High quality, logistic mix to bring organics into competition

- Last updated on GMT

Related tags: Organic food, Organic monitor

Relatively low Swedish prices of organic products can be seen as a
consequence of a well working distribution, well established
relations with the large retailers and high quality products.

So finds a new report from the SLI, Swedish Institute for Food and Agricultural Economics, that concludes prices for high quality foods - a clear barrier to consumer purchases - can be brought down, by engaging large retailers and by developing the logistics.

In Sweden and in Denmark the situation is similar. Prices differ between products, but the average prices correlate.

The EU organic market reached around €10 billion in 2002, according to data from UK market analysts Organic Monitor, but growth has slowed in recent years: an increase of 8 per cent between 2001 and 2002 shrunk to an estimated 5 per cent between 2002 and 2003.

The study by SLI identifies that both Sweden and Denmark have distribution processes that work efficiently to connect large retailers with the organic food movement.

By comparison, in Germany and France, certain large retailers are not linked up to the suppliers of organic products. The products are to a larger extent distributed through separate channels, not through the mainstream retailing organisations.

Engaging large retailers and developing the logistics can bring organic products into real competition with other products on the shelf, say the report's authors. "Further efforts in the organic area impacts not only the environment, but also the consumers through lower prices,"SLI​ concludes.

According to Organic Monitor, dairy is one of the fastest growing organic categories, with 2004 sales up on the previous year by 12.5 per cent.

Organic milk and yoghurt are the segments reporting the highest levels of growth, with sales of organic dairy products set to remain buoyant throughout 2005.

The introduction of organic dairy products under supermarket private labels has also boosted sales growth. Future market growth is also predicted to be driven by scientific research into the health benefits of organic milk, and by a greater penetration into the foodservice and catering sector.

Related topics: Market Trends

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