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Organic Food & Drink Market Research Report - UK - September 2012

Some questions answered in the 'UK Organic Food and Drink Market Research' report include:

  • Should a stronger emphasis be placed on animal welfare within the organic message?
  • How important are under-25s to the organic market?
  • What is driving consumer scepticism towards the organic label?
  • Will baby food continue to defy the downturn in spending on organic?

The beleaguered organic market is undoubtedly one of the major casualties of the economic downturn, its value having tumbled by 25% since its peak in 2008. In the current era of austerity, organic produce suffers heavily from the overriding perception that it is overpriced. The economic outlook remains uncertain and the organic market continues to be beholden to consumers prioritising price over other food-related issues.

However, it is not price alone which has held the organic market back. Shoppers appear to find the multi-faceted organic concept a confusing one and many remain sceptical about the organic label. As a result, consumers place a lot more importance on other ethical food considerations such as animal welfare, despite this being a key principle of the organic proposition. Communicating clearly to consumers the specific tangible benefits organic food offers will be key to restoring consumer faith in the virtues of the organic label and will help to justify the higher price points.

It is not all doom and gloom for the organic market, however. The enthusiastic, if still minority, commitment from young, food-aware adults has inspired cause for optimism in the future of the market, as does the projected growth in ABs and 25-34s. The market is also expected to benefit from the ongoing marketing campaign launched in 2011 by the Organic Trade Board – the first of its kind in this market.

  • This report looks at the organic food and non-alcoholic drink market in 2012, analysing consumers’ purchasing habits, what organic categories they buy into, their understanding of the differences between organic and non-organic food and drink, and their attitudes towards these products.
  • This report covers the UK retail market for organic food and non-alcoholic drink produced according to organic principles and standards. The main sectors covered include fruit and vegetables, meat and poultry, dairy products, fish and seafood, eggs, prepared foods and groceries, cereal products, baby and toddler foods and infant formula. It includes organic foods that are fresh, frozen or ambient.
  • Organic farming involves the development of management practices that aim to avoid the use of agrochemical inputs and to minimise damage to the environment and wildlife.
  • To be certified organic, products must derive from sustainable management practices that rely on crop rotation, biological pest control and use of natural fertilisers. Management practices avoid the use of artificial herbicides, pesticides and fertilisers, genetic modification and, for livestock production, the routine use of antibiotics, growth promoters and other drugs. For organic processed products, not less than 95% of the ingredients must be certified as organic. Products made with between 5% and 30% of non-organic ingredients can highlight the organic content – legally the label must state the percentage of total organic agricultural ingredients.
  • Organic production standards were first introduced in the early 1970s. The term “organic” became strictly defined in European law in 1993 with the introduction of EC Council Regulation 2092/91, which ensured the strict regulation of organic food production. This EC Regulation sets minimum standards for organic production, which conform to those laid down by the International Federation of Organic Agricultural Movements (IFOAM). The Regulation also sets out the practices and inputs that may be used in organic production, covers inspection systems, and it also applies to processing, processing aids and ingredients in organic foods. Only organic foods originating from growers, processors and importers that are registered with an approved body and subject to regular inspection can be sold as organic.
  • To ensure that organic standards are adhered to, in whichever country the food is produced, the symbol or EU code number of a certification body must be clearly visible on the label of all organic foods. The new EU organic leaf logo became compulsory from 1 July 2012 on all pre-packed organic food products that meet the necessary standards. Standards cover registration, certification, the environment and conservation, production, permitted and non-permitted ingredients, processing, packaging and distribution.

