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Growth Strategies In Organic Food And Drinks: Consumer Trends And New Product Development
Business Insights, March 2002
Table of Contents
The Outlook for Organic Food and Drinks: Consumer trends and new product development
Executive Summary 10
UK and German consumers will be organic big spenders in 2005 11
Consumer concerns over food safety and personal wellbeing are driving the organic market but are unlikely to sustain growth 12
Organic’s niche positioning is likely to be eroded as new food safety measures enter the food chain 13
Consumer priority is health and food safety not organic food production 13
Action points for the future 14
Chapter 1 Introduction 16
Introduction 16
What is this report about? 16
Who is the target reader? 17
How to use this report 17
Defining organics 17
EU Regulation 2092/91 17
Inspection 18
Labelling 18
Certification 20
Chapter 2 Organic momentum 24
Introduction 24
Introduction 25
Market overview 26
From little league to mainstream 26
Present - Organic market drivers 33
Market drivers analysis 33
Improved health awareness – achieving personal wellbeing 34
The organic revolution – the effects of BSE 35
Facing a future of food scares – the self-enforcing cycle of consumer fear 38
Environmental and animal welfare concern 38
Government and retailer support 39
The future: industry opinion survey 39
Key selling points for organic food 41
Organic consumer groups 44
Consumer barriers to buying organic 45
Obstacles to organic market growth 47
Organic retail channels 48
Retailer development strategies 50
Marketing organic products 51
The importance of organic branding 53
100% organic or organic hybrids 54
Conclusions 55
Chapter 3 Regional opportunities 58
Introduction 58
Limitation scores 58
Organic opportunities in France 59
Organic market overview 60
Organic certification and legislation – the AB symbol 64
Market drivers 66
Barriers to growth – justifying the price? 68
Conclusions 70
Germany market overview 71
Organic certification – Demeter, Naturland and Bioland 76
Market drivers 77
Barriers to growth – price and presentation 80
Conclusions 82
Netherlands market overview 82
Organic meat sales are boosted in the wake of the recent BSE crisis 84
Netherlands – SKAL and the EKO symbol 86
Market drivers 87
Market barriers – consumer attitudes need to change 89
Conclusions 92
Sweden market overview 92
Sweden – the KRAV accreditation 95
Market drivers – health and wellbeing top the list 98
Market barriers – availability limited to the major retailers 99
Conclusion 100
UK market overview 101
The Soil Association – implementing organic standards 106
Market drivers – the impact of BSE 107
Market barriers – price premiums remains the greatest hurdle 109
Conclusions 111
US market overview 112
USDA Final Organic Rule – cementing the future for the organic market 116
Market drivers – motivated by personal wellbeing 117
Conclusions 120
Chapter 4 Organic best practices: NPD and online retailing 122
Introduction 123
Key observations 124
Consumer targeting 124
NPD in organic products 126
Organic NPD – the category breakdown 127
Organic market positioning 129
Unrelated organic claims are still important 136
Increasing the consumer catchment zone 138
Category specific analysis 139
Dairy capitalise on organic’s premium positioning 140
Bakery 141
Ready meals 142
Baby food 144
Juices 145
Conclusions 146
Organics and eCommerce case studies 147
Freshfood.co.uk 147
SimplyOrganic 151
Chapter 5 Action points 154
Introduction 154
The future is not 100% organic but more organic 155
Do not overextend yourself in organics 155
‘Know thy organic consumer’ 155
Consumers are not ready for full scale conversion 155
Premium marketing and prime shelf-space is a must for success 155
Beware of the dangers inherent in the ‘organic ghetto’ strategy 156
The future is not 100% organic but more organic 156
Do not extend yourself in organics 157
‘Know thy organic consumer’ 159
Consumers are not ready for full-scale conversion 162
Premium marketing and prime shelf-space is a must for success 165
Beware of the dangers inherent in the ‘organic ghetto’ strategy 166
Index 167
List of Figures
Figure 2.1: Organic momentum chapter outline 26
Figure 2.2: Organic market sales (US$m) by country, historical market performance (1995—2000)
and forecasts (2000—2005) 30
Figure 2.3: Overall market drivers assessment 34
Figure 2.4: BSE Timeline, 1985—early 2001 36
Figure 2.5: Total number of reported BSE cases, early 2001 37
Figure 2.6: The future for organics: industry opinion survey 40
Figure 2.7: Key selling points for organic food 43
Figure 2.8: Organic consumer groups 44
Figure 2.9: Consumer barriers to buying organic 46
Figure 2.10: Obstacles to organic market growth 47
Figure 2.11: EU organic logo 48
Figure 2.12: Organic retail channels 49
Figure 2.13: Retailer development strategies 51
Figure 2.14: Marketing organic products 52
Figure 2.15: The importance of organic branding 53
Figure 2.16: 100% organic or organic hybrids? 54
