Dedicated consumers drive organic sales in the UK
Posted - June 10, 2009
Dedicated consumers drive organic sales in the UK
By Adrian Larose - From the Soil Association Organic Market Report 2009
Crashing stock markets and nose-diving banks are not news to anyone in the United Kingdom these days. A slow recovery may be beginning, but many shoppers find themselves a long way – mostly downwards! – from the heady, no-holds-barred purchasing power of the years preceding 2008.
The Greater London Authority, a governing body for the UK capital, estimates London’s overall economic growth rate will decrease by almost 3percent in 2009 and remain negative in 2010. Employment levels in the city are set to decrease through the end of 2011.
Yet amidst all this, sales of organic products still grew by about 2 percent during 2008, says the 2009 Organic Market Report recently-released by the Soil Association, the UK’s most respected authority in sustainable agriculture and organic production.. The report uses polling data supplied by the Market Tools and Omnibus firms.
Receding incomes have led some UK consumers to cut back on organic consumption recently, with the BBC reporting more than 10% declines in organic sales for March and April 2009.
Core organic consumers, though – 15 percent of the people who purchase many organic products regularly, rather than the occasional organic “luxury” item – plan to stay committed to organics in the recession, stating they will cut back on holidays and other leisure activities to afford the organic premiums. The polls say that 36 percent of consumers who spend more than 40 percent of their household budget in organic food and beverages plan to increase that spending, while only 15 per cent expect to cut back on these purchases.
Meanwhile, more consumers are buying at least a little bit of organics. Fully 90% of surveyed homes reported buying some organic products, compared to a touch more than 75% in 2004.
Personal care and cosmetics enjoy relative strength versus produce and meat, the Soil Association report suggests. Recession-wary shoppers in this strong category “trade down,” choosing cheaper, multi-purpose personal care products, still in organic quality, rather than more expensive, specialized products.
Organic dairy sales, which grew about 11 per cent in 2008, are falling, though dairy remains an entry point to attract new organic consumers.
UK organic pork has become a victim of its own success, according to the Soil Association report. Growing demand saw its production double from 2006 through 2008 – causing organic feed prices to shoot through the roof. That pushed prices too high for most tastes. Organic pork production is estimated to fall by 40% through 2009.
In the fields, UK vegetable growers have experienced poor seasons lately, with cool, damp summers. Demand for certain traditional local crops is growing, with produce such as broad beans, spring greens and fresh herbs in high demand, the report notes.
Overall, the UK’s organic farmers continue to enjoy higher profits versus conventional. The Organic Market Report notes that the price gap between organic and conventional products in most categories continues to narrow due to high fossil fuel prices, making organics seem more affordable to the consumer (and profitable to the farmer). High fuel prices hurt conventional products more, due to petroleum ingredients in chemical fertilizers and other conventional food production requirements.
Local producers may be set to climb to the top of organic production, due to increased long-distance transportation costs and piqued interest from consumers. Poor exchange rates with the Euro, meanwhile, have driven UK consumers away from imports.
As with any category, improved availability and branding remain central ways to increase exposure of organic products. Interesting to note that more than 25 percent of consumers surveyed stated they might buy more organic products if more were available locally, or if they were offered by their favorite conventional brands.
“It is clear from this report that much more work needs to be done to communicate the wider benefits of organic production to the public, especially in relation to health, animal welfare, climate change and the environment, writes ”Peter Melchett, policy director at the Soil Association. “Those (consumers) with a sophisticated understanding of all the benefits are the ones most likely to become or remain committed buyers – they know too much to turn back”.
