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The Evolution of Organic Food and Drinks: Growth opportunities, NPD and the impact of the economic downturn

Published by: Business Insights

Published: Mar. 23, 2009 - 121 Pages


Table of Contents


Executive summary
Introduction
Organic demand and industry development
Organic food and drinks NPD
Trends and growth opportunities
Future directions
Chapter 1 Introduction
Summary
Introduction
Organics defined
Certification and labeling
The legal framework
Organic labeling
Organic as ethical
Ethical benefits
Natural food, ingredient concerns and animal welfare
Fairtrade and ethical production
Organic production and the environment
Redefining the organic proposition
Chapter 2 Organic demand and market development
Summary
Introduction
Organic market development
The market up to 2007
Organic food and drinks demand: 2008 and beyond
US
UK
Rest of Europe
Long-term development potential
Development of main product sectors
Evolution of the organic industry
Leading independent specialists
US
Europe
Investment by major food manufacturers
Chapter 3 Organic NPD
Introduction
NPD growth
Growth by product category
Organic brand development
Sector analysis
Bakery and cereals
Confectionery
Dairy
Ready meals
Soft drinks
Snacks
Other products
Regional development
Conclusions
Product positioning
Innovation in organics
Chapter 4 Trends and growth opportunities in organic food and drinks
Summary
Introduction
Promoting health benefits of organics
Using nutrient-rich organic ingredients
Antioxidants
Omega-3
High fiber
Organic functional products
Kids’ organic food and drinks
Resilience and the impact of food scares
Ian’s Natural Foods and other specialists
Products for toddlers and younger kids
Vegetable-rich organic foods
Healthy convenience for kids
Maximizing ethical values
Chapter 5 The future of the organic market
Summary
Introduction
Organic sector SWOT analysis
Impact of the recession on demand
Brand resilience in the downturn
Targeting future growth
List of Figures
Figure 1.1: New EU organic logos
Figure 1.2: Ethical benefits of organic food and drinks
Figure 1.3: The organic positioning under threat
Figure 1.4: Price premiums in UK eggs
Figure 1.5: Defining the organic proposition
Figure 2.6: Sales of organic food and drink in leading national markets ($m), 2007
Figure 2.7: Estimated sales of organic food and drink, top five markets ($m), 2008
Figure 2.8: National market penetration of organic food and drink (% value), 2008
Figure 3.9: Share of organic product launches by category, 2005-2008
Figure 3.10: Share of organic NPD by product category, 2005 & 2008
Figure 3.11: Stretching organic brands, Amy’s Kitchen and Green & Blacks
Figure 3.12: New organic versions of major dairy brands, 2008
Figure 3.13: Leading brands in ready meals in Germany: organic versions launched in 2008
Figure 3.14: New organic versions of major snack brands, 2008
Figure 3.15: New organic versions of other category leading brands
Figure 3.16: % share of organic products launched by region, 2005 & 2008
Figure 3.17: Upscale organic food and drink launches
Figure 3.18: Flavor innovation, Rocks Organic and Sapori dell’Oasi
Figure 3.19: Innovative functional ingredient use, Julie’s Organic and Wildwood Organics
Figure 4.20: Healthy-eating organic fruit and vegetable products
Figure 4.21: Organic products with high nutrient levels
Figure 4.22: Selected organic functional products
Figure 4.23: Selected organic brands for kids
Figure 4.24: Organic products targeting younger children
Figure 4.25: Adding and hiding vegetables in organic food for kids
Figure 4.26: Selected organic convenience products for kids
Figure 4.27: Organic products incorporating Fairtrade ingredients
Figure 5.28: SWOT analysis for the organic sector
Figure 5.29: Developing value resilience in the organic sector
Figure 5.30: Focal areas for future growth in organics
List of Tables
Table 1.1: Standard and main organic labels in use, by country
Table 2.2: Sales of organic food and drink in leading national markets ($m), 2007
Table 2.3: Estimated sales of organic food and drinks, top five markets ($m), 2008
Table 2.4: Estimated market penetration of organic products by broad product sector, US and Europe (% value) 2008
Table 2.5: Leading private North American suppliers of organic food and drink
Table 2.6: Major organic company acquisitions, 1999-2008
Table 3.7: Launches of organic versions of selected major brands, 2008
Table 3.8: Top ten tags on organic food and drinks launched, 2005-2008

Abstract

The Evolution of Organic Food and Drinks

Growth opportunities, NPD and the impact of the economic downturn

Report Overview...