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: UK retail value sales of organic foods, 2007-17
              • Figure 2: UK retail value sales of organic foods, by category, 2012
            • Market factors
              • The shifting population structure presents challenges and opportunities
                • Figure 3: Trends in the age structure of the UK population, 2007-17
              • Growth in ABs bodes well for the market
                • Organic sits well below other ethical food-related issues
                  • The consumer
                    • Six in ten buy organic food and drink
                      • Figure 4: Changes in organic food and drink purchases, July 2012
                      • Figure 5: Buyers of organic food and drink, by gender, age and socio-economic group, July 2012
                    • Vegetables and fruit are most popular organic products
                      • Figure 6: Types of organic food and drink purchased, July 2012
                      • Figure 7: Selected types of organic food and drink purchased, by age group, July 2012
                    • The organic label suffers from a perception of being overpriced
                      • Figure 8: Differences between organic and non-organic food and drink, July 2012
                    • Having fewer chemicals is organic’s best known attribute
                      • Box schemes are deemed to be overpriced by three in ten consumers
                        • Figure 9: Attitudes towards buying organic food and drink, July 2012
                      • Three in ten would like to see more information about the specifics of the organic promise
                        • A large minority would purchase organic if prices were not higher than for non-organic
                          • Figure 10: Attitudes towards organic food and drink, July 2012
                        • Four in ten find the term ‘organic’ too vague
                          • The market faces a number of challenges
                            • What we think
                            • Issues in the Market

                                • Should a stronger emphasis be placed on animal welfare within the organic message?
                                  • How important are under-25s to the organic market?
                                    • What is driving consumer scepticism towards the organic label?
                                      • Will baby food continue to defy the downturn in spending on organic?
                                      • Trend Application

                                          • Trend: Greenfluencers
                                            • Trend: Guiding Choice
                                              • 2015 trend: East Meets West
                                              • Market Drivers

                                                • Key points
                                                  • Animal welfare is the top food issue
                                                    • Figure 11: Food-related issues seen as important, January 2012
                                                  • With budgets under pressure, fewer people are willing to pay more
                                                    • Figure 12: Agreement with the statement ‘It’s worth paying more for organic food’, 2008-12
                                                  • Strong slant towards ABs among those ready to pay more for organic
                                                    • Figure 13: Agreement with the statement ‘It’s worth paying more for organic food’, by age and socio-economic group, 2012
                                                  • Gender divide seen in interest in food-related issues
                                                    • Figure 14: Agreement with selected lifestyle statements, by gender, 2012
                                                  • EU strikes new organic trade deal with US
                                                    • Organic is hit by commodity inflation
                                                      • Figure 15: Annual average wholesale prices of breadmaking wheat, barley, farmgate price of milk, UK, 2005-11
                                                    • The shifting population structure presents challenges and opportunities
                                                      • Figure 16: Trends in the age structure of the UK population, 2007-17
                                                    • Growth in ABs should boost the market
                                                      • Figure 17: Forecast adult population trends, by socio-economic group, 2007-17
                                                    • Return to growth in consumer spending will benefit the market
                                                      • Figure 18: GDP, PDI, consumer expenditure and savings, at constant 2012 prices, 2007-17
                                                  • Strengths and Weaknesses in the Market

                                                    • Strengths
                                                      • Weaknesses
                                                      • Who’s Innovating?

                                                        • Key points
                                                          • Organic food and drink NPD continues decline
                                                            • Figure 19: Share of organic products in all food and drink NPD, January 2009-June 2012
                                                            • Figure 20: Share of organic products in all food and drink NPD, by category, 2011
                                                            • Figure 21: Top 15 brands, by share of launches in the UK organic food and drink market, 2009-2011
                                                          • Private label grows NPD share in 2011, but brands still have the lead
                                                            • Figure 22: Share of private label in UK organic food and drink launches, January 2009-June 2012
                                                          • Organic breakfast cereals NPD plummets
                                                            • Figure 23: Share of organic products in total NPD in baby food and breakfast cereals, January 2009-June 2012
                                                          • Baby food tops the ranks for organic NPD
                                                            • Figure 24: Selection of organic baby food NPD
                                                        • Market Size and Forecast

                                                          • Key points
                                                            • Organic food sales nosedived in the recession
                                                              • Figure 25: UK retail value sales of organic food, 2007-17
                                                            • Further decline predicted in a challenging landscape
                                                              • Figure 26: UK retail value sales of organic foods, 2007-17
                                                            • Growth of over-55s and C2s poses a threat to the market
                                                              • Factors used in the forecast
                                                              • Segment Performance

