Consumers, Retailers - and the
Organic market
National Organic Food Conference
4 September 2008
Jonathan Banks
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Agenda
•Consumer trends and concerns
•Product trends
–organic
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1
Demographics: the aging population
Life expectancy
Swaziland 33, Andorra 83
Population of over 65s
(millions)
830
420
230
1975
2000
2025
Sweden
81
Norway
80
Netherlands
79
US
78
Ireland
78
Slovakia
75
Lithuania
74
Estonia
72
Latvia
71
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Source: CIA World Factbook; UN
Consumer confidence...up in only 8
135
Norway
125
115
105
Ireland
95
85
GB
75
65
55
Japan
45
h1 05
h2 05
h1 06
h2 06
h1 07
Source: Nielsen Global Online Surveys to April/May 2008
h2 07
h1 08
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2
What are your biggest concerns over the next 6 months?
The economy
29%
Work/life balance
29%
22%
Debt
21%
Health
20%
Job security
Children's education and/or welfare
18%
Crime
10%
Parents' welfare and happiness
10%
Global warming
Ability to afford retirement
No concerns
9%
8%
6%
Source: ACNielsen – Global Online Survey April 2008
Ireland’s results
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Fast Moving Consumer Goods market dynamics
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3
Agenda
•Consumer trends and concerns
•Product trends
–organic
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4 megatrends
Health/
Well-Being
Indulgence/
Pleasure
Ethical
Convenience/
Practicality
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4
25
46
‘Health’ labelled sales
50%
value
20
40%
v last year
30%
10
20%
5
10%
0
0%
N
Fa
t
at
u
Sa
r
a
l t Ca l
O lo
ri
r
P r S od e
C
e
i
u
ho se
m
le rva
st
er tiv
W ol F e
h o re
le e
S w G ra
ee in
te
ne
C
C
af alc r
fe
in ium
e
Fr
O ee
rg
an
ic
H La
or ct Fib
m os e
on e r
e/ Fr
An ee
tib
io
C
tic
ar
P
b
r
o
C
t
e
on i n
sc
io
us
M So
u
y
An ltig
tio ra
in
x
G ida
lu
te nts
n
Fr
O ee
m
Pr ega
o
G bio
M tic
O
Fr
ee
15
Source: Nielsen 52w/e 19 April 2008
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Organic retail sales
Norway
€60m
+46%
Germany (part)
€459m
+42%
US
€2.6bn
+26%
Denmark
€500m
+21%
UK
€2.1bn
+19%
Sweden (KRAV, part)
€170m
+19%
Austria
€194m
+18%
Finland
€63m
+10%
Italy
€425m
+2%
Source: Nielsen Total Store Read – latest year
Germany & Sweden: meat, fish, fruit & veg. excluded
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5
23,885 respondents,18 statements
13 categories,18 countries
Organic farming is better for the
environment
Helps smaller farmers and supports rural
60
communities
50
They are just a fad
Just seems like the right thing to do
40
I don't trust the credentials of the organic
products
It's not relevant to me
Food taste better
30
20
Not sure about the benefits of organic
I would pay more for organic
10
0
I would change store if they didn't have
organic
Quality is just as good as non organic
Organic products are too expensive
Can avoid pesticides and other toxins
I disapprove of modern farming methods
They are healthier
More choices in organics should be
available
They are safer for people
They are GM free
Base : All Respondents = n
n=1201 for Denmark n=1005 for Czech Rep.
n=604 for Switzerland
n=1201 for Austria
n=707 for Slovakia
n=769 for Poland
n=3004 for Sweden
n=1049 for Spain
n=1012 for Finland
n=3308 for France
n=1225
n=1204
n=1500
n=1558
n=1530
for Norway
for Great Britain
for Germany
for Italy
for Belgium
n=1508 for Netherlands
n=500 for Ireland
n=1000 for Portugal
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Perception towards Organic Products:
Pro-organic Attributes
% of All Respondents who Agree
Ireland
19
Food tastes better
I would pay more for
organic
35
29
26
Helps smaller farmers
and supports rural
communities.
Just seems like the right
thing to do.
Denmark
GB
44
21
9
37
20
I would change store if
they didn't have organic
12
Better for the
environment
8
27
49
26
25
9
49
Source: ShopperTrends 2008. Base : All Respondents (n)
n=604 for Switzerland; n=1204 for Great Britain; n=1500 for Germany;
n=500 for Ireland; n=1530 for Belgium; n=1508 for Netherlands
72
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6
M&S Plan A objective 49...
• Organic food
– Tripling our sales of organic food in the UK and Republic of Ireland
Sources: Marks & Spencer; Nielsen Media Research
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Winning the argument?
“It’s worth paying extra for organic products”
% respondents who AGREE
27%
26%
25%
23%
21%
February
2004
February
2006
October
2006
Source : Nielsen Homescan Surveys
February
2007
February
2008
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7
Perception towards Organic Products:
Health-conscious Attributes
% of All Respondents who Agree
Ireland
They are safer for
people
12
They are healthier
12
Can avoid pesticides
and other toxins
12
They are GM free
More choices in
organics should be
available
I disapprove of modern
farming methods
Netherlands
GB
26
35
32
48
52
21
25
10
62
38
36
26
18
Source: ShopperTrends 2008. Base : All Respondents (n)
n=604 for Switzerland; n=1204 for Great Britain; n=1500 for Germany;
n=500 for Ireland; n=1530 for Belgium; n=1508 for Netherlands
48
28
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Confused? You will be!
