Can Organic revive consumer interest?

The Soil Association may well have tried to put a positive spin on it, but the results of their annual survey on the organic market make for depressing reading.

Sales of organic products fell almost 13% to £1.84bn, with baked goods and vegetables among the worst hit with drops of 40% and 23% respectively. This sales dive may have been the first in 15 years, but it was expected, of course: organic products have struggled to entice cash-strapped consumers to pay the premium.

Compare that with Denmark, where sales have held up during the recession. This is, in no small part, thanks to a campaign run by the Danish Ministry of Food, Agriculture and Fisheries in 2003 with ads on the TV and radio, as well as wide-ranging PR, combining to promote the sector.

The campaign was run when the market was in a position of strength, with sales rising and ethical issues front of mind among consumers. This provided a firmer grounding on which the sector could survive a downturn – consumers knew what it was about and why they were paying for it. Some say the UK industry made a “huge mistake” in not streamlining its own messaging when times were good .

Simon Wright, who runs ethical consultancy OF+ Consulting, explains: “The organic industry made a huge, huge mistake years ago when it failed to get its messaging and marketing tactics right. Rather than rely on simple messaging it tried to be all things to all people – greener, healthier, fairer. That just confused consumers.

“So, when the credit crunch hit and people began to reassess what they put in their shopping baskets, organic was one of the first things to go – especially in foods where the price premium was particularly high, or there was a competitive offer like Fairtrade or local.”

The oft-asked question is why Fair Trade is holding up while organic struggles. “It’s because Fair Trade is a single message, clearly communicated,” adds Wright.

The sales downturn could thus be seen a much-needed wake-up call with the UK organic industry now, finally, gearing up for its own generic campaign for the ’Organic UK’ band. Though the project has not been a knee-jerk reaction to falling sales (discussions have been ongoing since 2008), the decline in the market has certainly “spurred the impetus”, says the Soil Association’s trade director Finn Cottle.

Though similar to the Danish model in terms of its intentions – increase education, awareness and, in turn, sales – the UK campaign will, uniquely (according to Cottle), be funded by industry, not Government. And support has come thick and fast – in spite of the economic conditions.

Over 80 businesses – from big brands like Yeo Valley to small farmers – have pledged a combined £315k a year for the three year campaign- £65k above the target. Waitrose is also among those involved (but, interestingly, not M&S).Brand manager for organic at Waitrose, Andrea Watson says the funding will provide the tools for marketing and will allow the key organic messages to be communicated, promoting the role of organics to a whole new audience.

And, though the primer campaign has included advertorials in The Guardian – the campaign won’t just be preaching to the converted. The Organic Trade Board, set up to revive the organic ’brand’, has also applied for match-funding from the EU which would swell the pot to almost £2m – and expand the scope of the project.

This is the kind of budget that can “make a difference”, says Sophie Daranyi, CEO at Haygarth which won a four-way pitch to run the project at the tail end of last year.

A primer campaign has already begun with a new website and advertorials in The Guardian. Advertising and PR will take the lion’s share (75%) of the funding for the full campaign.

The target is a campaign, starting in October, that will deliver a 15% uplift in sales each year. To have any chance of this, it will have to do something that organic has often failed to do: simplify the messaging. Achieving that in a sector that is inherently complex is no easy task.

Consumers now buy organic for a plethora of reasons: environment, animal welfare, health, taste. Any campaign will have to appeal to those values. The trick will be to do that, and make it simple.

“Organic is not easy to understand, so the language we use in the campaign must appeal to the everyday consumer,” says the Soil Association’s Cottle. “The idea is to promote organic more generally, and not the brands.”

The smaller brands will certainly benefit from the amplification that a generic campaign will offer. Further activity from the bigger brands could also reinforce this.

Indeed, testing though 2009 was, a number of leading brands continued to invest in marketing their products. It’s the ones that are heavily promoted that are weathering the storm best.

Yeo Valley, for instance, combined deep-cut promotions with a reduced headline price to ensure the range was appealing to value-conscious consumers – strategies that will continue this year as the brand goes about “aggressively protecting” its position as market leader.

OMSCo, the organic milk co-operative that supplies the likes of Yeo Valley, also invested, with £1m spent on TV, press and PR to ensure market momentum was maintained. Sales of organic milk “accelerated”, enabling it to buck the trend and grow by 1% (though a new healthy 1% fat milk contributed too). There’s an upweighted campaign planned this year to build on this success.

Pushing organic milk is, of course, a lot easier than many other organic products given the small price premium compared to standard milk. Yet organic milk still only accounts for 4% of the market [Kantar Worldpanel]. Compare that to Denmark where it’s over a third and it’s clear that there is plenty of scope for improvement on these shores.

“I think the organic sector will benefit from this period in the mid to long-term,” adds Wright. “After years of seeing itself as a ’bit special’, the recession has brought the category into the real world of grocery and, as a result, organic is growing up a bit.”

Annual organic sales figures since 1993 (Soil Association):

1993 = 105 million
1994 = 121 million (+15)
1995 = 140 million (+15)
1996 = 200 million (+42%)
1997 = 260 million (+30)
1998 = 390 million (+50%)
1999 = 605 million (+55%)
2000 = 802 million (+32%)
2001 = 920 million (+14)
2002 = £1 billion (+8%)
2003 = £1.1 billion (+10%)
2004 = £1.2 billion (+11%)
2005 = £1.6 billion (+30%)
2006 = £1.9 billion (+22%)
2007 = £2.078 billion (+7.3%)
2008 = £2.113 billion (+1.7%)
2009 = £1.84 billion (-12.9%)