                                                                • Key points
                                                                  • Fruit and vegetables and dairy dominate
                                                                    • Figure 27: UK retail value sales of organic foods, by category, 2012
                                                                    • Figure 28: Year-on-year % change in organic food sales, by category, 2011 and 2012
                                                                  • Baby food continues to buck the declining sales trend
                                                                    • Figure 29: UK retail sales of organic baby food and infant formula, by value, 2007-17
                                                                  • Fruit and vegetables
                                                                    • Figure 30: UK retail sales of organic fruit and vegetables, by value, 2006-10
                                                                  • Dairy
                                                                    • Figure 31: UK retail sales of organic dairy products, by value, 2007-17
                                                                  • Meat, fish and poultry
                                                                    • Figure 32: UK retail sales of organic meat, poultry and fish, by value, 2007-17
                                                                  • Breads, bakery and cereals
                                                                    • Figure 33: UK retail sales of organic breads, bakery produce and cereals, by value, 2007-17
                                                                  • Eggs
                                                                    • Figure 34: UK retail sales of organic eggs, by value, 2007-17
                                                                  • Organic drinks
                                                                  • Companies and Products

                                                                      • Rachel’s
                                                                        • Yeo Valley
                                                                          • Duchy Originals from Waitrose
                                                                            • Seeds of Change
                                                                              • Organix
                                                                                • Green & Black’s
                                                                                  • Ethical Fruit Company
                                                                                    • The Soil Association
                                                                                      • The Organic Trade Board
                                                                                      • Brand Communication and Promotion

                                                                                        • Key points
                                                                                          • An uptick in adspend in 2011
                                                                                            • Figure 35: Main monitored media advertising expenditure on organic foods and drink, by selected leading organic brands, 2008-11
                                                                                          • Rachel’s bursts onto the advertising scene in 2011
                                                                                            • Figure 36: Advertising expenditure on organic foods, by company, selected advertisers, 2008-11
                                                                                            • Figure 37: Share of advertising expenditure on organic foods, by company, selected advertisers, 2008-11
                                                                                          • Baby food brands feature strongly
                                                                                            • Waitrose is the only multiple to invest in organic
                                                                                              • TV advertising dominates
                                                                                                • Figure 38: Advertising expenditure on organic foods, by media, selected advertisers, 2008-12*
                                                                                                • Figure 39: Share of advertising expenditure on organic foods, by media, selected advertisers, 2008-12*
                                                                                              • Organic. Naturally different
                                                                                              • Channels to Market

                                                                                                • Key points
                                                                                                  • Multiples dominate the organic market
                                                                                                    • Figure 40: UK retail value sales of organic foods, by outlet type, 2009-11
                                                                                                  • Box schemes and online tell a positive story
                                                                                                  • The Consumer – Usage of Organic Food and Drink

                                                                                                    • Key points
                                                                                                      • Organic continues to have a broad appeal
                                                                                                          • Figure 41: Changes in organic food and drink purchases, July 2012
                                                                                                        • Under-25s and ABs are the core purchasers of organic
                                                                                                          • Figure 42: Buyers of organic food and drink, by gender, age and socio-economic group, July 2012
                                                                                                        • Growing purchases of organic among under-25s
                                                                                                          • Figure 43: Consumers who are buying more organic food than last year, by gender, age and socio-economic group, July 2012
                                                                                                        • Tight finances have caused shoppers to cut back on organic
                                                                                                        • The Consumer – Types of Organic Food Purchased

