Life is no longer a pesticide-free bed of roses for the organic food sector. The market may be worth almost £1bn a year, but sales were down 5% between March 2011 and March 2012, according to Kantar Worldpanel, as consumers became increasingly cynical or confused in the light of recession and rising food prices.
“The Food Standards Agency drove a bus through the claim that organic was in any way better quality or better for you,” says Edward Garner, communications director at Kantar Worldpanel, referring to a 2009 government report on organic food.
He points out that the UK’s four leading organic brands focus on other plus points of their product ranges. “Duchy Originals, Rachel’s Dairy, Green & Black’s and Yeo Valley use organic provenance as supporting evidence for quality, sustainable farming, heritage, flavour and luxury, rather than simply stating their organic-ness,” says Garner.
“However, there are certain areas where the desire to avoid pesticides in products will favour the organic label. In milk, for example, the consumer has a clear vision of the process – grass, cow, me – and is keen for that to be as transparent and pure as possible.”
That desire, however, did not stop organic milk sales falling by £9.6m to £120m in 2011/12.
Garner blames this trend on the idea that organic food is too posh. Some consumers dismiss it as a “middle-class affectation”, he says, pointing to the fact that sales of organic vegetables slipped £11.5m in the year to March 2012, accounting for 2.7% of the total organic market.
To arrest this decline, some supermarkets are starting to include their organic produce within their mainstream displays. This new marketing strategy is made easier by the fact the two options are becoming closer in price.
“There is not enough clear consumer benefit to merit charging a higher price. You’ll often find someone has bought organic because it was the cheaper option due to a price promotion,” says Garner.
But not all consumers are being turned off by “posh, expensive food”. Organic baby food continues to show healthy growth, with sales increasing by £11.6m to £130m in the year to March 2012. It also made up 26.1% of the total organic spend. Similarly, cosmetics companies are driving new product development with organic ingredients, which has seen spend rise 35% year on year.
And Kantar’s other research reveals that free range, Fairtrade, sustainable and local are issues that people respond favourably to, even if they don’t fully understand the detailed definition of each description.
Free range egg sales account for more than two-thirds of the overall retail egg market, while sales of Fairtrade goods are growing 8% a year.
Garner says that marketers must consider the additional benefits of their organic products. “Ask whether consumers value the benefit enough to pay for it? People will buy organic products where the production methods support a compelling consumer benefit.”
We ask marketers on the frontline whether our ‘trends’ research matches their experience on the ground
Group product manager
Baby food is quite different to the regular grocery category and organic versions do contribute a huge part of the sector’s total value. Seeing baby food buck the trend bears out our own research.
The continuing guilt that mums seem to feel when buying rather than making baby food from scratch can explain this behaviour. There’s a blurring of the boundaries as to what mums understand by organic and what they perceive to be natural.
They wouldn’t home cook with organic ingredients, but when it comes to buying, they check the ingredients for items they’d find in the cupboard. That way, to them it feels less processed.
Price point is much less of an issue now because the biggest part of our range is jars where we join non-organic brands such as Heinz or Cow & Gate on the shelf. We are involved in permanent cross-brand multibuys, which brings our price down.
More premium brands such as Ella’s Organic and Plum Baby have carved out a higher price point with the pouches and pots, so this has eroded our own potential premium positioning. However, against Heinz and others, the organic element is certainly our big fighting ground.
There is room for growth in organic and we hope it will go from strength to strength in the baby segment.
Timothy Han London (aromatherapy products)
Like Green & Black’s, we do not promote the organic element of our products, even though I think it is a very important component. We have even fought to have the Soil Association logo that appears on our packaging made smaller than its brand guidelines suggest.
There are a certain number of skincare consumers who care about organic but the vast majority are more concerned about results. Organic carries a certain amount of baggage in the skincare industry because when the trend took off so many rushed to gain certification that not enough attention was paid to the efficacy of the product.
There are also different standards as to what you define as organic. The whole area is really complicated. Retailers bear this trend out by not mentioning organics any more.
This doesn’t mean that organic is not important. If we can change perceptions about organic and advanced skincare that actually works, we can make a huge difference to purchasing behaviour.
Skincare brand Ren achieved this eight years ago with the “natural” concept. We hope to do the same with organic now.
Vinceremos.co.uk (organic wine retailer)
Wine is very much at the opposite end of the organic scale from baby food. We’ve never really seen the boom period that organic goods experienced as a whole.
We’re always at pains to sell wines because they are good quality, not simply because they are organic.
Our message is never that non-organic wines are bad for you but we try to express that organic agriculture is the way forward for the wine industry.
By virtue of being quite a small company, we are unable to compete on price with Naked Wines or Laithwaites – we simply can’t get the deals that they get. We rely on people who want biodynamic [a type of organic agriculture], sustainable wines.
The trend for supermarkets reducing or removing their organic sections is not bad news as far as we’re concerned. If they get rid of organic, then we hope those consumers will migrate to us. A drop in sales of less than 1% for the supermarkets is still a sales uplift of several hundred per cent to us.
Manager, brand development and product innovation
Waitrose probably doesn’t reflect the market as a whole because our customers tend to make “ethical” buying decisions such as Fairtrade, free range and organic.
Our “everyday to gourmet” philosophy covers our organics offer, which includes chickpeas, baked beans, pasta sauce, chocolate biscuits, ales and fillet steak.
We’ve grown our organic market share to 22%, which is high considering our grocery market share is 4.5% overall.
Our organic sales have remained steady over the past year, during which we have expanded the Duchy Originals from Waitrose range to more than 250 products.
Head of brand
Abel & Cole
We are enjoying healthy growth at the moment in our vegetable box schemes. We believe that part of this is down to the original doubt over organics that was shown in 2008/09 when farmers started switching back to conventional methods.
Since the recession hit, the industry has been trying to focus its efforts on what organics means rather than just relying on the word ‘organic’, which doesn’t really mean anything. For us, provenance is one key selling point in that people want to buy food that is produced on a smaller scale, employing people, not machines.
There is an element that we represent the farmers’ market that some consumers don’t have access to.
Another driver for us is creativity in eating. We market vegetable boxes on the principle that you don’t really know what you’re going to get, so you’re encouraged to push yourself to try new recipes. There is a clear lifestyle trend towards this with the ongoing popularity of cookery shows and books.
Equally, customers enjoy the challenge of the vegetable box. There are more fruit and vegetables in there than you might normally buy from the supermarket and the knowledge that another box is arriving next week compels you to eat more of them and therefore make your diet a little more healthy.
We can’t claim that organic is better, but we can say our veg boxes are pesticide-free and that gives consumers confidence when feeding themselves and their families.