A booming market with remarkable growth rates…
Sales of organic foods are soaring throughout Europe. Consumer interest is growing, production and imports are rising, and mainstream manufacturers and retailers are moving increasingly into the sector.
Overall growth rates of 20, 30, and 40 per cent a year are general in the various countries and product categories. Sales of some items in the organic range are doubling from one year to another.
Though total consumption of food and drink in all the countries of Western Europe is stagnating or rising in volumes which do little more than reflect population growth, the booming sales of organic products are readily understandable. Consumers are worried about the safety of food, insecticide and pesticide residues, heavy use of chemical fertilisers and genetic modification. They have experienced several serious food scares in recent years. Many people are concerned about the effects of intensive farming on animals and poultry, on the countryside and on the environment in general. These factors, coupled with increasing awareness of the importance of diet and nutrition, have intensified interest in organic foods everywhere.
…covered by a new and detailed multi-country report
To meet the need for comprehensive information on this dynamic sector, Corporate Intelligence on Retailing has just issued a highly topical report, The European Market for Organic Foods.
The report contains detailed studies of organic foods in seven European countries and a European Overview. The countries studied in detail are the four largest (Germany, France, UK and Italy) and the three in which organic products are most important in relation to the size of their total food market (Austria, Denmark and Sweden).
The seven countries plus The Netherlands have a combined population of 294 mn; they account for almost 80 per cent of the population of the 15 member states of the EU and for 85 per cent of the EU’s gross domestic product. The European Market for Organic Foods reports that total retail sales of organic products in these eight countries are now running at around US$5 bn or e4.3 bn a year. At this level, organic products account for approximately 2 per cent of total food sales.
For each of the seven countries covered in detail, this 190-page report provides information on:
- market size and the main features of the market
- the structure of distribution
- production trends in unprocessed and processed products
- the regulatory background and the main organisations concerned
- prospects, and leading suppliers and retailers, with names and addresses of important contacts.
The numerous profiles and case studies are especially valuable: they describe what governments, major retail chains, specialist producers and retailers are doing, how they are developing their organic foods business and what can be learned from their experience.
Attractive prospects for European farmers…
Farmers throughout Europe are converting in large numbers to organic methods of production, usually with encouragement and financial aid from their governments. A high proportion of organic products sold in all European countries is imported, so there is evident scope for European farmers to increase their sales.
Imported products take a considerably higher share of the total organic foods market in the UK than elsewhere (60 per cent), which suggests that there is substantial potential for UK farmers.
Because of its nature, organic farming presents opportunities for small farmers working in areas which may not be suitable for large-scale food production. Such farmers have done well in several continental countries, notably Austria and Denmark, where organic products take a relatively large share of total food sales.
…though prices may create problems
Costs per unit of output are inevitably higher in organic farming than in conventional farming, so organic products retail at higher prices. However, the authors of The European Market for Organic Foods judge that consumers are generally ready to pay price premiums of 20 to 30 per cent for organic products. Many items sell at much higher premiums, but when the price of the organic product is 50 per cent or more above that of a conventional one, the number of potential customers falls off substantially.
The main products and growth sectors
Fresh fruit and vegetables, milk and dairy products, cereals and bakery goods are the chief organic products everywhere at present. Sales of organic meat, including processed meat, are expected to increase. In Denmark the government is providing new backing for the production of organic pork, in the expectation that this is essential to maintain the country’s position as one of the world’s largest exporters of pork. Other processed products in which sales of organic varieties are predicted to expand rapidly are dairy products, fruit and vegetable juices, frozen products, value-added convenience foods and baby foods.
The grocery chains are committing seriously to organics
Whereas in the late 1980s and early 1990s the large food chains were hesitant in their approach to selling organic products and wanted to see how the market would evolve before committing themselves, they now find themselves obliged to move with the tide and adapt their selling and purchasing to meet surging demand for organic products. In all European countries except Germany and Italy they account for 50 per cent or more of sales. Some of them are launching own-brand organic products. However, the potential growth in their sales is to some extent limited by the availability of organic products. Reacting to this problem, several of the leading UK grocery chains are giving special assistance and encouragement to organic farming.
The future: certainly growth and possibly radical changes
Continued rapid growth is forecast in The European Market for Organic Foods. Overall growth may attain 20 to 40 per cent or more over the next two or three years, but it could be considerably higher if production increases and relative prices fall. Sales of some products will double each year. Several large retailers are predicting startling rates of growth.
If high growth rates continue over an extended period, fundamental changes with wide-ranging consequences will occur in both the production and distribution of food in Europe. Small farmers should do well; mass-production farmers may suffer. Large retail chains will have to buy on a more local scale, leading to some reorganisation of their buying and logistics operations. Small, independent retailers with good links with local organic producers may gain competitive advantage.
No matter what conjectures one may make about it, the continuing growth in the market for organic foods has profound implications for everyone in the food industry and for everyone supplying it with goods and services.
The European Market For Organic Foods can now be purchased quickly and easily through our Knowledge Store. For further information about the publication and details of how to order, Click Here
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