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UK organics sees “disappointing” slump amid global upturn

By Kacey Culliney , 05-Mar-2012
Last updated on 05-Mar-2012 at 14:43 GMT

Sales of UK organics dropped by 3.7% in 2011 amid a global market upturn, exasperated by difficult trading conditions but caused by a lack of investment and innovation in this sector, according to a report by the Soil Association.

The Organic Market Report 2012 by the UK-based charity Soil Association pegged global organics growth at 8.8% in 2010 and noted that overall development was set to continue.

Despite this global upturn, the UK saw a drop of 3.7% in 2011 organics sales to £1.67bn (around €2bn), an outcome described as “disappointing” by James Twine, business development director at Soil Association.

“One of the striking outcomes of this report is that there is a clear lack of investment by retailers in the UK and this hasn’t been the case in other European markets,” Twine told FoodNavigator.com.

There were continued cuts in product ranges and shelf space made as well as a lack of investment in own-label products, he said.

Although not all retailers have taken this approach, he clarified, as Waitrose has been pro-active in driving its organics section.

Other European markets such as Austria, Belgium, Denmark, Germany and France have, by contrast, seen strong growth in organics, he said.

“This is  partly to do with innovation and government support in these markets,” he said, and “there are also targets for public procurement that cover the organics sector.”

Innovation and R&D needed across the board

From production level right through to point of sale, innovation and R&D is needed to drive the UK out of this rut, Twine said.

“Real investment in NPD (new product development) and innovation stimulates market growth and we haven’t seen this in the UK organics market, aside from Waitrose,” he said.

Communicating a message to consumers about the benefits of choosing organic products is also important, he said, and this is another area lagging in the UK.

At production level, there is a lack of extensive research dedicated specifically to organics, he said.

“There is a need for investment in projects like seed development, understanding soils at micro-level and breeding programmes,” he said.

The report noted that the number of organic producers and processers in the UK fell by 4% along with a decrease in the area of organic land.

Shining strengths

Within this downturn, there are strengths detailed by the report; strengths that Twine said are an indication that this negative market trend will change.

The report noted an increase in organic baby food sales, up 6.6% as well as organic meat with lamb up 16% and poultry 5.8%, and butter up 9.4%.

Dairy and fresh fruit and vegetables continue to be strong sectors, Twine said, despite an overall shrink in each segment.

Organic dairy products take a 29.2% share of the UK market and fresh produce (fruit, vegetables and salad) 22.9%, however both segments also experienced a drop in sales from 2010 and 2011.

Changing channels

Soil Association identified that one of the key factors to the market decline in UK organics was a 5% drop in multiple retail sales, an area that accounts for 71.4% of organic food sales.

Other purchasing channels are independent retailers (14.8%), home delivery and box schemes (10%), farm shops (1.8%) and farmers’ markets (1.1%).

The report showed that sales through box schemes, home delivery and mail order increased by 7.2%.

These other routes need to be capitalized, Twine said, along with the export market.

“At the moment, amid what are really tough trading conditions, it is more of a challenge for organic producers but there is still a lot of cause for optimism,” Twine said.

He noted that there is pro-activity and positive trends indicating the potential for a market shift that will, in time, favour the organics segment and its producers in the UK.

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