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Organic Food - UK - October 2010

This report covers the UK retail market for organic food produced according to organic principles and standards. This includes 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.

  • Eight million consumers consider “organic” to be an important issue when deciding what food and drink to buy. This is especially the case for 16-34-year-olds, and offers potential for organic food producers as their numbers are forecast to grow by 4% in the next five years.
  • Grocery multiples are running the risk of losing sales from valuable organic food buyers as 19 million would buy more organic foods if there was greater availability in their local supermarket.
  • Organic food products that emphasise their local provenance could attract consumers not currently buying organic foods as 56% of consumers consider locally sourced to be more important than organic.
  • There is potential for future growth in the organic food category as 26% of consumers are buying more organic food and drink now than a year ago.
  • Greater government support is needed to help consumers better understand how food production impacts on the environment, as 18½ million consumers who currently do not buy organic foods are not taking into account ethical issues when buying food.
  • Marketing communication campaigns promoting the benefits of organic foods need to include an explanation of the relatively higher cost of organic foods, as 78% of consumers who do not buy organic foods at present feel the extra cost is not justified.

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Table of contents

  1. Issues in the Market

      • Key issues
        • Definition
          • Abbreviations
          • Future Opportunities

              • Creating a more meaningful connection
                • Re-affirming the difference
                • Market in Brief

                  • Sales of organic foods falter
                    • Category performance
                      • Innovations in the organic food category
                        • Consumer attitudes towards organic foods
                        • Internal Market Environment

                          • Key points
                            • Changing shopping habits
                              • Figure 1: Consumer grocery shopping habits, June 2009-June 2010
                            • Attitudes towards organic and free range foods
                              • Figure 2: Attitudes towards free-range and organic food and food origin, 2006-10
                            • A greater focus on healthy food
                              • Figure 3: Agreement with selected lifestyle statements, 2006-10
                            • In search of value
                            • Broader Market Environment

                              • Key points
                                • Challenging economic outlook
                                  • Figure 4: GDP, PDI, consumer expenditure, at current prices, 2005-15
                                • Consumers face up to tougher economic conditions
                                  • Figure 5: Trends in how respondents would describe their financial situation, June 2009-June 2010
                                • Food price inflation soars
                                  • Ageing UK population
                                    • Figure 6: Percentage change in the UK population, by age group, 2010-15
                                  • Certified organic
                                    • Organic collaboration
                                      • AB population set to grow
                                        • Figure 7: Socio-economic profile of the UK population, 2005-15
                                    • Competitive Context

                                      • Key points
                                        • Concerns about animal welfare
                                          • Figure 8: Importance of food-related claims to consumers, December 2009
                                        • Localised food provenance
                                          • A fairer trade in food
                                            • Environmental pressures
                                            • Strengths and Weaknesses

                                              • Strengths
                                                • Weaknesses
                                                • Who’s Innovating?

                                                  • Key points
                                                    • Safeguarding the planet with more vegetarian options
                                                      • Figure 9: New food product launches in the UK, by leading claims – January 2008-July 2010
                                                    • Greater concern for environment heralds more green packaging
                                                      • Figure 10: Percentage of new food launches with ‘green’ positioning, 2008-10*
                                                    • Pasta gets the organic treatment
                                                      • Figure 11: Top ten categoreis, based on number of new food launches with organic positioning, 2008-10*
                                                    • Waitrose and Marks & Spencer support organics
                                                      • Figure 12: New product activity, % of organic launches by manufacturer, 2008-10*
                                                  • Market Value and Forecast

                                                    • Key points
                                                      • A challenging market
                                                        • Figure 13: UK retail value sales of organic food, 2005-10
                                                      • Proving and disproving organic benefits
                                                        • Continuing pressures on sales
                                                          • Opportunities for growth
                                                            • Future category growth
                                                              • Value sales forecast
                                                                • Figure 14: Forecast sales of organic foods, by value, 2005-15
                                                                • Figure 15: Forecast sales of organic foods, by category, 2005-15
                                                              • Factors used in the forecast
                                                              • Segment Performance

                                                                • Key points
                                                                  • Organic baby food stays strong
                                                                    • Figure 16: UK retail sales of organic food, by type and value, 2006-10
                                                                  • Fruit and vegetables sales stall
                                                                    • Figure 17: UK retail sales of organic fruit and vegetables, by value, 2005-10
                                                                  • Organic vegetables lead sales
                                                                    • Figure 18: UK retail sales of organic fruit and vegetables, by type and value, 2006-10
                                                                    • Figure 19: Price comparison of organic fruit and vegetables ranges, October 2010
                                                                  • A mixed performance for the dairy category
                                                                    • Figure 20: UK retail sales of organic dairy products, by value, 2005-10
                                                                  • Milk sales remain healthy
                                                                    • Figure 21: UK retail sales of organic dairy products, by type and value, 2006-10
                                                                    • Figure 22: Price comparison of milk ranges, October 2010
                                                                  • Yogurt sales helped by strong branding
                                                                    • Organic meat sales struggle
                                                                      • Figure 23: UK retail sales of organic meat, poultry and fish, by value, 2005-10
                                                                      • Figure 24: UK retail sales of organic meat, poultry and fish, by type and value, 2006-10
                                                                      • Figure 25: Selected price comparisons of organic and free range chicken in the main grocery multiples, October 2010
                                                                    • Only the best for babies
                                                                      • Figure 26: UK retail sales of organic baby food and infant formula, by value, 2005-10
                                                                    • Organic eggs fall out of favour
                                                                      • Figure 27: UK retail sales of organic eggs, by value, 2005-10
                                                                    • Organic bread sales struggle
                                                                      • Figure 28: UK retail sales of organic breads, bakery produce and cereals, by value, 2005-10
                                                                  • Companies and Products

