Organics - UK

Published by: Mintel International Group Ltd.

Published: Oct. 1, 2008

Table of Contents

Issues in the Market

Key themes

Definition

Abbreviations

Market in Brief

Growth slows but is still impressive in 2008

Milk and yoghurts propel dairy as fastest growing category

Box schemes steal supermarket share

Further threats to sector growth

Market insights

The future

Internal Market Environment

Key points

Health claims dispute continues

Figure 1: Agreement with selected lifestyle statements, 2004-08

What then for consumers?

Burgeoning kids’ organic sector boosted by health concerns

Pesticide and antibiotics linked to human illness

Technology tackling organic fraud

Ethical row rages on over organic imports

Provenance assumes greater importance

Figure 2: Agreement with selected lifestyle statements, 2004-08

Organic sector sustains casualties in 2008

Media attention diverts shoppers towards other ethical categories

Figure 3: Agreement with selected lifestyle statements, 2004-08

Broader Market Environment

Key points

Economic gloom sets in

Figure 4: Changes in socio-economic groups, 2003-13

Soaring production costs hamper organic conversion rate

Smaller household demands not always met

Figure 5: Changes in UK household size, 2003-13

Communicating organic to younger shoppers

Figure 6: UK population trends by age, 2003-13

Regulations

EC drops ‘bio’ logo

Nitrate proposals threaten bacon and ham production

Jury is out on organic for the FSA

Green credentials: Implicit with organic?

Communicating welfare standards

Tackling broader issues

Competitive Context

Key points

Competitive ethical categories come to the fore

Organic: a key premium claim

Figure 7: Summary of market strategies in other specialist food markets, 2008

Strengths and Weaknesses in the Market

Strengths

Weaknesses

Market Value and Forecast

Key points

Pace of growth slows

Figure 11: UK retail value sales of organic foods, 2003-08

A bright future forecast for quality producers

Market slows with economy

More challenging times ahead

Figure 12: Forecast of uk retail value sales of organic foods, at current prices, 2003-13

Segment Performance

Key points

Dairy leads segment growth

Figure 13: UK retail sales of organic food, by type and value, 2004-08

Organic produce outperforms market

Figure 14: UK retail sales of organic fruit and vegetables, by value, 2003-08

...but deflation, supply issues and ‘toxic’ reports hamper category

Figure 15: UK retail sales of organic fruit and vegetables, by type and value, 2004-08

Bolstering dairy sales

Figure 16: UK retail sales of organic dairy products, by value, 2003-08

Buoyant milk sales threatened by uncertain future

Figure 17: UK retail sales of organic dairy products, by type and value, 2004-08

Domestic yoghurt brands elbow out the competition

Competition mounts in the butter category

Mainstream organic spreads its wings

Figure 18: UK retail sales of organic prepared foods and groceries, by value, 2003-08

Free-for-all drives ambient sales

Frozen foods suffer; chilled may follow

Figure 19: UK retail sales of organic prepared foods and groceries, by type and value, 2004 -08

Solid growth for meat but sales are now sliding

Figure 20: UK retail sales of organic meat and poultry, by value, 2003-08

Organic meat imports increase and British farmers struggle

Figure 21: UK retail sales of organic meat, poultry and fish, by type and value, 2004-08

Strong growth for organic bread

Buoyant cereals market attracts new entrants

Figure 22: UK retail sales of organic breads, bakery produce and cereals, by value, 2003-08

Nothing but organic for babies

Figure 23: UK retail sales of organic baby food and infant formula, by value, 2003-08

Cracks appearing in the organic egg market

Figure 24: UK retail sales of organic eggs, by value, 2003-08

Dairy products to lead growth

Figure 25: Forecast of uk retail value sales of organic foods by type, at current prices, 2003-13

Figure 26: Forecast of uk retail value sales of organic foods by type, at 2008 prices, 2003-13

Figure 27: Percentage share of segments within the uk organic food market, 2003, 2008 and 2013

Product Positioning

Key points

Great variation in fresh produce

Figure 28: Price comparison of organic vs standard fruit and vegetable ranges, October 2008*

Premiums of around a third for dairy

Figure 29: Price comparison of organic vs standard dairy ranges, October 2008

Bargain beans and premium peas

Figure 30: Price comparison of organic vs standard prepared foods, October 2008

Chickens priced out of the credit crunch market

Figure 31: Price comparison of organic vs standard meat and poultry, October 2008

Small premiums for standard bread and cereal lines

Figure 32: Price comparison of organic vs standard bread and cereal ranges, October 2008

Organic baby food: surprisingly affordable

Figure 33: Price comparison of organic vs standard baby food and formula, October 2008

