The German organic market – An overview
Prof. Dr. Ulrich Hamm, University of Kassel, Germany
1 Analysis of the previous organic market developments
1.1 Demand
1.2 Supply
1.3 Marketing
2 Trends for the further development of demand and supply
3 Potential opportunities for Irish exporters of organic food
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
1 Analysis of the previous organic market developments
1.1 Demand
Annual turnover for organic food in Germany 1)
billion Euros
6.00
5.30
5.00
4.60
3.90
4.00
3.50
3.00
3.10
2.70
3.00
billion Euros
2.05
2.00
1.00
0.00
2000
1)
2001
2002
2003
2004
2005
2006
2007
On retail level, excluding out-of-home consumption
Source: Hamm and Rippin 2008
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
1.1 Demand
Germany is by far the biggest organic food market in Europe, however,
there is still more room for further growth.
Organic food purchases of the top 5 countries in Europe 1)
(2007, in Euro per capita)
103
Sw itze rla nd
De nm a rk
92
Lichte nste in
91
74
Austria
65
Ge rm a ny
0
1)
20
40
60
80
100
120
Excluding out-of-home consumption
Source: Hamm 2008
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
1.1 Demand
The level of organic food consumption was still low in Germany in 2007:
► organic share on total expenditures on food was 3.4% with huge
differences between the different food categories:
63.8% baby food in jars
28.8% lemons
28.2% vegetable drinks
27.4% carrots
24.3% beetroot
16.6% muesli
15.3% zucchini
13.9% bananas
11.5% fresh milk
10.4% eggs
7.7% bread
7.1% potatoes
6.9% oranges
5.2% apples
3.3% jogurt
2.4% butter
2.2% beef
0.7% poultry
0.6% pork
0.1% fish
Source: ZMP (2008) based on GfK panel data
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
1.1 Demand
Buying frequency of German organic food consumers (2007, different
sources):
•
84 to 92% bought at least one organic product
•
9 to 27% often bought organic products
•
3 to 8% bought organic products predominantly
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
1.1 Demand
Socio-demographic characteristics of German organic food consumers
(2007, different sources):
•
higher educational level
•
slightly higher per capita income
•
higher share of young families with small children
•
higher share of middle aged couples („empty nests“)
•
low share of single households
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
1.1 Demand
Top 5 buying motives of German consumers for organic food (2007,
different sources):
1. Health, fewer chemical residues
2. Taste
3. Animal husbandry
4. Environment
5. Naturalness
► Trend towards „Lifestyle of Health and Sustainability (LOHAS)“
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
1.2 Supply
Certified organic area in Germany at the end of the respective year
(1000 ha)
1.000,00
900,00
800,00
697
700,00
600,00
734
768
807
826
2005
2006
865
632
546
500,00
400,00
300,00
200,00
100,00
0,00
2000
2001
2002
2003
2004
2007
Source: BLE 2008
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
1.2 Supply
Indices of the development of supply (organic area) and demand (turnover)
in Germany
(2000 = 100)
Turnover
Organic area
260
259
240
p
ga
y
l
pp
u
s
220
220
200
ing
w
gro
190
180
170
160
147
140
132
120
128
151
134
141
148
151
2005
2006
159
116
100
2000
2001
2002
2003
2004
2007
Source: Hamm 2008
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
1.2 Supply
Development of supply (organic area) and demand (turnover)
in the Top 10 European countries for organic food
(2006 against 2001 in %)
Turnover
Organic area
91
UK
70
FR
70
DE
69
DK
55
44
31
-15
27
28
BE
NL
34
SE
22
32
AT
34
28
-9
IT
CH
26
9
-3
16
Source: Hamm 2008 based on national data
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
1.2 Supply
► Supply deficits for organic products in Germany since 2006:
- poultry
- different vegetables and fruit
- potatoes
- compound feed (especially protein feed)
► Additional supply deficits for organic products in Germany since 2007:
- milk (especially butter in winter)
- spelt, wheat, oats
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
1.2 Supply
Farmer prices of organic products sold to processors or wholesalers
in Germany (in €/100 kg without VAT)
2005
2006
2007
2008 1)
Wheat
25
26
38
51
Rye
18
21
36
55
Oats
20
26
40
41
Field peas
22
26
35
48
Potatoes
28
48
56
58
Carrots
61
68
72
77
Milk (4.2% fat)
33
35
41
50
bulls 2)
321
347
368
364
cows 2)
235
246
267
270
pigs 2)
234
244
267
297
lambs 2)
•
•
495
504
Eggs (100 pieces)
22
22
23
25
1) January to June 2) Carcass weight
Source: ZMP, different years
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
1.3 Marketing
Sales channels for organic products in Germany (in %)
2000
2007
Farmers/gardeners
17
10
Bakeries/butchers
7
5
Health food shops
10
4
Natural food shops
28
22
Conventional retailers
33
53
5
6
Others (e.g. drugstores)
Source: Hamm and Rippin 2008
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
1.3 Marketing
Recent trends in sales channel developments for organic food in Germany
Main winners
Main loosers
1. Conventional discounters
(Aldi, Lidl, Plus, Penny, Norma etc.)
