In time of recession, can organic food be a reality for the majority?

Susanne Padel Institute of Biological

Environmental and Rural Sciences

Outline

10 year trends of the organic sector Who is the organic consumer? Some more recent trends of the

organic market Can organic food be a relality?

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Organic agricultural land by region (2007)

Global organic market 1999-2007

97% of consumer demand in North America (43%) and Europe (54%).

Asia, Latin America and Australasia are important producers and exporters

Supply problems for fruits, vegetables, beverages, cereals, grains, seeds herbs and spices

Growth at lower rate is expected to continue

UK organic certified land area since 1997

0

100

200

300

400

500

600

700

800

thousand ha

'97 '98 '99 '00 '01 '02 '04 '05 '06 '07

NI

Scotland

Wales

England

UK Organic sector development since 1997

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97 98 99 '00 '01 '02 '03 '04 '05 '06 '07

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6000Land area (thousand ha)

Retail value (£ million)

No of holdings

Organic market and sales channels

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2004 2005 2006 2007

Farmers markets

Box & mail(producer)Box & mail (retail)

Independent retail

Supermarkets

Source: KeyNote (2008)

Who are the organic consumers?

We used to think Higher social class and education

•2/3 are A,B,C1 (compared with 1/2 in population)

Fewer children and older Mainly living in London, South East,

South West and WalesBut appeal has widened Manual and casual workers, students

and pensioners now account for 50% of consumers

Why people buy organic? (% consider very important)

Quality and taste (31) No GM ingredients (26) High animal welfare standards (25) Avoiding food with pesticides (25) Avoiding artificial colours & additives (23) Wanting to know where food come from (22) Fair prices and wages for farmers &workers (20) Farming methods encouraging wildlife (20) Impact of production and transport on greenhouse

gases and climate change (14)

(Source: Market Tools/ZOmnibus for Soil Association, January 2009)

Two broad segments of consumers

Regular/committed (15%) Claim to buy more then

40% of food as organic Well educated; health

aware Range of income levels Believe in organic product

quality Seek other attributes

• Environment

• Animal welfare

• Fair trade and local

Account for > 80% of spend

Occasional (30%) and rarely (48%)

Claim to buy between 35% and 10% as organic

More price & convenience sensitive

More sceptical about some claims

Less knowledgeAccount for < 20% of spend

Knowledge and availability remains a problem

¼ of those that don’t buy regularly would like to know more.

Organic products are bought unknowingly

People believe to buy organic if in fact they are not (e.g. on farmers markets, natural)

Limited knowledge legal status of ‘organic’ and annual inspection/certification requirements

More recent trends

Market has grown by 1.7% between 2007 and 2008 (£2.1 billion)

Nine out 10 households buy organic food•increases in the last 5 years

Broader appeal Average spending has fallen

•from £51.30 to £50.55

Dairy products (29.5% of sales)

Above average growth (07-08) •+10% milk

•+11.5 cheese

•+1.5 yoghurts Now the largest sector Commitment from key

players to communication campaign

Comparatively low premiums

Fruit & veg (26.2 % of sales)

Available in supermarkets but also box schemes, local shops, farmers markets

Reductions in consumer spend during 2008

Heavy reliance on imports•Despite steady increase in

horticultural land area in the UK

Meat (<10%)

Above average growth rates • +13% for red meat and

• +17% for poultry Downturn in supermarket sales in late 2008

• Lower value cuts and products (beef burgers)

• Cheaper outlets

• Affected by grain price increases

• Animal welfare important ‘Chicken out’ campaign

Difficulties balancingQuality

Health

Taste

Animal welfare

Local food

Fair price

Wildlife

Climate change

Labelling jungle?

Expected responses to the recession...Different types of shopping

Fun

Source :Bord Bia Research – Feeling the Pinch

Shopping Habits will Change…

Fun

Source :Bord Bia Research – Feeling the Pinch

• Shoppers will first try to reduce cost of Vital essentials– Promotions, Own brand, Discounters

• And will then cut out Fun expenditure

• Reluctant to cut back on Lifestyle or Sanity purchases

– Some affordable luxuries may actually increase!

© www.igd.com/analysis© www.igd.com/analysis

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0%5%

10%15%20%25%30%35%40%45%50%55%60%65%

...food that hasbeen produced

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...organic food ...foods that supportFairtrade

...foods with highanimal welfare

standards

% m

ain

shop

pers

(all

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)

2003 2004 2005 2006 2007 2008 2009

Specific food purchases –environmental and ethical

I have specifically bought…

Source: IGD Consumer Unit, 2009

Summary and conclusions

Consumers have reviewed spending on premium organic foods

People continue to seek ways to make a difference

Organic market largely driven by committed regulars

Can organic food be a reality for the majority?

Availability remains a problem Expensive image, not always reality

•Checking prices

•Premiums vary between outlets More home cooking and less

convenience food and changes in diet

We need clear messages about the wider benefits of organic food