                                                                    • Yogurts
                                                                      • Rachel’s
                                                                          • Figure 29: Examples of new products launched by Rachel’s in the UK organic food market, January 2008-July 2010
                                                                        • Yeo Valley
                                                                            • Figure 30: Examples of new products launched by Yeo Valley in the UK organic food market, January 2008-July 2010
                                                                          • Prepared foods
                                                                            • Duchy Originals
                                                                                • Figure 31: Examples of new products launched by Duchy Originals in the UK organic food market, January 2008-July 2010
                                                                              • Seeds of Change
                                                                                • Figure 32: Examples of new products launched by Seeds of Change in the UK organic food market, January 2008-July 2010
                                                                              • Organico Realfoods Ltd
                                                                                • Baby foods
                                                                                  • Organix
                                                                                      • Figure 33: Examples of new products launched by Organix in the UK organic food market, January 2008-July 2010
                                                                                    • Chocolate confectionery
                                                                                      • Green & Black’s
                                                                                          • Figure 34: Examples of new products launched by Green & Black’s in the UK organic food market, January 2008-July 2010
                                                                                        • Fruit and vegetables
                                                                                          • Organic Farm Foods
                                                                                            • Pollybell Organic Farm
                                                                                              • Produce World
                                                                                                • Trade bodies
                                                                                                  • Soil Association
                                                                                                    • Organic Farmers and Growers
                                                                                                      • The Organic Trade Board
                                                                                                      • Brand Communication and Promotion

                                                                                                        • Key points
                                                                                                          • Above-the-line spend declines in 2009
                                                                                                            • Figure 35: Main monitored media advertising expenditure on organic foods, 2007-10*
                                                                                                          • Green & Black’s supports their ranges
                                                                                                            • Figure 36: Top 10 main monitored media advertising expenditure on organic foods, top ten brands, by organic brands, 2007-10*
                                                                                                          • Grocery retailers withdraw above-the line spend
                                                                                                            • Figure 37: Grocery retailers spend on organic food ranges, 2007-10*
                                                                                                          • Promoting organic food
                                                                                                          • Channels to Market

                                                                                                            • Key points
                                                                                                              • Grocery multiples maintain largest share of organic food sales
                                                                                                                • Figure 38: UK retail sales of organic food, by outlet and value, 2007-10
                                                                                                              • Increasing the importance of farmers
                                                                                                                • Key points
                                                                                                                  • Discussing price
                                                                                                                    • Figure 39: Importance of food and drink issues for consumers who have bought any organic food and drink in the last 12 months and those who have not bought any organic food or drink in the last 12 months, August 2010
                                                                                                                  • Ethical considerations
                                                                                                                    • Considering organics
                                                                                                                    • The Consumer – Organic Food Purchase Habits

                                                                                                                      • Key points
                                                                                                                          • Figure 41: Purchase of any organic food or drink in the last 12 months, August 2010
                                                                                                                        • Over half of consumers buy organic food and drink
                                                                                                                            • Figure 42: Profile of consumers who have//have not bought organic food and drink in the last 12 months, August 2010
                                                                                                                          • A quarter of consumers are buying more organic food
                                                                                                                              • Figure 43: Purchasing habits on organic food and drink, August 2010
                                                                                                                            • The issue of availability
                                                                                                                              • Figure 44: Agreement on statements about organic food and drink, August 2010
                                                                                                                            • Environmental benefits of organic food
                                                                                                                            • The Consumer – Reasons for Not Buying Organic Foods

                                                                                                                              • Key points
                                                                                                                                  • Figure 45: Agreement on statements about organic food and drink, August 2010
                                                                                                                                • Tackling the issue of cost
                                                                                                                                  • Consumers not buying organic food more likely to be sceptical of health benefits
                                                                                                                                    • Prioritising ethical issues when food shopping
                                                                                                                                    • Targeting Opportunities

                                                                                                                                      • Key points
                                                                                                                                          • Figure 46: Consumer clusters for organic foods, June 2010
                                                                                                                                        • Pro-Organics (18%)
                                                                                                                                          • Who are they more likely to be?
                                                                                                                                            • Attitudes towards organic foods
                                                                                                                                              • Organic Indifferents (28%)
                                                                                                                                                • Who are they more likely to be?
                                                                                                                                                  • Attitudes towards organic foods
                                                                                                                                                    • Easy Organics (31%)
                                                                                                                                                      • Who are they more likely to be?
                                                                                                                                                        • Attitudes towards organic foods
                                                                                                                                                          • Uncommitted Organics (23%)
                                                                                                                                                            • Who are they more likely to be?
                                                                                                                                                              • Attitudes towards organic foods
                                                                                                                                                              • Appendix

