The Soil Association’s Organic Fortnight this year ran from September 6-21, kicking off with the annual Organic Food Festival in Bristol.
The message of this year’s event was ‘Love Your Planet, Choose Organic’. Sponsored by Organix, Riverford Organic Vegetables and Greenvale AP, the two weeks of festivities brought together individuals, communities, retailers, restaurants, schools and organic farms for the UK’s biggest celebration of all things organic. Events held all over the country included organic breakfasts at work and farm open days, to organic cookery lessons in schools and organic fashion shows.
But were the celebrations short-lived? TNS figures released earlier this month for the Guardian painted a chilling picture for the organics sector - especially at a time when speculation is rife that shoppers are due to abandon the category in their droves.
The data revealed that organic food sales have fallen more than at any other time in the last decade. Spending on organic food and drinks fell to
£81 million in the four weeks to August 29, from almost £100m a month earlier this year.
According to TNS data, sales of organic fruit and vegetables increased just two per cent in the year to August, compared to the double-digit increases previously reported.
Edward Garner of TNS said: “We are certainly seeing a dip, the question is: is [it] a dip that is bouncing back again, or could it be the start of a real drop?”
One insider reports a 12 per cent drop on organic brassicas and a 14 per cent fall in organic root vegetable sales, along with an 18 per cent dive in apples and a 15 per cent drop in stonefruit sales; while his volumes to Lidl and Aldi have increased by 12-15 per cent.
“There is a shift away from organics and, to a lesser extent, Fairtrade,” he tells FPJ. “We are going full circle again, from ‘values for money’ back to ‘value for money’. We did a little research and found that people are just being more cautious about where they shop, what they buy and how much they spend.”
Freshinfo’s August 8 poll question - To what extent do you believe the organic sector will be affected by the credit crunch? - ignited plenty of debate, with a plethora of opposing comments. “It’s back to basics for everyone… and the organic sector will be one of the first to be hit,” wrote one pollster, while another said: “I would have thought that the majority of organic buyers would not feel the credit crunch as hard as the so-called value line punters, so maybe the effect will be minimal.”
Consultant Brian McGillivray wrote: “As this started in the US, it has impacted on Whole Foods’ bottom line in the last quarter, so one has to expect a similar position over here.”
However, Asda, now touted by many to have overtaken Sainsbury’s and become the second-most important supermarket in terms of food and drink sales in the UK in these penny-pinching times, conversely reported an increase of 25 per cent in sales of its organic range in the last quarter - compared to growth of just under three per cent for the rest of the market. The Leeds-based supermarket chain attributes its organic rise to a 10 per cent increase in AB shoppers hitting its stores. During Organic Fortnight, Asda organised price promotions on more than 40 organic lines across its stores.
But recent reports suggest that the cost of an organic veg box can in many cases fall far below that of the equivalent purchases at large retailers. Rob Haward, operations director at box delivery scheme Riverford Organic, openly accused major supermarkets of operating “financially redundant” business models in the press this quarter, claiming they are selling organic vegetables at an elevated cost. He blamed large central distribution warehouses and the rejection of irregular-sized produce for the bumped-up price of organic veg in retailers.
Indeed, farm shops and box schemes may be profiting from the credit crunch, suggesting there is plenty of light at the end of the tunnel for the organic sector.
One insider says: “We definitely saw a downturn in demand in August across the board and the major retailers have seen a fall in demand.
“But in September, the non-retail side has picked up - it might not be as strong as it was in 2007, but it is hard to tell at the moment. We have felt strong support from the non-retail side of box schemes and niche wholesalers.”
Indeed, the Soil Association has been quick to assert the importance of the category, even in today’s economic climate. Helen Browning, the association’s director of food and farming, said: “I predict [demand] will plateau a bit, but not decline.
“These values are important to people still - the concern about the way we farm, the way the countryside is under threat at times, and animal welfare.”
And Soil Association policy director Peter Melchett insisted any recent decline in sales of organic produce is a “short-term problem”, following the release of the TNS figures in the Guardian. He told FPJ that the industry body is still expecting 10 per cent growth this year, and the strong sales increase at Asda is evidence that this goal is still within reach.
Traders are taking a generally optimistic point of view. “For us there is a discreet organic consumer and the opportunities are still there,” one tells FPJ. “These shoppers will stick with organic as there is no cheaper alternative to the concept - in the longer term, a core cluster of consumers will continue to buy into the category.”
FLORETTE’S ORGANIC OPPORTUNITY
We got into organics because there was clearly a consumer trend there, says Sandy Sewell, commercial director for bagged salad specialist Florette. There are always a number of concerns surrounding produce - pesticides, gangmasters, food miles, etc - but the major concern we heard from our consumers, who tend to be ABC1s, was pesticides.
Organics fit in with our brand values of freshness and naturalness, and we felt it was an area in which we could make a difference at the heart of consumer trends. We were already working on LEAF and such initiatives, so it complemented our brand profile.
The other reason we got into it was the financial opportunity, with the organics market now worth more than
£20 million. We believe that in the longer term this will continue to grow, as many consumers have issues with pesticides and there is something we can do about that.
We tested our organic produce for quite a while, as we wanted to make sure it was completely safe. We could not use chlorine to wash the salad leaves and therefore developed a UV system using just water for washing, so there were no chemical additives. We felt we needed to do something a bit different with the product safety aspect in order to stand out.
We trialled the system in France for a year, then trialled it for a year in the UK before launching two organic salad bags into the market in May.
One of the bags consists of spinach, watercress and rocket, while the other is a baby leaf salad comprising red chard and rocket, among other leaves. Both are on sale for £1.69. The raw materials are sourced from the UK during the summer season and from Italy and Spain during the winter months.
Since the launch, sales have been good. We have not gone into all our customers yet - we have been in Asda, The Co-op and Budgens with these organic lines this summer. We are pretty comfortable with the sales level, but feel there will be a lot more opportunities in the future, as we are building from a low base. Despite the economic climate, there remain plenty of opportunities in organics - but we need to get new consumers in. The credit crunch also offers an opportunity in terms of innovation - everything we are doing as organic now is baby leaf, but there is an opportunity to introduce adult leaves, which are slightly cheaper, into the category.
The other route through which to attract new consumers is with marketing. As a brand, Florette has been good at bringing new consumers to the category and next year we think we can ramp this up. Florette will continue with its generic television advertising next year as people know the adverts - they present the credentials of the brand and we get a positive reaction from them. But in the future we will look at more specific advertising around organics. We have done a good job this year, but we need to take the organic business forward with investment and innovation.
We would like to launch an organic version of Crispy, which is our best-selling lettuce bag, but it is a question of making sure we get the right availability and quality.
Next year, we plan to increase volumes and move forward. A couple of years ago just putting the label organic on an item meant it would sell, but in today’s climate, consumers are being more fussy. Like every category, organics will plateau, but we still believe there is an opportunity - however, we will have to look for it more and work harder to achieve it.
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