Companies and Products

Fruit and vegetables

Organic Farm Foods

Pollybell Organic Farm

Produce World

Dairy products

Lurpak

Rachel’s Organic

Yeo Valley

Eggs

Noble Foods

Prepared foods

Duchy Originals

Heinz

Seeds of Change

Simply Organic

Chocolate

Green & Black's

Montezuma's

Traidcraft

Meat and poultry

Friland

Higher Hacknell Farm

Laverstoke Park Farm

Rhug Estate

Cereals

Jordans

Baby food and infant formula

Ella's Kitchen

HiPP

Organix

Peter Rabbit Organics

Plum

Trade bodies

Brand Communication and Promotion

Key points

Record spend expected in 2008

Figure 34: Main monitored media advertising expenditure on organic foods, 2004-08*

Brands fight back against own-label invasion

Figure 35: Top 10 main monitored media advertising expenditure by organic brands, 2004-08

M&S leads retailer spend on organics

Figure 36: Top 10 main monitored media advertising expenditure by retailers on organic foods, 2004-08

Trade bodies

Federation of Organic Milk Groups

OMSCo

European Commission

Organic Trade Board

Channels to Market

Key points

Box schemes deliver market share growth

Figure 37: UK retail sales of organic food, by outlet and value, 2006-08

Organic goes mainstream

Figure 38: Summary of grocery retailer organic targets/initiatives, October 2008

Economic hardship fails to quell growth of small chains

Box schemes proliferating

Farmers’ markets: more sales, more often

Figure 39: How often adults shop at farmers’ markets, 2007

The Consumer - Organic Foods Preferences

Key points

Figure 40: Factors taken into account when buying food, July 2008

Organic low on the radar for shoppers

Organic vs. locally sourced

Figure 41: Profile of those stating locally sourced and organic as key considerations, July 2008

Fruit, eggs and convenience choices

Figure 42: Types of organic products purchased in the last 12 months, July 2008

Opportunities to expand organic foods bought

Figure 43: Number of different types of organic products purchased in the last 12 months, July 2008

Figure 44: Repertoire of organic foods bought and key considerations in food purchase, July 2008

Appendix

Advertising data

Appendix - Internal Market Environment

Figure 51: Agreement statement “It is worth paying more for organic food”, by total family income before tax, 2008

Appendix - Broader Market Environment

Figure 52: PDI and consumer expenditure, at constant 2003 prices, 2003-13

Appendix - Companies and Products

Bread and cereals

The Celtic Bakers

Honeyrose Bakery

Pertwood Organic

True Loaf Baker

White's

Other dairy products

Calon Wen

The Dairy House

Graham's The Family Dairy

Other prepared foods

Billington's

Fresh! Naturally Organic

Kallo Foods

Suma

The English Provender Company

Venture Foods

Yumbles

Appendix - Channels to Market

Figure 54: How often adults shop at local markets, by demographics, 2007

Figure 55: How often adults shop at farmers’ markets, by demographics, 2007

Appendix - The Consumer: Organic Foods Preferences: Detailed Demographics

Figure 56: Factors taken into account when buying food by detailed demographics, July 2008

Figure 57: Factors taken into account when buying food by detailed demographics, July 2008

Figure 58: Factors taken into account when buying food by detailed demographics, July 2008

Figure 59: Cross tab for Factors taken into account when buying food, July 2008

Figure 60: Cross tab for Factors taken into account when buying food, and things consumers look for in the food purchased, July 2008

Figure 61: Types of organic products purchased in the last 12 months, by detailed demographics, July 2008

Figure 62: Types of organic products purchased in the last 12 months, by detailed demographics, July 2008

Figure 63: Types of organic products purchased in the last 12 months, by detailed demographics, July 2008

Figure 64: Types of organic products purchased in the last 12 months, detailed demographics, July 2008

Figure 65: Types of organic products purchased in the last 12 months, by detailed demographics, July 2008

Abstract

As consumers tighten their purse strings in the face of rising food prices and utility costs, retail sales growth of organic foods is forecast to slow to 7.5% annually to reach £1.6 billion in 2008.

Many organic food categories are under threat from competition and consumer confusion; producers and retailers need to communicate the ethical and environmental benefits of organic and tap into demand for quality, convenient, healthy or indulgent products.

In recent years, organic foods have seen a widening of distribution channels, with supermarkets increasingly taking a larger share of the market. With the higher price of organic foods a major consideration for consumers, supermarkets have been actively trying to keep costs as low as possible for consumers.

Key report themes:

• Food inflation and economic gloom create a challenging market for organic foods
• Advertisers have increased their above-the-line promotional spend on organic foods as the food items are positioned as healthy, indulgent and convenient.
• Locally-sourced foods pose a significant challenge to the organic category as environmental concerns mean that consumers increasingly think about food miles and supporting the local economy.
• Scientific evidence of organic’s nutritional superiority is mounting, putting pressure on the Food Standards Agency to amend its impartial stance on the category.

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