Organics is jealously guarding its space as functional and fairly traded foods appeal to similar consumer aspirations. Helen Gregory reports
Richard Dent, Asda’s grocery speciality food buyer, agrees that it has had to rethink its organic fixtures. “Ambient organics used to be given its own fixture, but in January we decided that customers should be able to buy their organic products within the category.” However,he says the move has
produced positive results. “We have now seen a 9% like-for-like sales uplift this year.”
The organic categories aren’t what they used to be. A couple of years ago retailers were rushing to declare their organic credentials and set up specially merchandised areas and gondola ends. Many own label ranges were launched while the big manufacturers jumped on the shiny new bandwagon. But since then organic produce has been shunted around, merchandised among conventional products, and in some cases, rationalised. So is organic food under pressure?
The initial wave of enthusiasm in the industry was fuelled by the government and organic bodies, says the NFU’s organic committee chairman Oliver Dowding. “Retailers then introduced too many lines - many imported. Now they have pulled back to core lines,” he says.
More recently retailers’ own label organic products haven’t been finding the success that their branded counterparts have. Ben Cull, marketing director of Yeo Valley Organic, says the number of lines that have fallen by the wayside appear to have cut the space devoted to organics and reduced choice. “But those that have succeeded are about genuine authenticity,” he adds.
Dent believes the change in merchandising strategy exposes organic products to consumers who before were not interested in the category or incorrectly assumed the prices were too high.
One success story is Organix Brands and its founder Lizzie Vann believes its pioneering credentials played a big part. “The big companies muscled in and thought they’d show us how it should be done, but it’s the small pioneers who have grown,” she says.
Regardless of market shares, the treble and double-digit category growth enjoyed before 2001 dropped to 7% last year, according to TNS. Much of the early growth was through consumer trial and although it’s evidently not attracting converts at the rate it was, the UK still spends about £920m on organic products - more than any other European country except Germany.
The sector is bearing up despite doubters, such as Food Standards Agency chairman Sir John Krebs who believes organic food is neither safer nor more nutritious than conventionally grown food.
In the last year, organics’ best performer was meat which jumped by 43% from £40m to £57m, while multi-ingredient products rose by 30% from £125m to £163m. Baby foods rose by 6% from £49m to £52m, while fruit and vegetables only managed a 3% rise, from £268m to £275m. However, fruit and veg is still the biggest category and the most common entry point.
The NFU’s Dowding believes mainstream fast-moving lines get more attention in supermarkets and that has led to the half-empty shelves which are so unappealing to shoppers. The Soil Association, however, thinks organics could be pushed harder by some category managers. That said, supermarkets are most commonly used to buy organic food, with an 82% market share.
Tesco is the retailer with the highest market share, at 27.2%, followed by Sainsbury at 26.4%, Waitrose at 15.7% and Asda at 7.3%. However, TNS says Sainsbury is closing the gap with Tesco. Indeed, the chain will launch a competition to find its organic suppliers and producers of the year and claims to have a wider range of organic foods that has also won more awards than any other supermarket. Its £4m organic sales a week are between 1% and 3% of total volume.
Not to be outdone, Tesco is promoting its organic range and boasts an offer of more than 1,200 products. However, the fastest growing organic retailers are Waitrose and Marks and Spencer which attract older, more upmarket shoppers who are the core of committed organic consumers. And Rob Howard, the Soil Association’s horticulture development manager, recognises that supermarkets are putting more effort and investment into the category. “They know that the people who buy organic tend to spend more in the store as a whole.”
He believes there will be substantial growth in organic produce and it will be reflected in more shelf space. However, other new categories such as fairly traded and functional foods have begun to demand more shelf space and that raises the question of whether they will thrive at the expense of organics. According to Key Note, functional foods grew by 9.2% in 2002 - up from £401m to £438m - mainly in breakfast cereals, spreads, yogurts, milk, juice and water. In addition, shoppers are generally becoming more receptive to foods that claim to be health-enhancing and pleasurable rather than medicinal.
Although many are niche, brands in the functional food arena spend more on marketing than many conventional brands. Most organic proponents do not see any conflict between functional and organic foods, and neither do manufacturers, it seems. Unilever owns the Go Organic range but is also seeing big sales with Flora Pro-activ. The company says the interest in organics is driven by consumers who want a healthier diet and lifestyle and demand for functional foods is being driven by the same aspirations.
Howard believes the demands of the organic consumer are different to those of the consumer looking for functional foods, and that the growth of functional foods will not, therefore, be at the expense of organic.
Dowding adds that fairly traded produce could be more of a challenge to the sector than functional foods, but the fact that it is likely to prompt consumers to think more about where their food comes from could be an advantage for the organics market.
The supermarkets are proclaiming their faith in the category with promises of continued investment. None see a conflict with any other area and point out that even if shelf space is not being extended, it isn’t being cut back. Somerfield, for example, says its new format and new merchandising teams are constantly looking for opportunities to develop the organic range.
And Asda’s Dent says: “We will be looking to substantially improve the range next year. As long as there is customer interest in this area, Asda will supply it.”
The bottom line for the multiples is: what the consumer wants, the consumer gets. For some that might be more organic, for others less. As a Sainsbury spokeswoman says of its offer: “The space won’t be increasing that much. Consumer interest is finding a level.”
