Organic Articles: Organics UK: A Personal Overview

The Organic Consultancy

Organics UK: A Personal Overview

This article first appeared in the September 2000 edition of Natural Products.

Article from Natural Products September 2000

When I started working with organic food in 1986 I never believed that the sector would develop so far or so fast. In 1993 UK organic sales were running at 105 million per year at retail : last year they reached 550m, next year the Soil Association expects the sector to exceed 750m. The UK organic sector is currently growing by 40% year-on-year, making it the most dynamic part of the UK food industry. Mainstream supermarkets compete to see who can list the most organic products: specialist organic companies are popping up daily.

Supermarkets currently account for about 69% of all organic food sold in the UK, the remaining sales being split between independent retailers (health-food stores, fine-food stores, organic stores, farm shops, farmers markets) and delivery companies (box schemes). The enthusiasm of UK supermarkets shows no signs of abating and traditional health-food stores run the risk of being squeezed between the competitive pricing and accessibility of supermarkets and the wide product ranges of the new wave of specialist organic retailers such as Planet Organic, Fresh & Wild and As Nature Intended. For now all three of these stores are London only, but the formats could work equally well elsewhere so a national roll-out is likely, giving at least one national organic chain.

The last year has seen the entry of a number of multinationals into the organic sector. First in were Seeds of Change (a subsidiary of Mars), then came Enjoy Organics, a specialist organic company set-up by RHM. Now we have Nestle launching Organic Nescafe, and Heinz selling Organic Baked Beans and Organic Tomato Ketchup. The presence of organic versions of everyday brands represents a considerable challenge to marketeers: how do you promote Organic Nescafe without drawing the attention of consumers to the potential presence of pesticides in non-organic Nescafe ? And will organic consumers trust multinationals who produce a few organic products ? The route followed by Enjoy Organics – a dedicated organic company, with the resources and backing of a larger group- seems to offer the best of both worlds.

I predict that we will move to three groups of organic suppliers:

Volume Producers

These are the large food companies that make own-label products for the UK supermarkets, packing commodities such as sugar, flour, butter and cornflakes. Most such companies are either certified organic producers or have plans to be so.

Champion Brands

These are the companies with organic brands that are heavily promoted and work hard to bring new customers into the organic market – for example Organix Brands, Yeo Valley, Green & Black’s, Libby’s, Seeds of Change, Harmonie, Enjoy Organics. Increasingly these brands are spending millions of pounds to promote their products.

Specialist Producers

Here we find high quality products that add considerable interest to any organic fixture, frequently with an emphasis on regional production. Examples of these companies are The Organic Spirit Company (Juniper Green Organic Gin, UK5 Organic Vodka), Free Natural with their quirky organic sodas and The Village Bakery’s range of craft-baked goods.

One effect of large food manufacturers entering the organic market is to put pressure on the supply of organic ingredients. The Soil Association have estimated that 75% of organic food eaten in the UK is imported: for organic ingredients for further processing I suspect the figure is even higher. The only way for a manufacturer to get all the organic ingredients it needs is to contract with organic farmers many months in advance, rather than relying on the increasingly unreliable organic ‘spot’ market. Filling the gap between farmer and manufacturer is a new breed of organic ingredient supplier, notably Tradin BV in Holland and Community Foods in the UK. Organic ingredient sourcing is still a very disjointed process. Trade Organex have spotted a major opportunity that exists for an internet portal that will bring together all the different organic ingredient suppliers – visit www.tradeorganex.com for more details.

With UK organic food manufacturers having to import organic ingredients from all over the world a bottle of organic tomato ketchup can end up containing ingredients from six different countries, each certified as organic by a different certifying body. It is then the responsibility of the UK certifying body to ensure that the finished ketchup reaches their standards. This procedure of establishing organic certification equivalence is proving to be a major challenge to the certification team at the Soil Association. As the market for processed organic products continues to develop the amount of time and resources required to establish organic certification equivalence looks set to grow.

Organic standards continue to develop. EU organic livestock regulations were finally published in 1999 and from August 2000 they have become effective in the UK via the Organic Livestock Regulations developed by UKROFS in consultation with the UK organic certifying bodies. The original EU organic regulations from 1991 have continued to evolve, reflecting market developments both welcome (increased availability of organic ingredients) and unwelcome (the need to protect organic consumers from GM). For the first time the USA will have national organic legislation, easing organic trade between the EU and the USA in both directions. Overall certification bodies such as the Soil Association continue to push organic standards to higher levels, protecting the integrity of the organic offer but making greater demands of their licensees.

The price paid by consumers for organic food looks to be an issue over the next year. The entry of Iceland into the sector has resulted in at least some consumers being given the impression that it is possible to buy organic food at the same price as non-organic. Given that it costs a farmer more to produce an organic crop than a non-organic crop (chemicals are relatively cheap, the labour that replaces them is not) either the organic farmers are getting a bad deal or Iceland are subsidising the offer. For the first year Iceland say they will subsidise organic sales, thereafter…. ASDA responded by promising to undercut other retailers on the selling prices of its organic foods. At a time when focus group work has revealed that UK consumers are happy to pay a modest premium for organic food, taking value out of the sector in this way seems short-sighted. There is a lot of work going on behind the scenes to cut supply costs of organic foods without reducing the price that organic farmers receive. Increased production volumes help here through economies of scale. In this way we can offer consumers organic food at a price that represents good value for everyone involved.

One thing that is unlikely to change in the coming year is the amount of publicity and media attention that organics receives. However unlike the past not all this coverage is likely to be positive. Recent attacks from the Daily Mail on the safety of organic mushrooms and from the Sunday Times on inconsistent international organic standards could be the first shots in an organic media backlash. Prudent organisations are already getting their responses ready.

One way to deal with these attacks is for us to modify the way we present organic food. Marketing organic food in a negative way has so far been very successful, capitalising on the consumers fear of pesticides, BSE and GM in non-organic food. I do not believe that consumers will stay scared of the mainstream food industry indefinitely. Can we market organic food on a positive basis ? I believe that if we want to ensure organic food is more than a fad the message has to be “Buy organic food because it looks good, it smells wonderful, it tastes great and you are supporting truly sustainable agriculture which will benefit the world you leave to your children, and to their children”. In this way the UK organic sector can continue to prosper, and everyone can benefit.

Copyright Simon Wright, August 2000.