►direct sales of farmers
►conventional supermarkets with small
organic range
2. Conventional supermarkets with broad
organic range > 2000 organic articles
(tegut, Feneberg, some Edeka or Rewe
supermarkets)
►conventional supermarkets with small
organic range
►natural food shops
►direct sales of farmers
3. Organic supermarkets (Alnatura, Basic and
many small chains)
►small natural food shops
►direct sales of farmers
►bakeries, butchers
Source: Hamm 2008
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
2 Trends for the further development of demand and supply
Further strong growth of demand because of:
(1) Growing interest of consumers in buying organic products ► LOHAS
► organics are seen as the main possibility of lowering health risks (chemical
residues, in future GMOs)
► organics are seen as a possibility to have a good taste without a bad
conscience towards one‘s own health, natural environment, farm animals etc.
► increasing amounts and competition on processors‘ and retailers‘ level lead to
lower consumer prices
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
2 Trends for the further development of demand and supply
However, consumers become more demanding with respect to organic food:
• appearance (especially fruit and vegetables, packaging)
• taste
• convenience degree (frozen pizza, pre-cooked pasta, chilled food etc.)
• traceability of origin and transport media (carbon footprint, food miles)
• regional origin („fresh food we can trust“)
• ethical values with regard to production and trade („fair trade“, „good working
conditions for employees“)
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
2 Trends for the further development of demand and supply
Consumers‘ demand for organic products increasingly differentiates in
• premium segment (e.g. regional specialities, perfect taste)
► mainly sold via organic supermarkets, conventional supermarkets with a
broad range of organic products and farm shops
• discount segment (organic is seen as a food category)
► mainly sold via conventional discounters, drugstores and conventional
supermarket chains, but also via organic supermarkets
• in between segment with no distinctive profile (organics of the past)
► problematic in future
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
2 Trends for the further development of demand and supply
(2) Growing interest of conventional discounters and supermarket chains
because of:
► consumers‘ demand
► organics are seen as possibility to minimise risks with regard to food
security (residues of pesticides or antibiotics)
► organics help to improve the company‘s image (CSR concepts)
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
2 Trends for the further development of demand and supply
(3) Growing importance of organic products in out-of-home consumption
► top end restaurants (► LOHAS)
► canteens of companies (following CSR concepts)
► canteens of governmental organisations
► canteens for schools and kindergartens
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
2 Trends for the further development of demand and supply
Further development of supply:
?
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
2 Trends for the further development of demand and supply
Further development of supply:
• German farmers are risk-averse and traditionally not very market-oriented
(waiting for governmental incentives)
• like to act independently or in small organisations only
► many organic farmer organisations with own standards (more than 10)
► many small organic marketing organisations (ca. 60) which cannot fulfill
the quantitative (and qualitative) demand of big discount or supermarket
chains
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
2 Trends for the further development of demand and supply
Further development of supply:
There is no question that the German organic market needs more imports to
overcome the existing supply shortages and to serve the further strongly
increasing demand.
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
3 Potential opportunities for Irish exporters of organic food
It is not possible to give well-founded advice to Irish food exporters without
knowing the specific strengths and weaknesses of the organic sector in Ireland.
As a foreigner, I can only share a few ideas with you.
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
3 Potential opportunities for Irish exporters of organic food
All in all export opportunities for organic food (growing market) are
much better than for conventional food (shrinking market).
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
3 Potential opportunities for Irish exporters of organic food
Ireland may have better premises to serve the premium organic food
market as
• several conventional Irish food products (e.g. beef, butter) have a
very good image in Germany and are sold for premium prices
• the German market for organic beef is not scarce in supply and
Danish and Austrian farmers fill the gap for discount organic milk
products
• the premium organic food market does not need big quantities in
homogeneous quality (Irish organic market is still small).
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing
3 Potential opportunities for Irish exporters of organic food
There are also good opportunities to serve the small but strongly
growing German market for organic fish. Conventional production
methods (especially for salmon) are often critisized in German media
reports so that organic fish will have good sales opportunities.
► Organic fish as a possibility to improve the overall Irish image
for organic premium products.
Prof. Dr. U. Hamm
Dept. of Agricultural and Food Marketing