Organic fruit sales continue to rise in France as consumer demand for organic fresh produce remains buoyant, write market analysts Organic Monitor this week. In spite of flagging growth in other organic categories, organic fresh fruit sales are projected to increase by 25.8 per cent to € 54 million in 2002, adds the company.
A new study from Organic Monitor shows that the organic fruit market is undeveloped compared to other sectors of the French organic food industry and healthy growth rates are envisaged to continue in the short term. The major growth will come from increasing retail penetration and the broadening of organic fresh produce range in hypermarkets and supermarkets.
According to the report, most sales of organic fruit occur from natural food shops, which held a 53 per cent market share in 2001. Few major retailers actively market organic fresh fruit and those that do have a limited product range. Direct sales are an important channel for French-grown organic fresh fruit, added the report.
According to the study, apples and oranges have the largest market share in the organic fruit sector; however, the highest growth is expected to be in the tropical and exotic fruit category. The addition of organic exotic and tropical varieties to the fresh produce range of the major retailers is to fuel market growth, states Organic Monitor. Some companies reported sales increases of over 50 per cent in this category last year.
Challenges facing the French organic fresh produce sector include the need for organic fruit suppliers to cater to the growing needs of the hypermarkets and supermarkets. A high level of fragmentation at the supplier level is causing inefficient distribution to the major retailers and this is inflating retail prices. Consolidation is envisaged in which two to three major companies emerge to meet the requirements of the growing retail trade.
Competition is also expected to intensify as demand from export markets decreases. According to the study, over 40 per cent of organic fruit sales are to the European market with the leading suppliers generating most of their revenues from exports. However, a dip in growth rates and greater self-sufficiency in the European market will limit export opportunities for French companies in the future.
A further challenge is the reduction in the conversion rate to organic agriculture in France. The amount of organically managed land rose by 13.5 per cent to 420,000 hectares in 2001. However, waning interest from farmers to convert to organic farming means that it is unlikely the government target to reach 1 million hectares by 2005 will be attained.