Not All Green Is Equal—BioFach 2018 and the Next Generation of Organic Food

Organic is growing, but not in the speciality shops

Most European countries have seen double-digit organic food market growth in recent years. Rabobank expects that, overall, the European market for organic food will continue to grow in the coming years, albeit somewhat slower than in the past few years.

The outlets for this growth vary per country. In Germany (the largest organic market by value in Europe), approximately 50% of all organic food is sold by general retailers, and approximately 30% by specialised organic retailers, or natural food stores. Interestingly, these specialised organic retailers in Germany (as in the Netherlands) have seen only more-or-less stable revenues during the past years—they were unable to profit from the overall high market growth. In two other top-5 European organic markets (the UK and Switzerland), specialised organic retailers never had a large market share (10-15% of the organic sales). In France, on the other hand, where organic food has seen double-digit sales growth across all sales channels, the fastest growth was realised in the specialised organics shops (which have a 37% share of the organic sales). As is often the case in Europe, the differences are large.

A sector needs flagships

Even though many specialised organic food stores have been given a modern facelift, in some European countries they still mainly draw the usual-suspect ‘dark-green’ crowd of conscious consumers. New organic consumers—young families, and ‘lighter green’ consumers looking for food they perceive as healthier, and who care about animal welfare—more often purchase their organic products in their regular supermarket, or online. This could prove challenging for the specialised retailers, but also for the organic sector as a whole: front-runners, or 'flagships' are needed to lead the way in innovation and quality, and to wow and intrigue both existing and new customers.

Competition on the supermarket shelf leads to more transparent prices

As organic foods are increasingly sold through regular supermarkets, price pressure, and potentially even margin pressure, could be the result. For many customers, organic signifies healthy, safe, and animal-friendly food. These (perceived or real) benefits govern the price premium of organic versus regular products. However, regular food is fast becoming more sustainable and traceable, too. And, additionally, supermarket customers have a wide choice of products, which either boast alternative certification schemes, such as fair trade, or are non-certified but (real or marketed) ‘good’, ‘healthy’, or ‘natural’ foods. The ‘dark-green’ consumer may not be tempted by these – in their eyes – ‘light-green’ alternatives. But most of the growth of organic food sales has been coming from ‘lighter-green’ consumers, who may be more easily swayed to buy another product with, in their eyes, a better price point relative to its promise. With a wide range of choices side by side on the supermarket shelf, it is easy for the consumer to compare options and prices.

For the organic sector, the pressure is on to continue to provide a distinguishing product, and send a clear message to buyers that organically-certified food is worth a premium over conventional food.

Author: Maartje van den Berg