Nic Lampkin, Director
Organic Research Centre, Elm Farm
Susanne Padel, Research Associate
Aberystwyth University
In the media spotlight
Shoppers lose their taste for organic
food
The Guardian, Friday 29 August 2008
 Organic food sales have fallen more than at any time in
the last decade as shoppers try to cut costs and experts
warn that consumers are more confused than ever
about whether it is worth paying the higher prices.
Organic sales set to slip, says Mintel
November 2008
 A new survey from Mintel shows that seeking out
organic food is slipping down consumers’ ethical
agenda as the credit crunch begins to bite.
 According to the survey, nearly half of the UK’s organic
shoppers – 48 per cent – will consider reducing or
giving up buying organic food altogether in the year
ahead.
Hard-up shoppers abandon organic and
fair trade goods
The Times, March 26, 2009
• Organic food has fared particularly badly. In a
Populus poll commissioned by the Times, only 23
per cent of consumers said that they intended to
buy organic this year - down from 34 per cent last
year.
• This compares with more than three quarters of
consumers saying that they would buy food with
less packaging, and two thirds saying that they
would buy more healthier foods or more locally
produced goods.
Conflicting views
 New results to be published next week will show:
 small increase in UK organic sales in 2008,
 growing strongly in the first six to nine months
 then falling back in the face of the economic downturn
in late 2008 and early 2009
 What is the real story?
 First, some background data
Global organic market 1999-2007
 97% of consumer demand in
North America and Europe.
 Asia, Latin America and
Australasia are important
producers and exporters
 Supply has tightened for
fruits, vegetables, beverages,
cereals, grains, seeds herbs
and spices
 Market growth is expected
to continue, but at lower
rates
European organic market value M€
18,000
Other Europe*
Spain
Belgium
Austria
Netherlands
Denmark
Sweden
Switzerland
Italy
France
U.K.
Germany
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
20
99
19
97
19
95
19
94
19
19
89
0
European countries with the
highest sales
Germany
UK
France
Italy
Switzerland
Austria
Spain
Denmark
Netherlands
Sweden
5.30
2.56
1.90
1.87
0.79
0.74
0.60
0.58
0.50
0.49
0
1
2
3
4
Sales in billion Euros
5
6
European countries with
highest share of food sales
Denmark
Austria
Switzerland
Sweden
Luxemburg
Germany
Netherlands
Belgium
UK
France
Norway
6.0
5.3
4.6
4.3
3.3
3.1
2.0
1.9
1.6
1.2
1.0
0
1
2
3
4
Market share in %
5
6
7
Value of the UK organic market
(£m at current prices)
2000
1800
1600
1400
2003
2004
2005
2006
2007
2008 (est.)
1200
1000
800
600
400
200
0
MINTEL
Key Note
2007 Market by sectors
(Key Note 2008)
other
processed
Beverages
5%
Chocolate5%
3%
Baby food
5%
Eggs
2%
Strongest growth in the
dairy and meat market
Fruit and veg
34%
Meat
12%
Cereal products
13%
Dairy
21%
Fruit and vegetables
 34 % of organic sales
(equal split between fruit &
vegetables)
 First entry point for many consumers,
 Direct association with not spraying and
home-grown, taste is important
 10% increase in horticultural land in
2007
 Some reports of price reduction in the
autumn of 2008 to stimulate demand
Cereals and pulses
 Large part of
production for feed
market
 Supply and demand
are not in balance
 Price fluctuations in
2008
Dairy
 Second largest sector (21%)
 Above average growth, mainly in
milk sales and yoghurts and
desserts
 Commitment from key players
(Federation of Organic Milk
Groups and DairyCo)
 Health claims are important for
consumers
 Growth (lower rate) expected to
continue, but supply unclear
Meat
Above average growth rates
of retail sales
Beef (25% of meat market)
 undersupply in 2007, but increases in production
Lamb (10% of meat market)
 seasonality & sales to non-organic outlets;
