The French organic vegetables market is to show high growth in excess of 30 percent per annum in the coming years, providing lucrative opportunities to organic vegetable suppliers and exporters.
The new strategic study by Organic Monitor forecasts market revenues to treble between 2000 and 2004 as the penetration of organic vegetables increases in the retail sector. With a relatively slow increase in domestic organic vegetable production over the same period, exporters are tipped to capitalise on the high growth. Roughly a third of market volumes were imported in 2000 and this could reach 50 percent in 2001 due to the slow increase in domestic capacity.
The study shows that the supermarkets had 23 percent market share in the organic vegetables market in 2000. Although the retail giants are slowly extending their product ranges and increasing supplies of organic foods, the major sales channel for organic fresh vegetables remains the health food sector with 53 percent market share.
A major problem in the market is lack of supplies, which is partly because of low organic farmland in the country. There was no increase in organic farmland for vegetable production in 2000 and the implementation of new government regulations on conversion to organic farming was responsible for the conversion rate to drop in 2000. High market growth rates will widen the gap between domestic supply shortages and consumer demand in the short term.
Demand for organic food is growing at an accelerated pace due to consumer fears for food safety. Organic food retail specialists like Biocoop have reported sales increases of up to 50 percent since onset of the BSE crisis in November 2000. Demand is surpassing supplies in many sectors of the organic food industry, with exports compensating for the domestic supply shortfall.
Market revenues are projected to expand by 43 percent in 2002 to reach US $95 million as the hypermarkets play a more important role in the marketplace. Soaring demand from French consumers is causing the major retailers to increase supplies and widen availability of organic vegetables. This is boosting organic vegetable volumes and will provide the impetus for high market growth during the forecast period.
The French organic vegetables industry is predicted to change considerably in the coming years. Rapid market growth is likely to spur national production removing some of the structural impediments in the marketplace, particularly the inefficient and fragmented supply chain. The market has been constrained for a number of years by the large number of industry participants and an inefficient distribution structure.
There is a high degree of fragmentation in the French organic vegetables industry with the presence of numerous suppliers. Many of these companies have traditionally focused on export markets, and they supply a wide range of organic fresh produce in low volumes. Their low national focus and lack of volumes prevents strong relationships to be formed between them and the major retailers. This has resulted in a lack of loyalty at the retailer side and it has also limited their role in the marketplace.
As the market continues to develop, consolidation is expected in which major suppliers are likely to merge, and some vertical integration is predicted. This will enable stronger relationships between the major retailers and suppliers, shortening the supply chain, allowing more efficient distribution and lower consumer prices. As a result, Organic Monitor predicts the French organic vegetables market to be one of the largest in Europe by 2007.
About Organic Monitor
Organic Monitor provides strategic research & marketing consulting on the international organic food industry. International consultants continuously track the organic food industry for market trends and developments. Visit us at www.organicmonitor.com
This strategic report is one in a series on the European organic vegetables industry. Free executive summaries of Organic Monitor reports are available to the press.
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Research Publication: #1301-41 The French Market for Fresh Organic Vegetables
Publication Date: April 2001
For further information, please contact:
Mr. Amarjit Sahota
Organic Monitor
Tel: (44) 020 8567 0788
Fax: (44) 020 8567 7164
Email: asahota@organicmonitor.com