Richard Dent, Asda’s grocery speciality food buyer, agrees that it has had to rethink its organic fixtures. “Ambient organics used to be given its own fixture, but in January we decided that customers should be able to buy their organic products within the category.” However,he says the move has
produced positive results. “We have now seen a 9% like-for-like sales uplift this year.”
The organic categories aren’t what they used to be. A couple of years ago retailers were rushing to declare their organic credentials and set up specially merchandised areas and gondola ends. Many own label ranges were launched while the big manufacturers jumped on the shiny new bandwagon. But since then organic produce has been shunted around, merchandised among conventional products, and in some cases, rationalised. So is organic food under pressure?
The initial wave of enthusiasm in the industry was fuelled by the government and organic bodies, says the NFU’s organic committee chairman Oliver Dowding. “Retailers then introduced too many lines - many imported. Now they have pulled back to core lines,” he says.
More recently retailers’ own label organic products haven’t been finding the success that their branded counterparts have. Ben Cull, marketing director of Yeo Valley Organic, says the number of lines that have fallen by the wayside appear to have cut the space devoted to organics and reduced choice. “But those that have succeeded are about genuine authenticity,” he adds.
Dent believes the change in merchandising strategy exposes organic products to consumers who before were not interested in the category or incorrectly assumed the prices were too high.
One success story is Organix Brands and its founder Lizzie Vann believes its pioneering credentials played a big part. “The big companies muscled in and thought they’d show us how it should be done, but it’s the small pioneers who have grown,” she says.
Regardless of market shares, the treble and double-digit category growth enjoyed before 2001 dropped to 7% last year, according to TNS. Much of the early growth was through consumer trial and although it’s evidently not attracting converts at the rate it was, the UK still spends about £920m on organic products - more than any other European country except Germany.
The sector is bearing up despite doubters, such as Food Standards Agency chairman Sir John Krebs who believes organic food is neither safer nor more nutritious than conventionally grown food.
In the last year, organics’ best performer was meat which jumped by 43% from £40m to £57m, while multi-ingredient products rose by 30% from £125m to £163m. Baby foods rose by 6% from £49m to £52m, while fruit and vegetables only managed a 3% rise, from £268m to £275m. However, fruit and veg is still the biggest category and the most common entry point.
The NFU’s Dowding believes mainstream fast-moving lines get more attention in supermarkets and that has led to the half-empty shelves which are so unappealing to shoppers. The Soil Association, however, thinks organics could be pushed harder by some category managers. That said, supermarkets are most commonly used to buy organic food, with an 82% market share.
Tesco is the retailer with the highest market share, at 27.2%, followed by Sainsbury at 26.4%, Waitrose at 15.7% and Asda at 7.3%. However, TNS says Sainsbury is closing the gap with Tesco. Indeed, the chain will launch a competition to find its organic suppliers and producers of the year and claims to have a wider range of organic foods that has also won more awards than any other supermarket. Its £4m organic sales a week are between 1% and 3% of total volume.
Not to be outdone, Tesco is promoting its organic range and boasts an offer of more than 1,200 products. However, the fastest growing organic retailers are Waitrose and Marks and Spencer which attract older, more upmarket shoppers who are the core of committed organic consumers. And Rob Howard, the Soil Association’s horticulture development manager, recognises that supermarkets are putting more effort and investment into the category. “They know that the people who buy organic tend to spend more in the store as a whole.”
He believes there will be substantial growth in organic produce and it will be reflected in more shelf space. However, other new categories such as fairly traded and functional foods have begun to demand more shelf space and that raises the question of whether they will thrive at the expense of organics. According to Key Note, functional foods grew by 9.2% in 2002 - up from £401m to £438m - mainly in breakfast cereals, spreads, yogurts, milk, juice and water. In addition, shoppers are generally becoming more receptive to foods that claim to be health-enhancing and pleasurable rather than medicinal.
Although many are niche, brands in the functional food arena spend more on marketing than many conventional brands. Most organic proponents do not see any conflict between functional and organic foods, and neither do manufacturers, it seems. Unilever owns the Go Organic range but is also seeing big sales with Flora Pro-activ. The company says the interest in organics is driven by consumers who want a healthier diet and lifestyle and demand for functional foods is being driven by the same aspirations.
Howard believes the demands of the organic consumer are different to those of the consumer looking for functional foods, and that the growth of functional foods will not, therefore, be at the expense of organic.
Dowding adds that fairly traded produce could be more of a challenge to the sector than functional foods, but the fact that it is likely to prompt consumers to think more about where their food comes from could be an advantage for the organics market.
The supermarkets are proclaiming their faith in the category with promises of continued investment. None see a conflict with any other area and point out that even if shelf space is not being extended, it isn’t being cut back. Somerfield, for example, says its new format and new merchandising teams are constantly looking for opportunities to develop the organic range.
And Asda’s Dent says: “We will be looking to substantially improve the range next year. As long as there is customer interest in this area, Asda will supply it.”
The bottom line for the multiples is: what the consumer wants, the consumer gets. For some that might be more organic, for others less. As a Sainsbury spokeswoman says of its offer: “The space won’t be increasing that much. Consumer interest is finding a level.”
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