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8
93% Awareness, 28% purchasing
Denmark
% Bought in the last 4 weeks
65
55
Austria
45
Sweden
Norway
Germany
Finland
35
Belgium
25
France
Switzerland
Great Britain
Italy
Slovakia
Czech Republic
Ireland
Poland
Netherlands
Spain
15
40
50
60
70
80
90
100
% Aware of Organic Products
Base : All Respondents = n
n=1201 for Denmark n=1005 for Czech Rep.
n=604 for Switzerland
n=1201 for Austria
n=707 for Slovakia
n=769 for Poland
n=3004 for Sweden
n=1049 for Spain
n=1012 for Finland
n=3308 for France
n=1225
n=1204
n=1500
n=1558
n=1530
for Norway
for Great Britain
for Germany
for Italy
for Belgium
n=1508 for Netherlands
n=500 for Ireland
n=1000 for Portugal
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What kind of Organic Products are shoppers buying?
% of Organics buyers buying...
Fresh Fruit/Vegetables
76
Poultry and eggs
44
Fresh Meat
30
Dairy Products
27
Fish
11
Fruit Juice & soft drink
8
Tea & coffee
6
Baby Food
6
Chocolate
4
Wine & spirit
4
Skin care
3
Baby product
3
Others
3
Source: ShopperTrends, Ireland
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9
Cow Milk: p/litre
75
+29%
70
65
+17%
60
Organic
55
Non-organic
50
Aug 2004
Aug 2005
Aug 2006
Aug 2007
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Source: Nielsen Scantrack UK Total coverage
GB egg sales by type: £m
52 WE 11.03.06
52 WE 10.03.07
52 WE 08.03.08
£ per pack premium per pack
£1.25
587
£1.04
£0.99
459
+47%
£1.46
56
478
+54%
+53%
£1.93
£1.59
78
66
ORGANIC
Source: ACNielsen data to 8 March 2008
STANDARD
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10
Baby food
70
Norway
60
50
Low share, high growth
% growth 2007 v 2006
40
Sweden
30
High share, low growth
20
GB
Denmark
Austria
10
Italy
Germany
0
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Finland
-10
Belgium
-20
organic's share of category 2007
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Source: Nielsen Scanning data
Perception towards Organic Products:
sceptics’ Attributes
% of All Respondents who Agree
Ireland
I don't trust the
credentials of the
organic products
Not sure about the
38
They are just a fad
Switzerland
20
22
25
benefits
GB
29
23
27
It's not relevant to me
35
23
29
Quality is just as good
as non organic
60
64
13
Too expensive
29
35
48
44
Source: ShopperTrends 2008. Base : All Respondents (n)
n=604 for Switzerland; n=1204 for Great Britain; n=1500 for Germany;
n=500 for Ireland; n=1530 for Belgium; n=1508 for Netherlands
51
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“Which of these types of products do you
actively try to buy?”
Local products
66%
64%
Energy efficient products or appliances
52%
Products with minimum/no packaging
Products in recyclable packaging
55%
46%
Products not tested on animals
48%
Fairtrade products
43%
Products from a Farmer's Market
38%
Organic products
Products that haven't travelled long
distances to get to the store
Ethically produced or grown products
30%
29%
ROI
None of these 5%
Source: Nielsen Global Online Survey – April 2007
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Fairtrade: weekly sales
25th Feb-9th March
FT Fortnight
26th Feb-11th March
FT Fortnight
10,000
9,000
6th-19th March
FT Fortnight
8,000
7,000
1st-13th March
FT Fortnight
6,000
5,000
4,000
3,000
2,000
1,000
0
19/02/2005
19/08/2005
19/02/2006
19/08/2006
19/02/2007
Source: Nielsen ScanTrack Fair Trade £000’s to 8 March 2008
19/08/2007
19/02/2008
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Caution...
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
“What’s the relevance of the ‘parrot’ logo?”
“Low commodity prices are caused by over-supply”
“Any subsidy or protection scheme is wrong”
“Fair trade schemes encourage further over-production”
“Fair trade rewards inefficient producers”
“Only a small proportion of the premium I pay reaches the producer”
“Makes things worse for producers outside Fair trade schemes”
“Wrong for Fair trade schemes to align with big multi-national
manufacturers and retailers”
“Better to help poor farmers add value to a basic crop or
grow something with higher demand (and therefore price)”
“I choose better ways to give money to charity”
“Fairtrade quality is lower than other similarly priced alternatives”
“Manufacturers and retailers have an obligation to their shareholders to
maximise (optimise) profit”
“There are so many different logos on packs it’s confusing”
“Accreditation bodies are just there to make money for themselves”
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Vox populei vox dei...
“The accreditation bodies are just there to make
money for themselves”
“It’s a money-making scam then really”
“Constant guilt”
“The whole world is collapsing around you”
“Everything you buy that’s not organic is covered
in chemicals”
“Not put off by negative publicity because they’re
trying to do something good”
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Source: Dragon brands focus groups 1 Feb 2008
Branded NPD: sales in year 2
Only 24% of successful launches are worth more in Year 2 than Year 1
Index
Growing
24
>120
Stable
18
80-120
<80
Declining
58
% Product Indexes
169 New Launches Used in sample
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14
“Natural is good, synthetic is bad”
• Healthy?
– positive: (eg Omega 3s and 6s)
– negative: E.coli, botulism
– ‘chemical’ fertiliser v cow manure
• Environmentally friendlier?
– carbon emissions
– pollution
• Tastes better?
– side by side blind taste tests
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Summary
•Consumers: richer, older, fatter
•4 megatrends:
– health & wellness, convenience & snacking,
indulgence, ethical
•Organic still growing
•Consumer confusion
•Manufacturing integrity
•Consumer trust and propensity
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15
Closing thought...
“It is not your duty to
finish the work, but
neither are you free to
neglect it.”
Source: Rabbi Tarfon, Pirke Avot, Talmud
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Thank you!
•Questions?
•Comments?
•Good luck!
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16