                                                                                                          • Key points
                                                                                                            • Vegetables and fruit are most popular organic foods
                                                                                                              • Figure 44: Types of organic food and drink purchased, July 2012
                                                                                                            • Eggs rank higher than meat, poultry and dairy
                                                                                                              • Under-25s are the keenest buyers in most organic sectors
                                                                                                                • Figure 45: Selected types of organic food and drink purchased, by age group, July 2012
                                                                                                              • A third of parents with under-fives buy organic baby food
                                                                                                                • Women are core buyers in the main organic sectors
                                                                                                                  • Figure 46: Types of organic food and drink purchased, by gender, July 2012
                                                                                                                • Six in ten users have a repertoire of four or less products
                                                                                                                  • Figure 47: Repertoire of types of organic food and drink purchased, July 2012
                                                                                                              • The Consumer – Comparisons between Organic and Non-Organic Food and Drink

                                                                                                                • Key points
                                                                                                                  • Cynicism over price
                                                                                                                    • Figure 48: Differences between organic and non-organic food and drink, July 2012
                                                                                                                    • Figure 49: Differences between organic and non-organic food and drink, any agree, by users and non-users of organic food and drink, July 2012
                                                                                                                  • Chemical-free is the best-known attribute
                                                                                                                    • Figure 50: Consumers who think that organic food has fewer chemicals, is natural and is better for the environment compared to non-organic food, by gender and age group, July 2012
                                                                                                                  • Animal welfare is less on the radar, despite its importance to shoppers
                                                                                                                    • The health credentials of organic food divide the nation
                                                                                                                        • Figure 51: Consumers who agree that organic food/drink is healthier, by gender and age of children, July 2012
                                                                                                                      • Large minority prefer the taste of organic
                                                                                                                        • A third see no benefits to organic
                                                                                                                          • Figure 52: Consumers who see organic food/drink as having no benefits over non-organic, by gender, July 2012
                                                                                                                      • The Consumer – Attitudes Towards Buying Organic Food and Drink

                                                                                                                        • Key points
                                                                                                                          • Organic vegetable boxes suffer from perceptions of poor value for money
                                                                                                                            • Figure 53: Attitudes towards buying organic food and drink, July 2012
                                                                                                                          • Other animal welfare labels present competition
                                                                                                                            • Under-25s are hungry for more information
                                                                                                                              • A fifth have never considered buying organic
                                                                                                                                • Under-35s and ABs want more choice
                                                                                                                                  • Under-25s are most open to other channels
                                                                                                                                  • The Consumer – Attitudes Towards Organic Food and Drink

                                                                                                                                    • Key points
                                                                                                                                      • Price is the sticking point
                                                                                                                                        • Figure 54: Attitudes towards organic food and drink, by gender, July 2012
                                                                                                                                      • A large minority sees the organic message as too vague
                                                                                                                                        • Parents with young children care most about chemicals
                                                                                                                                          • Organic labelling needs to build awareness
                                                                                                                                            • The organic message can be seen as a fashion statement
                                                                                                                                              • Consumers don’t view organic farming as unsustainable
                                                                                                                                              • The Consumer – Target Groups

                                                                                                                                                • Key points
                                                                                                                                                  • Four target groups
                                                                                                                                                    • Figure 55: Target groups based on attitudes towards organic food and drink, July 2012
                                                                                                                                                  • Environmentally-friendly (20%)
                                                                                                                                                    • Unconvinced (45%)
                                                                                                                                                      • Enthusiasts (15%)
                                                                                                                                                        • Sceptical (20%)
                                                                                                                                                        • Appendix – Market Drivers

                                                                                                                                                            • Figure 56: Agreement with selected lifestyle statements, 2008-12
                                                                                                                                                            • Figure 57: Agreement with selected lifestyle statements, by demographics, 2012
                                                                                                                                                        • Appendix – The Consumer – Usage of Organic Foods

                                                                                                                                                            • Figure 58: Changes in organic food and drink purchases, by demographics, July 2012
                                                                                                                                                        • Appendix – The Consumer – Types of Organic Food and Drink Purchased

                                                                                                                                                            • Figure 59: Most popular types of organic food and drink purchased, by demographics, July 2012
                                                                                                                                                            • Figure 60: Next most popular types of organic food and drink purchased, by demographics, July 2012
                                                                                                                                                            • Figure 61: Other types of organic food and drink purchased, by demographics, July 2012
                                                                                                                                                            • Figure 62: Repertoire of types of organic food and drink purchased, by demographics, July 2012
                                                                                                                                                        • Appendix – The Consumer – Comparison between Organic and Non-Organic Food and Drink

