ORGANIC MARKET IN IRELAND THE UK 2013

How is the organic market faring in Ireland, the UK and elsewhere? Oliver Moore delves in.

The future is online, when it comes to organic sales in the UK. That's according to the most recent organic market report 2013 from the UK's Soil Association.

The majority of Irish organic produce exports still go to the UK. Despite increases in the EU and indeed tentative increases in the global markets, the UK is still both dominant and vital for Irish organic exports.

Incredibly, an online only retailer now has larger sales of organic produce that either Morrisons or even the Walmart-owned ASDA.

On line retailers Ocado are now the 4th largest organic retailer in the UK. In a noteworthy move within the on line category, Riverford and also Abel and Cole, primarily vegetable box schemes, also saw massive sales growth.

Combined, Ocado, Abel & Cole and Riverford saw a 10.3% increase in organic produce sales overall.

About 10% of organic produce is now sold through on-line retail outlets, nearly twice the rate of conventional sales.

Riverford are an innovative social franchise, where farmers sell with just one main intermediary. This Riverford franchisee (the intermediary), is employed by the mark up generated by the delivery system.

Supermarkets have, however, fallen out of love somewhat with organic. Taking a bottom line only approach, it seems they have failed to take account of potential loyalty to organic food those customers have. Thus, many lines have been discontinued by the UK's multiple retailers in expectation of declines in sales.

Overall organic sales in the UK are down 1.5%, as supermarkets do still dominate the distribution and sales of organic of produce. Sales are down 2.4% in Supermarkets, when counted as a distinct retail outlet. Sales of supermarket own-label ranges fell by a whopping 11.2% in 2012, with only the high-end Waitrose showing a small increase (1.1%).

However Sainsbury’s saw its online organic sales increase by a remarkable 48%.

Overall UK sales were down 3.4% according to the previous Soil Association report. After the highs of the 2000-2008 period, 2009 saw a major crash in sales in organics in the UK. The latest two years of figures, along with other reports, such as the Co-op report in December 2012, point to overall organic sales approaching stability.

Other positives for the organic market include:

European and global market increases: global organic market is up 25% over the past three years.
The under 35s significantly increased their average spending on organic products in the UK in 2012.
The organic dairy sector, non-food and catering are also showing a positive uplift.
The food service sector is opening up rapidly in the UK, especially through the Food for Life Catering Mark.
Box scheme, home-delivery and mail-order sales increased by 4.4% to £174.3 million, while independent retailers grew slightly, to now command £480.6 million of the overall £1.64 billion UK organic market.

And then there is the effect of scandals. Traditionally, the organic sector has always grown when a conventional food scandal occurs. It seems the ongoing horsemeat scandal is no different.

Monthly figures supplied by Kantar Worldpanel show in February 2013 that total UK supermarket organic sales increased to their highest level in 9 months. February sales increased 8.4% over January.

Some independent organic meat suppliers in the UK have also reported an increase in sales of up to 20% over the past month.

All of these dynamics, when taken together, point to supermarkets jumping the gun on the supposed end of organics in the UK, and most other sectors benefiting.

In many cases, the producer benefits from a rise in these more direct routes to market.

And in any case, few producers will shed a tear to see supermarket power over the organic sector decline, however slightly. (Though Irish exporters find UK supermarkets easier to deal with for scale product)

How does all of this compare to the organic market in Ireland?

Ireland mirrors the UK in many ways, for a variety of historical, cultural, economic, geographic and demographic reasons.

Organic food and drink sales are no different. Unlike the rest of Europe, the UK and Ireland have seen sales stall and then slightly decline over the recession years.

Slowly but steadily, more and more Irish organic produce is being sold not in the UK but in mainland Europe.

For this reason, a real emphasis has been placed on Biofach – the annual organic food and natural living trade show - the biggest of which is held in Germany each Spring. Thirteen Irish organic food and drink producers participated in February, and this has been the 5th year of Irish companies attending the trade show.

According to Eileen Bentley of Bord Bia, Biofach generated “approximately €400k of new business was generated by exhibitors on the Irish stand” in 2012.

For 2013, “we wait 6 months to do the new sales tally - typically, this is the earliest period business leads will translate into new sales post a trade fair. However, there was good interest in the organic seafood offerings in particular and a majority of exhibitors felt the show was an important platform for them to meet existing customers and potential new buyers.”

She adds “Maintaining existing business through participation at the event is an important objective for many exhibitors also”.

I asked about data from Irish organic food and drink exports. As agri-food in Ireland is so export focused, surely its important to understand how this market is actually developing?

“I don't have an overall figure for the value of Irish organic exports” she tells me. “At present, we have not broken organic down into a category in its own right within Bord Bia's annual export review...We would need to survey current organic exporters to get a topline figure of export values. If the Organic Focus Committee prioritise this for the coming year, we will undertake this on their behalf.”

Closer to home, Kantar Worldpanel figures for organic sales in Ireland for the year ending 2012 show an overall market value of almost €100 million. The market declined in value by 3.5% compared to the previous year although yoghurts, fresh meat and biscuits gained market share and demonstrated growth versus 2011.

Organic yoghurt has increased from 17% in 2010 to 24% of the overall Irish organic market. This reflects marketing spend and availability, both of which are considerable for the category.

Organic vegetable market share is up slightly on 2010, while organic milk market share is down.

Like in the UK, overall market decline was very significant in the earlier years of the recession (2008/2009), but this decline has slowed. Sales were almost E105 million at end of year 2010, E103.5 million 2011, and just over E97 million in 2012.

According to Kantar data pre-family, older dependents and empty nesters are the key demographics for organic food sales in Ireland now. This most likely reflects the recessionary squeeze on families, though young families are increasing their percentage again from 2011 to 2012, after a decline in 2010. Families in the 40+ category have declined each year since 2010.

Other key facts from the Kantar data include:

Shoppers buy organic food on average 21 times a year
91% of the population have bought organic with the majority buying an organic yoghurt
Organic Vegetables are the largest single market worth over €25 million. Organic Fruit is worth just over €8.5m.
The typical spend on organic over the year was €66.40 - €1.80 less than last year
In terms of retailer performance and organic food, Aldi, Tesco and Supervalu have all achieved organic sales growth over the period.

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