 increasing production may lead to oversupply
Pork & bacon/ham (about 20% of meat market)
 Taste is important motive
 Two segments selling to multiples and direct sales
 Demand, but sales price is not always cost covering
Organic and conventional shopper footfall 2006-08
Organic and conventional meat sales compared
Meat price trends 2006 to 2008 in multiples
(Source TNS)
9.00
90%
8.00
80%
7.00
70%
6.00
60%
5.00
50%
4.00
40%
3.00
30%
2.00
20%
1.00
10%
0.00
0%
2006
Organic
2007
Conventional
2008
Price differential %
Price differential %
100%
Retail price (£/kg)
10.00
Farm gate price Beef
£4.00
Beef price per kg DW
£3.50
£3.00
£2.50
£2.00
£1.50
Jan
Feb
Mar
Org 2007
Apr
May
Org 2008
Jun
Jul
Aug
Conv 2007
Sep
Oct
Nov
Conv 2008
Dec
Farm gate price Lamb
£4.00
Lamb price per kg DW
£3.50
£3.00
£2.50
£2.00
£1.50
Jan
Feb
Mar
Org 2007
Apr
May
Org 2008
Jun
Jul
Aug
Conv 2007
Sep
Oct
Conv 2008
Nov
Dec
Volume of milk sales compared
(DairyCo from TNS data)
Milk liquid volume (Million
litres)
4,120.0
200.0
4,100.0
4,080.0
190.0
4,060.0
180.0
4,040.0
4,020.0
170.0
4,000.0
160.0
3,980.0
Milk liquid volume (Million
litres)
4,140.0
210.0
3,960.0
150.0
1
2
3
4
5
6
7
8
9 10 11 12 13
4 weekly periods (January - December)
Organic 2008
Organic 2007
Conventional 2008
Conventional 2007
Organic Farm gate Milk Price compared
2007 and 2008 (Source: Kingshay)
Milk price (ppl)
40
35
30
25
20
15
Dec
Jan
Feb
Mar
Organic 2008
Organic 2007
Apr
May
Jun
Jul
Aug
Sep
Oct
Conventional 2008
Conventional 2007
Nov
What is effect of credit crunch?
Two broad segments of organic consumers
Regular/committed
>80 % of sales
 Well educated
 Health aware
 Middle income levels
 Believe in organic product
quality
 Seek other attributes
 Environment
 Animal welfare
 Social
 “Missionary zeal”
Occasional
< 20% of sale
 More price & convenience
sensitive
 Cooking skills?
 More sceptical about some
claims
 Little knowledge
90% of UK households claim to
buy at least some organic
products
more committed consumers
expecting to spend more than
less on organic food in 2009
Competition for organic from other
sustainability initiatives




Natural
Locally sourced
Fair-trade
Carbon footprints
but
 Only organic has clearly defined standards and a
European regulation
Need better communication
 Mintel: Consumers may review spending on premium
organic foods if they do not fully understand the benefits,
but a growing trend of people seeking ways to make a
difference
 “What is needed is a unified voice from the organic
industry, extolling the virtues of their products”.
 Justin King, chief executive of Sainsbury's: customers were
increasingly concerned with animal welfare and husbandry
standards but organic food producers had not done a good
job in communicating what it “stood for”.
 Joint UK-Ireland EU-funded promotion initiative?
Sources
Moakes, S and Lampkin, N (2009) Welsh Organic Production and Market
Report Jan 2009, Organic Centre Wales, IBERS, Aberystwyth University.
Lampkin, N., Measures, M. and Padel, S. (eds.) (2008). 2009 Organic Farm
Management Handbook. Aberystwyth and Newbury: Aberystwyth
University and Organic Research Centre Elm Farm.
Market Assessment 2008: Organic Food & Drink, Key Note Ltd: Hampton.
MINTEL (2008). Organics - UK - October 2008Report. London: Market
Intelligence Unit of the UK Economic Intelligence Unit.
Padel, S. and Foster, C. (2005). "Exploring the gap between attitudes and
behaviour: Understanding why consumers buy or do not buy organic food."
British Food Journal 107(8): 606-625.
SA/WDA/OCW (2004). Organic Food: Understanding the consumer and
increasing salesReport. Aberystwyth: Soil Association, Agri-food
partnership, Organic Centre Wales, Welsh Development Agency, Welsh
Assembly Government.
Soil Association (2009) Organic Market Report to be published 6th April
www.soilassociation.org