                                                                                                                                                            • Figure 63: Agreement with the statements ‘Organic food/drink has fewer chemicals’ and ‘Organic food/drink is natural’, by demographics, July 2012
                                                                                                                                                            • Figure 64: Agreement with the statements ‘Organic food/drink is unprocessed’ and ‘Organic food/drink is natural’, by demographics, July 2012
                                                                                                                                                            • Figure 65: Agreement with the statements ‘Organic food/drink is better for the environment’ and ‘Organic food/drink tastes better’, by demographics, July 2012
                                                                                                                                                            • Figure 66: Agreement with the statements ‘Organic food/drink is safer to eat’ and ‘Organic farming ensures high animal welfare’, by demographics, July 2012
                                                                                                                                                            • Figure 67: Agreement with the statements ‘Organic food/drink is more ethical’ and ‘Organic food/drink is over-priced’, by demographics, July 2012
                                                                                                                                                            • Figure 68: Agreement with the statement ‘Organic food/drink has no benefits for me over non-organic food/drink’, by demographics, July 2012
                                                                                                                                                            • Figure 69: Differences between organic and non-organic food and drink, by changes in organic food and drink purchases, July 2012
                                                                                                                                                        • Appendix – The Consumer – Attitudes Towards Buying Organic Food and Drink

                                                                                                                                                            • Figure 70: Most popular attitudes towards buying organic food and drink, by demographics, July 2012
                                                                                                                                                            • Figure 71: Next most popular attitudes towards buying organic food and drink, by demographics, July 2012
                                                                                                                                                            • Figure 72: Other attitudes towards buying organic food and drink, by demographics, July 2012
                                                                                                                                                            • Figure 73: Attitudes towards buying organic food and drink, by changes in organic food and drink purchases, July 2012
                                                                                                                                                        • Appendix – The Consumer – Attitudes Towards Organic Food and Drink

                                                                                                                                                            • Figure 74: Most popular attitudes towards organic food and drink, by demographics, July 2012
                                                                                                                                                            • Figure 75: Next most popular attitudes towards organic food and drink, by demographics, July 2012
                                                                                                                                                            • Figure 76: Attitudes towards organic food and drink, by changes in organic food and drink purchases, July 2012
                                                                                                                                                        • Appendix – Target Groups

                                                                                                                                                            • Figure 77: Target groups, by demographics, July 2012
                                                                                                                                                            • Figure 78: Differences between organic and non-organic food and drink, by target groups, July 2012
                                                                                                                                                            • Figure 79: Changes in organic food and drink purchases, by target groups, July 2012
                                                                                                                                                            • Figure 80: Types of organic food and drink purchased, by target groups, July 2012
                                                                                                                                                            • Figure 81: Attitudes towards buying organic food and drink, by target groups, July 2012
                                                                                                                                                            • Figure 82: Attitudes towards organic food and drink, by target groups, July 2012
                                                                                                                                                            • Figure 83: Grocery shopping habits, by target groups, July 2012
                                                                                                                                                            • Figure 84: Attitudes towards health and healthy lifestyles, by target groups, July 2012

                                                                                                                                                        Companies Covered

                                                                                                                                                        • Channel 4
                                                                                                                                                        • Facebook, Inc.
                                                                                                                                                        • Green & Black's Ltd
                                                                                                                                                        • Heston Blumenthal
                                                                                                                                                        • International Federation of Organic Agricultural Movements
                                                                                                                                                        • Kraft Foods UK
                                                                                                                                                        • Lactalis UK & Ireland
                                                                                                                                                        • Twitter, Inc.
                                                                                                                                                        • Waitrose
                                                                                                                                                        • Yeo Valley Farms (Production) Ltd
                                                                                                                                                        • YouTube, Inc.

                                                                                                                                                        Organic Food & Drink Market Research Report - UK - September 2012

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