Anne Bruce
Growth in the organic market has slowed at a "dramatic rate" and penetration into households is dropping, according to the chairman of the Food and Drink Federation Organic Group.
Growth in the sector would be in line with conventional grocery in two or three years' time as the upward trend tailed off, said Rupert Maitland-Titterton, Heinz general manager of government relations, Europe.
Maitland-Titterton predicted the value of the organic food market would eventually stabilise at between 2.5% and 3% of total market value.
Addressing an FDF conference, he said the sector was dependent on a core of committed organic enthusiasts, with 69% of organic sales accounted for by 12% of shoppers. Household penetration had dropped over the last year as people who "dabbled" in organics lost interest, he said, and the sector was suffering from deflation.
Tesco was "very unlikely" to hit its target of £1bn organic sales by 2005, he predicted.
A Tesco spokesman told The Grocer its target was "challenging", but claimed sales and demand were still strong, with new opportunities like organic flowers due for launch.
Sainsbury sustainability manager Alison Austin told the conference the multiple sold £4m of organic products a week, but "quick wins" were over. Growth would depend on developing more processed lines and encouraging customers to trade up.
Loyalty card data showed a committed 5% of customers accounted for 38% of Sainsbury's organic sales.
The multiple was focusing on converting less loyal customers with initiatives including a booklet with money-off coupons due for release in the summer.
Simon Wright, founder of the Organic Consultancy, said the sector was consolidating: "There are too many companies for current organic sales and growth rates are falling back. We are beginning to see mergers and acquisitions, such as Kallo buying Whole Earth Foods and Enjoy Organics and Go Organic being absorbed back into parent companies RHM and Unilever."

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