box schemes seeing double-digit growth year-on-year (SAC, Organic Market 2019). This is followed by strong growth for independents such as health stores. These two channels, where consumers are likely to expect to pay a price premium, are stealing share from supermarkets, which are not seeing such a fast growth as total organic. Retail availability is increasing as major brands develop in the area.
Left to right: Heinz organic tomato ketchup, Babybel organic cheese, Carte Dor organic ice cream, organic wine, Lurpak organic spreadable
The fastest-growing organic food products are canned and packaged foods, as well as chilled and deli foods (SAC, Organic Market 2019). The biggest driver of this has been plant-based alternatives. This reflects the claimed importance of organic to differing diets, being of importance to 16% of flexitarians and 20% of vegans, versus only 6% of meat eaters (YouGov, Is the future of food flexitarian, Data collected in 2018 and January 2019).
Losing share in the organic market are meat, fish and poultry (MFP), and dairy. For meat, organic pork and lamb are still growing year-on-year, while organic beef has started to decline in volume (Kantar Worldpanel, 52 w/e 24th Feb 2019). There is moderate growth for organic dairy but the category is clearly impacted by dairy alternatives with varying health claims. However, MFP and dairy are still worth 38% of the organic food market, according to the SAC and are, therefore, key areas to educate on organic.
For more information about the Soil Association Certification report, please visit https://www.soilassociation.org/certification/market-research-and-data/download-the-organic-market-report/
Previous AHDB research available here:
*Total market includes supermarkets, home delivery including box schemes, independent retailer sales, foodservice, textiles, beauty & wellbeing and licensee sales