Figure 3.17: Limitations cores, by country, 2001 59
Figure 3.18: Agriculture Biologique symbol 65
Figure 3.19: Market drivers: France 67
Figure 3.20: French barriers to organic market growth 70
Figure 3.21: Common seal for German organic products 76
Figure 3.22: AGOL member associations 77
Figure 3.23: Market drivers: Germany 78
Figure 3.24: German barriers to organic market growth 81
Figure 3.25: Netherlands – the EKO symbol 86
Figure 3.26: Market drivers: Netherlands 87
Figure 3.27: Dutch barriers to organic market growth 91
Figure 3.28: Sweden – the KRAV logo 97
Figure 3.29: Market drivers: Sweden 98
Figure 3.30: Swedish barriers to organic market growth 100
Figure 3.31: UK – Soil Association logo 106
Figure 3.32: Market drivers: UK 108
Figure 3.33: UK barriers to organic market growth 111
Figure 3.34: Market drivers: US 118
Figure 3.35: US barriers to organic market growth 119
Figure 4.36: Today organic products are filling consumer’s shopping trolleys not baskets 123
Figure 4.37: NPD organic consumer targeting 126
Figure 4.38: NPD organic consumer targeting 127
Figure 4.39: Organic NPD by category (%), September 1999—February 2001 130
Figure 4.40: Organic market life cycle and product innovation 131
Figure 4.41: Number of organic products making additional claims, Sept 1999—Feb 2001 132
Figure 4.42: Organic products making functional and fortified claims 135
Figure 4.43: Organic products with a premium positioning 136
Figure 4.44: Richard Scarry - organic products for children 137
Figure 4.45: Organic products making low and light health claims 138
Figure 4.46: Consumer catchment zones could be increased by improved organic positioning 139
Figure 4.47: Dairy - targeting the organic consumer and strengthening its association with health140
Figure 4.48: Beyond health - organic dairy indulgence 141
Figure 4.49: Bakery moves into premium organic products 142
Figure 4.50: Vegetarian focus for organic convenience 143
Figure 4.51: Extending the offering - ethnic and exotic organic meat dishes 144
Figure 4.52: Baby food – providing a complete organic alternative 145
Figure 4.53: Organic juices 146
Figure 4.54: The Fresh Food Company homepage 1.12.2000 148
Figure 4.55: SimplyOrganic’s customer base 151
Figure 5.56: % of households claiming to buy organics when they can 161
Figure 5.57: Iceland’s risqué organic marketing campaign for frozen vegetables 163
List of Tables
Table 1.1: Glossary of terms 21
Table 2.4: Organic market potential in Europe and the US 28
Table 2.5: Organic market values (US$m), 1995—2000 29
Table 2.6: Organic market values (US$m), 2000—2005(forecast) 29
Table 2.7: Organic market sales (US$m) by country, historical market performance (1995—2000)
and forecasts (2000—2005) 31
Table 2.8: Per capita expenditure on organic food (US$/head), 1995—2005 32
Table 3.9: France, organic market values (US$m), 1995—2000 61
Table 3.10: France, organic market values (US$m), 2000—2005f 62
Table 3.11: France, organic category market values (US$m), 2000—2005f 63
Table 3.12: France, % total organic category values, 2000—2005 64
Table 3.13: Carrefour Organic price check, 2001 69
Table 3.14: Germany organic market values (US$m), 1995—2000 72
Table 3.15: Germany organic market values (US$m), 1995—2000 72
Table 3.16: Germany organic market values (US$m), 1995—2000 73
Table 3.17: Germany organic market values (US$m), 1995—2000 continued 74
Table 3.18: Germany, % total organic category values, 2000—2005 75
Table 3.19: Germany, % total organic category values, 2000—2005 continued 75
Table 3.20: Plus Organic price check, 2001 80
Table 3.21: Netherlands organic market values (US$m), 1995—2000 83
Table 3.22: Netherlands organic market values (US$m), 2000—2005f 83
Table 3.23: Netherlands organic market values (US$m), 2000—2005f 84
Table 3.24: Netherlands % total organic category values, 2000—2005 85
Table 3.25: Super de Boer Organics price check, 2001 91
Table 3.26: Sweden organic market values (US$m), 1995—2000 93
Table 3.27: Sweden organic market values (US$m), 2000—2005 94
Table 3.28: Dutch organic market categories (US$m), 1995—2005 96
Table 3.29: Sweden % total organic market value, 2000—2005 97
Table 3.30: UK organic market values (US$m), 1995—2000 102
Table 3.31: UK organic market values, (US$m), 2000—2005f 103
Table 3.32: UK organic market category values (US$m), 2000—2005f 104
Table 3.33: UK, % total organic market value, 2000—2005 105
Table 3.34: Sainsbury’s organic price check, 2001 110
Table 3.35: US organic market values (US$m), 1995—2000 112
Table 3.36: US organic market values, 2000—2005 113
Table 3.37: US organic category values (US$m), 2000—2005f 115
Table 3.38: US, % total organic market values, 2000—2005 116
Table 4.39: NPD in the organic market, by product category, September 1999 – February 2001 128
Table 4.40: NPD in the organic market, by product category, September 1999—February 2001 134
Table 5.41: NPD in the organic market, by product category, September 1999 – February 2001 159
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