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Organic movement plans for growth after sales slump

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Organic sales fell by 13% in 2009, down from £2.1 billion (2008) to £1.84 billion. But some categories bucked the overall downward trend, with milk, babyfood and beauty products recording growth.

The figures are contained in the 2010 Soil Association Annual Organic Market Report which was unveiled yesterday (April 12) in a special presentation at Natural & Organic Products Europe.

The report’s findings were unveiled to a packed audience at Olympia by the Soil Association’s policy director, Peter Melchett, and its new trade director, Finn Cottle.

Despite the fall in organic sales in 2009 Melchett predicted growth of 2-5% in 2010. 60% of the UK’s biggest organic brands planning for growth this year, he said.

But he added that incentives might be needed to strengthen and support the market as it recovered and increase organic output. “We need an equivalent of the car scrappage scheme to encourage farmers to switch from their old polluting farming techniques — and more funding for R&D into sustainable farming techniques.”

The new report shows that the three biggest categories of organic food – dairy, fruit and vegetables, and fresh meat – saw supermarket sales fall by 6.5%, 14.8% and 22.7% respectively. In contrast, organic milk bucked the trend in dairy sales growing by 1%, with 2009 being the best year for organic milk sales on record, and organic baby food sales, resilient throughout 2009, grew by 20.8% passing the £100m mark.

The report shows that dairy has now over taken produce as the biggest organic category (33% of total market share). Produce commands 26% share, with home cooking ingredients coming in at 6% and meat at 5%.

Supermarkets still account for the lion’s share of retail sales, with independents capturing around 14% (£260 million).

Organically managed land area in the meanwhile UK increased to 743,516 ha in January 2009 – up 9% on the previous year – and now represents 4.3% of UK farmland.

Key findings in the report include:

• Over 60% of the UK’s biggest organic brands are planning for growth in the coming year;

• Sales of organic food are still three times higher than in 1999 and over 50% higher then five years ago;

• Tesco organic fresh produce sales are already growing. Tesco predict overall organic sales will increase by 1% in 2010 while Waitrose anticipates organic sales growth of 3-5%;

• Organic box schemes fell by -9.8% while supermarket sales of organic fell by -12.2% and the independent sector by -17.7%;

• Organic health and beauty products continued to grow rapidly with sales increasing by a third to £36m;

• Sales of bread and other bakery items were one of the worst hit categories (-39.8%);

• The number of households buying some organic food fell only slightly in 2009 (from 88.9% to 88.3%);

• Organic products continue to attract shoppers from across the social spectrum, with groups that include manual and casual workers, pensioners, students and people on benefits accounting for 33% of the spend.

Peter Melchett commented: “It has been a tough year for the organic market, but we have seen businesses that are most committed to communicating the many, real benefits of organic food and farming to the public perform best.

“Confidence is now returning, and with the growing recognition of the need for environmentally sustainable production systems that are less reliant on fossil fuels, we are confident that the organic market, having weathered the recession, will return to growth.

“The question we should really be asking is not ‘can we afford organic food?’ but ‘can policy makers afford to carry on playing down the potential of organic farming’s contribution to food security and tackling climate change?’ In the meantime, we need to rekindle the kind of consumer demand that will ultimately be impossible for policy makers and retailers, to ignore.”


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