The economic chill that swept the world in October 2008 led to worrying forecasts that the organic market would go into freefall, as consumers would no longer pay the premiums. The effect of this on organic producers would be devastating.
However growth in the first nine months of the year, followed by a downturn in Q4 2008, means that overall growth is in the black. The market is valued at ₤2.1bn (c €2.3bn at today’s exchange rates).
Peter Melchett, policy director of the Soil Association, said the growth is “encouraging” and “points to some underlying resilience in the organic market suggesting that it has the potential to grow dynamically once the economy picks up again”.
However there are signs that consumers are tightening their belts, especially as the positive growth masks falling sales volume in some areas. For instance, some fruit, bread, bakery, soft drink and prepared foods have seen a fall in sales.
On the other hand, there is evidence that consumers are switching to cheaper forms of organic food, such as cheaper cuts of meat, and canned or frozen organic vegetables in place of fresh.
Consumers are also tending to cook more food from scratch rather than buying ready prepared foods – a trend indicated by the 13.5 increase in organic cooking ingredients in 2008.
In terms of where consumers are buying their organics, there are some changes, too. There is a general shift towards low cost retailers; and high street retailer Asda, which trades heavily on its value premise, increased sales of organic products by 25 per cent in 2008. Last year it abandoned a separate organic section for fruit and veg, and now stocks organics side by side with conventionally grown produce.
Low cost chain Morrisons also saw its organic sales increase, but Sainsbury’s Tesco and Waitrose all saw declining sales last year.
Farmers markets also seem to have picked up some of the demand, with sales having increased by an estimated 18.6 per cent to £23.7m last year (c €26.1m). Moreover research over the last year has indicated that fruit and veg from box schemes are consistently cheaper than those in supermarket.
The major supermarkets are expecting organic sales in 2009 to be “level at best”, but are remaining optimistic that this represents just a temporary blip in growth, the Soil Association reports. But the organisation says it hopes they will increase their advertising of organics, as spend on the sector has diminished from a peak in 2006, according to analyst Mintel.
Although the Soil Association’s report covers mainly the UK market, Melchett points out that the credit crunch has hit other European countries less hard so far, resulting in less impact on organics.
However he said it is difficult to predict how the ₤23bn global organic market will fare in 2009, and details of individual European countries’ markets in 2008/9 are not yet available.
However IFOAM’s recently published report The World of Organic Agriculture: Statistics and Emerging Trends 2009 put the value of the European market at €16.2bn, up almost €2bn on the 2006 figure.
The largest markets by value are Germany, UK and France. Highest growth is seen in the Czech Republic (70 per cent), Denmark (34 per cent), Sweden (26 per cent), and Norway (24 per cent).
The Soil Association’s 2009 Organic Market Report is available at http://www.soilassociation.org/marketreport