The French organic market is showing strong growth. It reached 9.7 billion euros in 2018, 15.7 percent higher compared to 2017. After Germany, France is the second-largest consumer of organic products in Europe. The influence of the Bio label has reached record levels. French grocery, cooperative, and hypermarket store groups have expanded in-store Bio departments or opened more specialist Bio stores in recent years.
Nielsen Insights said that sales of organic products in French supermarkets continued to grow by more than 20 percent a year in 2019, with the consumer being offered 25 percent more organic products in retail stores.
Agence Bio, the French Agency for the Development and Promotion of Organic Agriculture presented on June 4, 2019, the 2018 figures of the organic sector and said that the French organic production has doubled in five years, the highest increase ever recorded. With 5,000 added in 2018, there are now a total of 41,600 farms engaged in organic farming in France, almost 9.5 percent of the farming facilities in the entire country.
Other key numbers presented:
* In 2018, more than 9 in 10 French people say they have eaten organic products. French people consume organic at least once a month, while 12 percent consume organic every day.
* There were 61,768 operators, at all stages of the sector, engaged in 'Bio' at the end of 2018. The French organic agricultural industry is continuously developing. It maintains and generates employment and helps meet consumer demand. At the end of 2018, the country enjoyed 2 million hectares of organic farming, i.e., 7.5 percent of the French UAA.
* Nearly 5 percent of household food consumption is devoted to biological products.
* In 2018, the out-of-home catering purchased 555 million euros of organic products excluding tax. Social catering recorded a record growth of + 28 percent vs 2017, which echoes the EGALIM law announcements (such as consumer expectations for better quality food and proposing measures to allow increased prices for farmers).
Every retail format wants a share of the organic market
Rising online shopping sales and changing shopper habits have hit sales at some hypermarkets such as Auchan, Carrefour, Casino, E. Leclerc, and Intermarche, while, those revenues at major grocers Carrefour and Casino are 52 percent and 25 percent respectively. Strong growth in the French grocery market for organic and plant-based products in the first quarter of 2019 should support the launch of more organic or 'BIO' stores.
"Driven by the rise in nutritional apps and media buzz, consumers are looking for products that are cleaner (free of chemicals, organic) and more traceable (local, smaller producers). In the first quarter of 2019, organic grew volumes by 15 percent and plant-based, by 22 percent," Kantar Worldpanel reported on July 2019.
"Buying from small producers is also popular, and we see an increase here of 1.7 percent in the same period. Consumers now have a wider repertoire in terms of how they shop, where they shop and what they are buying. Shopping, both online and offline, has been well documented. People are also visiting a wider number of retailers (7.8 retailers in 2018 vs 7.1 in 2008)."
Kantar suggests that 56 percent of French individuals distrust mass retailing and that more and more are procuring at natural grocers or specialist contemporary meals from retailers corresponding to the Grand Frais fresh food concept.
France is home to over 2,000 hypermarkets offering range products such as clothing, electrical, homewares, garden products, food, and personal care, often found outside city centres. It is interesting to note that up to 80 percent of organic sales come from supermarkets and hypermarkets. In early 2018, E. Leclerc, France's largest food retailer by market share with over 680 stores operating under its banner in regional France, announced it would open 200 new stores with a 'Bio' format and open for the first time in Paris hypermarkets and "click and collect" stores. It also launched a home delivery service in Paris in March 2018 called "Leclerc To My Door."
Chief executive Michel-Edouard Leclerc said it would take three years to establish a solid foothold in the capital, with a hypermarket planned for 2020 near Montparnasse railway station, which will challenge domestic rivals such as Carrefour, Casino and Auchan.
Leclerc's Bio stores will have store spaces ranging from 400 to 800 square meters, the company said in March 2018. The first store opened at Fontaine-lès-Dijon, Côte-d'Or with an assortment of around 6,000 organic products including the Leclerc private label brands Bio Village for food and Bionaïa for personal care. Leclerc's Bio product sales reached 930 million euros in 2018, up 22 percent, compared with Carrefour at 1.2 billion euros (up 20 percent) and organic cooperative Biocoop with 1.2 billion euros in sales.
Kantar’s France grocery retail market share for the 12 weeks ending July 30, 2019, revealed that E. Leclerc led the market with 21.7 percent share, followed by Carrefour (19.9%); Intermarche (15.1%); Casino (10.9%); Systeme U (10.7%); Auchan (10.0%); Lidl (6%); Delhaize (2.9%); and Aldi (2.3%) . Now the more significant hypermarket and supermarket players have their own Bio private label brands and are eyeing off the specialist Bio store market. Auchan announced on November 2017 that it would open its first Auchan Bio store concept in Marquette-lez-Lille, near Lille.
The new concept with 4,200 references (including 470 products stamped by the Auchan brand Bio), and 450 sqm of space, aims at welcoming up to 16,000 customers a week. Auchan said that this new 100 percent organic brand has an objective, if the experience is positive after 18 months, to open 100 stores. "I do not set goals, but a hundred future stores seem to be a minimum," said the president of Auchan Retail France, Patrick Espasa. "This store will act as a laboratory that will refine our commercial project."
In 2012, Auchan created its first brand in organic, named "Heart of Nature," but only two stores were opened in Brétigny (Essonne) and Paris without Auchan Bio brands, while results were below Auchan's expectations.
