Organic growth is a term often used by CEOs to trumpet a business's steady, sustainable growth from within. It's ironic, therefore, that the market for organic food has been very much boom or bust.
Since the first murmurs about the credit crunch, the prophets of doom have been heralding the death of the organic movement - and last week's Soil Association report into the market has given them plenty of ammunition.
The report does its best to shine a positive light on organic's predicament. Overall value sales in 2008 were up 1.7% year-on-year, it claims, with organic milk, yoghurt, fresh red meat, eggs, cheese and fresh poultry showing an increase.
The absence of volume figures is conspicuous, however, as they offer a more accurate view of the market, with the effect of food price inflation stripped out.
In his foreword, Soil Association policy director Peter Melchett admits "the overall sales by value masks a net decline in the sales volume of a fair few categories".
Recent TNS figures support this, with volume sales of organic bread down 29%, organic fruit down 20%, organic eggs down 12% and organic vegetables down 8% year-on-year in the 12 months to 25 January 2009. Overall sales of organic food and drink were down 1% in value despite spiralling food price inflation. During the same period, value sales of non-organic food increased 7%.
It paints a bleak picture for the organic sector and casts doubt on its ability to attract new customers while retaining existing ones.
Industry commentators believe a failure to justify the price premium organic food commands has been at the heart of its problems.
"It's quite an in-depth area and not enough money or time was spent fully explaining it," says Ben Cull, sales and marketing director at Yeo Valley.
While committed organic consumers might say the benefits speak for themselves, others need more persuading, argues Richard Walters, head of food marketing at consultancy Bidwells.
"During recession, the price element of the value-for-money equation comes under increased scrutiny," says Walters. "And people are finding the premium associated with organic to be unacceptable."
The Soil Association concedes that greater efforts must be made to sell the core values of organic produce to the consumer.
"We need to get better at communicating the benefits of organic farming and food," said Melchett at the launch of the report. He decried the "lack of sophisticated understanding of the benefits" outside the core consumers who are committed to the category. The benefits are inherently difficult to communicate to the consumer in a snappy soundbite, he added.
Kellie Fernandes, global marketing director at Green & Black's, agrees. "It would be very short-sighted to presume [the word] 'organic', especially during a recession, is enough to drive purchasing decisions."
Indeed, Rachel's Dairy this week announced it was dropping the 'Organic' moniker from its brand name (see p36), although the company denies this is an attempt to distance the brand from the organic movement altogether. "The word 'organic' will feature on pack as an important and clear descriptor of our dairy products and their ingredients," says marketing director Steve Clarke, with the emphasis placed on Rachel's as a distinctive brand with distinctive products.
Branding expert Don Williams, CEO of Pi Global, is not surprised by the move.
"The problem the organic movement faces is that it is nigh-on impossible to communicate the benefits because they are more emotional than tangible."
Champions of organic disagree. Duchy Originals has put renewed emphasis on sustainability as a benefit.
Research undertaken with 2,000 consumers in December 2007 revealed the term 'organic' had become commoditised and slightly misunderstood, says Duchy Originals CEO Andrew Baker.
As a result Duchy embarked on a strategy of encouraging shoppers to buy into what organics stood for, rather than relying on the word alone to sell products.
"With the current environment, it seemed really important, to reposition the brand back to sustainability roots, link it back to the farm, to locally produced and sustainably raised crops," says Baker.
As well as the environmental argument for organic, however, Cull believes more could be done to establish the health benefits of eating organic food. There is a growing body of evidence suggesting organic milk contains more soluble nutrients in it than conventional milk, he says. Walters stresses the need for a greater degree of research to justify the health messages associated with organic. "There needs to be more research to underpin sometimes quite generic and vague messages."
And let's not forget taste, says Guy Watson, founder of Riverford Organic Vegetables (the organic food box delivery scheme). Watson claims that when Riverford customers are asked about the benefits of buying a vegetable box, taste comes streets ahead. "For our customers, flavour is absolutely key." More so than the other perceived benefits of buying organic, such as environmental and animal welfare, he says.
In the short term, however, a willingness to contribute to promotions could help bring people into the sector, says Helen Browning, the Soil Association's director of food and farming who is best known for her eponymous sausages and bacon.
Browning believes bogofs are dangerous territory for organic as they devalue and undermine the brand. However, price-led as well as non-price-led promotional activity is no bad thing, she says, as it can help bring non-organic consumers on board.
"It's important to try and get people to try organic for the first time," she says. And brands have a key role to play in encouraging trial, Browning adds, suggesting the sea of own-label organic goods in supermarkets cannot tell the organics story in the way a branded product can.
"Sometimes you can be more proactive, or lively, or chatty through a brand than perhaps you can through own-label," she says.
The organic dairy sector, in particular, has benefited from strong brand presence. As well as Rachel's, Yeo Valley has become a fixture in the dairy aisle. Its milk volumes rose 24.7% in the 52 weeks ending 21 March 2009 [Nielsen].
But Cull believes the category is as important as the brand in determining success. "Organic products that will do well are those that are closer to the earth," he argues. "Organic pizza is difficult to get your head around."
Organic sales through the multiple retailers stood at £1.54bn in 2008, up 1.8% by value on 2007 figures. Tesco, Sainsbury's and Waitrose hold the biggest organic market shares among the multiples. Sales in independents were up 1.4% by value, from £560m in 2007 to £568m in 2008. The most successful category growth was in alcohol (+21.9%) & fresh poultry (+17.7%), while the worst-performing organic categories were confectionery (-21.3%) and fish (-18.7%).
Source: Soil Association.