The organic food and drink category is one of the fastest-growing sectors of the UK grocery market. In 1994 the market was worth just over £100m, but by 2003 this figure had risen to £1bn.
Consumer demand for organic products is at its highest ever level. According to consumer information company Acxiom, 42.8 per cent of UK households now buy one or more organic products monthly. While there is undoubtedly greater awareness of the benefits of organic food and a demand for higher-quality products, this rise is also partly attributable to the food scares that have dominated headlines in recent years.
The organic food industry is growing at ten per cent a year. This rise in sales means that the market is constantly evolving and it is no longer possible to stereotype consumers of organic products as “eco-warriors” or animal welfare crusaders. An analysis of more than 250,000 responses from organic consumers who took part in Acxiom’s National Shoppers Survey provides a valuable snapshot of the market. It segments organic buyers into two groups: selective buyers, who spend less than £10 a month on organic products, and committed buyers, who spend more than £31 a month on organic products.
The data shows that these two groups do share some similar attributes. Both are predominantly female and both are likely to have children over the age of four. But there are also key differences. Selective buyers are either aged between 18- and 24-years old or are over 55-years old with average incomes. On the other hand, committed buyers are aged over 40-years old and earn top-end salaries.
The selective buyers group are more likely to work in education or medical services, be a shop worker or housewife, whereas committed buyers are most likely to be professionals or senior managers. The selective purchasers tend to favour newspapers such as The Daily Telegraph, The Daily Mail and The Times, whereas committed purchases are readers of The Guardian and The Independent.
Perhaps unsurprisingly, both groups are highly active in their support for wildlife and environmental concerns, but selective buyers also enjoy hobbies such as sewing, needlework and coin and stamp collecting, whereas committed buyers prefer self-improvement and photography.
One of the strongest indicators of organic purchasing is geography, with a higher proportion of committed and selective purchasers found in Wales and East Anglia. The North is a key area for selective purchasers, while the South-east has a higher number of committed buyers. These differences are directly attributable to income levels, as a majority of organic products still have a premium price. This is reflected in the fact that the top earners are the most committed buyers of organic products.
At present, the supermarkets still dominate the organic landscape with an 82 per cent market share. The five big supermarket chains have all increased the range and number of items on offer, with some claiming to have more than 1,000 organic lines.
The report shows that in all cases Sainsbury’s has the biggest share of organic consumers, with 52.2 per cent of its customers buying organic products every month. This compares with 46.2 per cent of Tesco customers and 41 per cent of Asda and Morrisons/Safeway shoppers. The chains with the lowest proportion of organic consumers at 31.6 per cent are Somerfield and KwikSave.
The selective purchasers, who spend less than £10 a month on organic food, tend to shop in a variety of difference chains, although Sainsbury’s is still the most popular. However, the committed consumers, who spend more than £31 a month, are dedicated to Sainsbury’s, with 72 per cent of this group using it for regular purchasers.
The committed purchaser may still account for a relatively small market share, but as the market continues to grow, Sainsbury’s is likely to reap the rewards from its head start.
While the supermarkets reign supreme in the organic arena, last year saw a significant growth of nearly 30 per cent from organic box schemes. The report shows some evidence that organic shoppers are reducing their support for supermarkets and turning to local businesses. There is also increasing competition from specialist suppliers such as Fresh & Wild, which was recently bought by American retailing giant Whole Foods Market and is expected to expand its network of seven UK outlets.
The UK has the third-largest organic industry in the world behind the US and Germany but it has yet to mature. Consumer attitudes are rapidly changing and this tendency is being hastened by shocking headlines about obesity, genetically modified crops and various health scares. These dangers are also leading the younger generations to adopt traditional values concerning the quality and authenticity of their goods.
The Government has adopted a high-profile health agenda and its focus on eating a balanced diet is likely to benefit the organic market. However, the luxury positioning and premium pricing of many organic products is still prohibitive to larger families and consumers in lower socio-economic groups. This is a key factor that will need to be addressed if the category’s current level of growth is to be maintained.