The organic food and drinks market grew rapidly over the first part of the decade, with sales in the US and the nine largest European markets reaching more then $40bn in 2007. However, the rate of growth in the market appears to have slowed in 2008, with the economic downturn of 2009 expected to test consumer willingness to pay more for organic and other ethical products. Nevertheless, demand for organic food and drinks is proving to be resilient in a number of key markets and product sectors, due to a combination of key factors. Firstly, heavy purchasers of organics typically have significantly higher than average disposable incomes and have so far been largely unaffected by the global downturn. Secondly, the price differential between many organic and regular products has contracted steadily in recent years, and this has increased consumer reluctance to revert to cheaper non-organic alternatives.

‘The Evolution of Organic Food and Drinks: Growth opportunities, NPD and the impact of the economic downturn’ is a new report published by Business Insights that evaluates which regions, countries and products are expected to grow in the organic market over the next five years. This report provides an understanding of underlying consumer purchasing triggers as well as an in-depth analysis of NPD to assess current and future trends in organic food and drinks.

Key Findings

...Organic food and drinks outperformed the wider grocery sector in 2008, although the rate of growth slowed in the second half of the year. Organic food and drinks sales in the US and the nine largest European markets amounted to $40 billion in 2007.

Europe has overtaken North America (41%) as the main region for new organic products, accounting for over 45% of launches in 2008. Asia-Pacific accounted for less then 7% of global organic NPD in 2008.

‘Upscale’ overtook ‘natural’ as the leading product tag for new organic products in 2008. The use of the ‘upscale’ tag reflects manufacturers reinforcing the link between organic and premium quality.

Use this report to...
  • Quantify the performance of the organic food and drinks markets and their growth potential based on market value and volume sales data between 2007 and 2012 by category, region and product tag.
  • Improve the targeting and effectiveness of your NPD strategy using this report’s analysis of product launch data of 8,000 organic products launched globally between 2005-2008.
  • Identify key trends that are shaping the organic food and drinks market, and evaluate the trends that are likely to become important over the coming years.
  • Understand how companies are looking to maximize the inherent strengths of the organic proposition by developing organic food and drinks with a nutritional benefit and reinforcing the ethical values of organic.
Key issues...

The proliferation of ethical labels and claims across the food and drinks market is generating consumer confusion and doubt over the reliability of claims.

Standardised labelling of organic food and drinks. The new pan-European organic label is set to become compulsory by July 2010. This may increase costs for organic food and drinks manufacturers.

Calls to relax certification criteria have been made by some organic producers, reflecting growing cost pressures. Certifying organisations have not compromised on adherence to strict organic criteria including use of organic feed.

The organic sector’s rate of growth is expected to slow considerably in 2009 and into 2010 and total sales may remain flat in markets like the US, the UK and Germany. Demand for meat and produce is also expected to weaken, with packaged grocery sales holding up well.

Your questions answered...
  • How has the credit crunch impacted demand for organic food and drinks during 2008?
  • Who are the leading companies/brands in the organic food and drinks market?
  • How fast will the organic market grow over the next three years and which regions will experience the fastest growth?
  • How will changes in legislation affect NPD in organic food and drinks?
  • What are the major trends likely to impact organic NPD over the next three years?
  • How can food and drinks manufacturers position their products to capitalize on the key areas of growth in organic food and drinks?


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