Organic scandal felt acutely in Germany

News in Germany earlier this year that tainted organic wheat had been fed to poultry at organic farms caused an immediate fall in consumer demand for organic foods, with the organic meat sector being particularly badly hit, reports UK market research body Organic Monitor.

According to a new report, sales of organic meat products are projected to drop by 24 per cent to €481 million in 2002.

The German market for organic meat products remains the largest in Europe, but consumer confidence has weakened since May 2002 when the news broke. This led to a sharp reduction in organic meat sales with consumer demand for organic poultry collapsing during the peak of the crisis. Organic Monitor projects organic poultry revenues to fall by a half in 2002.

The supermarkets have experienced the sharpest sales decrease with many retailers withdrawing organic meat products altogether since the scandal. The loss in consumer confidence has not been as great in the specialist retailers with many reporting that sales were slowly returning to pre-scandal levels. Organic food shops and butchers remain the most important marketing channels for organic meat products and their market share is projected to increase due to ailing interest from the supermarkets.

Pessimistic news, then, for the organic industry in Germany, with Organic Monitor forecasting that organic meat sales will not return to pre-scandal levels for many years. Although consumer confidence is expected to gradually return and organic meat volumes will recover to 2001 levels, price erosion will curb revenue growth. Prices of organic meat products have fallen considerably since May 2002 and overcapacity will continue to put downward pressure on prices.

The study shows that the German organic food industry faces many challenges. Apart from the loss of confidence caused by the nitrofen scandal, the industry is becoming increasingly divided, a plethora of organic symbols and logos exist, and consumers are becoming more price sensitive in the current economic climate.

Organic Monitor​ mentions that continuing state support could be guaranteed with the re-election of the coalition government [voted in on Sunday in the general election]. The report concludes that tighter controls to protect future scandals and a massive effort to strengthen consumer confidence in the German organic food industry are absolute musts if the industry is to stabilise and grow.