The Organic Bandwagon Featured

The Organic Bandwagon Rachel D, Manchester, UK

The organic sector has defied recent economic downturns to continue its solid growth. What have fuelled this expansion and what are the challenges ahead? By Marg Will, CEO, Organic Systems & Solutions

Awareness and understanding of what is organic and the benefits of buying organic products is reaching a wider sector of the community and is reflected in current market trends.

Double digit growth is reported in the New Zealand market with Monette Tiu, marketing manager of Ceres Enterprises, attributing a portion of the upswing to supermarkets embracing organic products as a direct result of consumer demands.

Across to Malaysia and Jolene Yeo, wholefoods business unit manager of SCC Marketing, claims that although there is no syndicated data on the organic food industry within the country, she is aware from their own research that there has been significant growth within the organic sector.

“We do believe that the growth of this segment is in its strong twenties.” She said. “Consumers are not only becoming more affluent and discerning but more health conscious with the rise of serious ailments and the awareness of the need for preventative health management.”

According to her, the increasing market demand for organic products is evident with retail outlets having bigger organic sections and the mushrooming of independent organic cafes cum stores.

Health Factor

There is also a growing trend where young affluent mothers instill organic living and eating in their homes. The alarming increase in new diseases, global health epidemics and diet related ailments among children are key motivators influencing mothers to opt for organic food and products.

She believes that the next 12 months would continue to see positive growth in the organic fresh produce sector as the demand for the organic produce continues to rise among health conscious and discerning consumers.

“With rising demand for organic products, prices for such products will be more affordable spurring regular consumption of these products.” she explained.

Organic products tailored for infants, toddlers and growing children should also saw positive uptrend. Parents, especially mothers, are now more informed and willing to splurge for what's best for their children.

This means opportunity in the organic area targeting children’s needs is vast as the myriad of products in this segment ranges from food to personal care and even natural health-giving remedies.

THE ONGOING DERIVE AND EXPANSION OF PRIVATE LABEL APPEARS AN INEVITABILITY.

Organic Conversion

Retailers are changing the way they treat organic products with more emphasis on sections dedicated to organic products. She added that organic sections are not only more organised but also more prominent and larger. Product offerings are also much bigger and complete.

“While in the past consumers are only exposed to organic fresh produce, consumers are now looking for a holistic organic offering from retailers.”

So while society has grasped an understanding of what is organic, she added that the key challenge now is in educating consumers on the benefits of ‘going organic’.

“Conversion rate among consumers is still relatively low. Nevertheless, we see this as an opportunity to rapidly grow the organic segment.” She concluded.

These are encouraging market trends indicating that the organic industry worldwide continues to strengthen reflecting consumer demands despite the impact of the recent global financial crisis.

Growing Mainstream Demand

According to the UK Soil Association 2011 Report, global sales of organic products continue to defy the economic downturn, growing by 8.8 percent in 2010, with growth continuing into 2011.

The report also stated that sales of organic products in China have quadrupled in the last five years, and Brazil is reporting an annual growth rate of 40 percent. Market analysts predict that organic sales in Asia will grow by 20 percent a year over the next three years.

In Australia, the recent release of the Organic Market Report 2012 has seen documented growth continue within that country. The report, commissioned by Biological Farmers of Australia (BFA), highlights consumer demand increasing within mainstream retail customers.

Dr Andrew Monk, chairman of Australian Certified Organic, a division of BFA, said the most significant trend change over the past two years has been the expansion of purchase activities (infrequent) by ‘laggards’ or those consumers who have not traditionally purchased organic.

“Almost one in four of these people have claimed a purchase of an organic product in the past year.” He explained. “This is reflective of the ongoing ‘mainstreaming’ of organics going on.”

Facilitating this growth is in part the reported greater availability of products in major retailers, including items, such as soft drinks in cafes and food service.

“Some major retailers have more recently realised the significant uplift potential in ranging products within conventional areas, with major growth being experienced. This is testament to a changing consumer type now buying organic products.”

Going Private Label

While not a favourite of some in the organic industry, the ongoing drive and expansion of private label appears an inevitability, and certainly on the upside for consumers who do purchase such products.

Indications are that private label will continue to add to further generic sales in organic products in Australia.

“Such lines as dairy, horticultural produce, meats as well as competitively priced processed goods such as baby foods and ready to eat products appear to offer potential for further growth.” He commented.

However are there any barrier to this growth continuing? He cautioned that the constraints on supply of ‘to specification’ products and produce remain the choke points for further growth.

“Across the major retailer sector there have been reports of considerable growth in some categories, ranging from 10 to 30 percent and more per annum over the past two years.”

He reported that retailers are generally asking for more organic products and generally cannot get what they are wanting, in the quantities, consistency and specification they want.

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  • Last modified on Friday, 08 July 2016 11:24
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