In May 2019, Auchan announced a new Auchan concept 'lifestore' in Luxembourg's La Cloche d'Or, a "laboratory of 12,000 sq metres" with a revamped gourmet food hall, on-site catering, hydroponic greenhouses, an organic bakery, and wellbeing services, an open model store connected to a whole area wellness aimed to really change the lives of its customers. The lifestore model was also deployed in Jiaxing, a Chinese city in Zhejiang province, and Turin, Italy. However, Reuters revealed in late April 2019 that Auchan would sell 21 sites in France including 20 supermarkets as a result of the harsh business conditions within its main French business, that have already impacted its rivals such as Carrefour and Casino.
Carrefour, which opened its first specialist Bio store in Paris in 2013, unveiled a new Bio store design in late 2018 to be rolled out to dozens of stores across France and Europe in 2019.
Carrefour has 20 Bio stores in France, mostly in Paris and four in Spain and opened its first Carrefour Bio store in Belgium on July 2019, in the municipality of Woluwe-Saint-Lambert in Brussels. The store, spread across an area of 200 square-meters, offers nearly 3,000 organic SKUs.
Carrefour's head of organic, Benoit Soury said the updated look and feel was meant to spotlight the banner's organic focus. "Our old models were perceived as convenience stores that stock organic products. Now, with this new concept, we want to be seen as a distributor of organic products," he said.
At its July 2019 half-year sales results Carrefour said that sales of organic products continued their strong momentum, with growth above +25% in Q2 2019, driven by new customer gains. Carrefour also supports farmers in their conversion to organic farming and is ahead of schedule, with more than 300 support contracts already signed in France since 2018 (including +96 in H1 2019).
"Carrefour has systematized and internationalized the adaptation of hypermarkets in favor of more compact formats, specifically adapted to their catchment area," it said.
Intermarché, France's third-largest retailer has yet to open exclusively organic stores. However, the store-owner cooperative Les Mousquetaires Intermarché took an undisclosed minority stake in organic store cooperative Les Comptoirs de la Bio, LZ Retailytics reported in January 2018.
The 141 store-strong network recorded an estimated turnover of EUR220 million in 2016. The partnership is understood to give Intermarché members access to the Les Comptoirs de la Bio concept that should fuel the chain's growth while enabling Intermarché owners to tap into the fast-growing organic segment in France, L Z Retailytics said.
"For Les Mousquetaires, working on two complementary approaches to organic retailing, that of specialists on the one hand, and that of the medium and big boxes, on the other hand, constitutes a real development opportunity for the business owners for whom we are eager to strengthen their presence in their catchment areas," said Didier Duhaupand, president of Les Mousquetaires.
Group Casino strengthened its position in organic products, notably with the opening of eight new Bio Experience areas in hypermarkets in H1 (13 opened to date) The So.bio banner acquisition has been finalized and opened in July, the largest organic store in Paris, on the rue de Sèvres (800 sqm, 10,000 SKUs), while the first "Carrefour Bon Appétit" restaurant opened in June. Organic products are sold through its Casino and Franprix supermarkets and Monoprix stores, while its subsidiary Monoprix acquired organic and natural grocer Naturalia in 2008, which now has 150 stores.
In June 2017, Monoprix opened three new Naturalia Vegan, 100 percent vegan supermarkets in Paris and Vincennes that only sell organic and vegetable products. The new stores doubled the vegan product range, and offer 2,000 "daily vegetable products," the retailer said.
In 2019, Groupe Casino pursued a debt reduction strategy with a disposal plan of around EUR2.5 billion by the first quarter of 2020. Casino sold off subsidiaries, hypermarkets, supermarkets and store property to other retailers and fund managers.
Japan's AEON supermarkets acquired a 19.9 percent stake in Bio c' Bon in December 2018 and opened eight Bio c' Bon stores in Japan. Bio c' Bon is a private stock company founded in 2008 and has 150 stores, some in other European countries such as Spain, Belgium, and Italy.
One issue that may be negative for suppliers of organic brands is the recent growth of store brand or private label (PL) packaged product sales in France. The PLMA 2019 International Yearbook figures showed that French private label product sales reached 31 percent in 2018. Sixteen other European countries' PL market share is around 30 percent, compared with Spain (51%), Switzerland (49%), the UK (47%), Germany (45%) and Italy (20%). Another issue is that from February 1, 2019, the new French EGALIM law was expected to increase food costs nationwide, ensure that agricultural products are sold at their proper value and redistribute more money to the farmers producing the goods.
The law is intended to raise grocery prices at big stores on hundreds of food items by as much as 10 percent, but there are fears it could also impact on organic prices. French grocery stores historically have made 30 to 40 percent profit on fruits, vegetables, milk, and meats. The increased cost is also intended to make it impossible for big brands to sell food at a loss.
Specialist Bio store groups in France include Biocoop with 530 stores, La Vie Claire with 325 stores, Biomonde with 200 stores, and Bio c' Bon with around 100 stores. Biocoop plans to have 900 stores by 2025 and in May, opened its first Anti-Waste Nation store, intending to reduce the use of the packaging as much as possible. Biocoop also announced that it would only accept products from suppliers who specialize in organic products.
In 2017, in terms of overall market share, the supermarket groups had 44.9 percent share, ahead of specialty stores such as Biocoop, La Vie Claire or Naturalia (37.1%), direct sales (13.2%) and merchants (4.8%).
In December 2018, the Economist Intelligence Unit said that France has the most sustainable food system. Moreover, France, South Korea, and Italy are the top three countries for sustainable agriculture.