                                                                                                                                                                • Advertising data
                                                                                                                                                                • Appendix – Internal Market Environment

                                                                                                                                                                    • Figure 47: Consumer grocery shopping habits, by demographics, June 2010
                                                                                                                                                                    • Figure 48: Consumer grocery shopping habits, by demographics (continued), June 2010
                                                                                                                                                                    • Figure 49: Consumer grocery shopping habits (continued), by demographics, June 2010
                                                                                                                                                                    • Figure 50: Agreement with selected lifestyle statements, by demographics, 2010
                                                                                                                                                                • Appendix – Broader Market Environment

                                                                                                                                                                    • Figure 51: Trends in how respondents would describe their financial situation, by detailed demographics, June 2010
                                                                                                                                                                    • Figure 52: UK: Consumer price index, bread, cereals, fruit, vegetables* and sugar**, 2007-09
                                                                                                                                                                    • Figure 53: UK: Consumer price index, meat, fish, dairy produce, oils & fats, 2007-09
                                                                                                                                                                • Appendix – Competitive Context

                                                                                                                                                                    • Figure 54: Attitudes towards local food, December 2009
                                                                                                                                                                • Appendix – Market Value and Forecast

                                                                                                                                                                    • Figure 55: Issues consumers are concerned with, June 2009-June 2010
                                                                                                                                                                • Appendix – Segment Performance

                                                                                                                                                                    • Figure 56: UK retail sales of organic prepared foods and groceries, by value, 2005-10
                                                                                                                                                                    • Figure 57: Segmentation of organic prepared foods and groceries market, by value, 2006-10
                                                                                                                                                                    • Figure 58: UK retail sales of organic breads, bakery produce and cereals, by value, 2005-10
                                                                                                                                                                    • Figure 59: NPD in the baby food category, % by positioning claim, 2008-September 2010
                                                                                                                                                                • Appendix – Brand Communication and Promotion

                                                                                                                                                                    • Figure 60: Total grocery retailers’ adspend, 2007-10*
                                                                                                                                                                    • Figure 61: Importance of food and drink issues when deciding to buy, August 2010
                                                                                                                                                                    • Figure 62: Importance of food and drink issues for consumers who have bought any organic food and drink in the last 12 months and those who have not bought any organic food or drink in the last 12 months, August 2010
                                                                                                                                                                    • Figure 63: Importance of food and drink issues when deciding to buy - price, by demographics, August 2010
                                                                                                                                                                    • Figure 64: Importance of food and drink issues when deciding to buy – free range/animal welfare, by demographics, August 2010
                                                                                                                                                                    • Figure 65: Importance of food and drink issues when deciding to buy – Not genetically modified, by demographics, August 2010
                                                                                                                                                                    • Figure 66: Importance of food and drink issues when deciding to buy – produced/grown in Britain, by demographics, August 2010
                                                                                                                                                                    • Figure 67: Importance of food and drink issues when deciding to buy – locally sourced, by demographics, August 2010
                                                                                                                                                                    • Figure 68: Importance of food and drink issues when deciding to buy – fair trade, by demographics, August 2010
                                                                                                                                                                    • Figure 69: Importance of food and drink issues when deciding to buy – country of origin, by demographics, August 2010
                                                                                                                                                                    • Figure 70: Importance of food and drink issues when deciding to buy, by demographics – organic, August 2010
                                                                                                                                                                • Appendix – Organic Food Purchase Habits

                                                                                                                                                                    • Figure 71: Purchase of any organic food or drink in the last 12 months, by demographics, August 2010
                                                                                                                                                                    • Figure 72: Organic food and drink purchase habits, by demographics, August 2010
                                                                                                                                                                    • Figure 73: Consumer attitudes to statements about buying organic foods “If an organic product I usually buy is not available in-store, I buy a non-organic alternative “, August 2010
                                                                                                                                                                    • Figure 74: Consumer attitudes to statements about buying organic foods “ I buy organic food as it is better for the environment (eg pesticide free produce) “, August 2010
                                                                                                                                                                    • Figure 75: Consumer attitudes to statements about buying organic foods “I believe that organic food is better for you than non-organic food “, August 2010
                                                                                                                                                                    • Figure 76: Consumer attitudes to statements about buying organic foods “I would buy more organic foods if there was more availability in my local supermarket “, August 2010
                                                                                                                                                                    • Figure 77: Consumer attitudes to statements about buying organic foods “Organic products taste better than non-organic “, August 2010
                                                                                                                                                                    • Figure 78: Consumer attitudes to statements about buying organic foods “The product labelling on organic products is not always clear “, August 2010
                                                                                                                                                                    • Figure 79: Consumer attitudes to statements about buying organic foods “I buy organic foods from farmers’ markets/ farm shops “, August 2010
                                                                                                                                                                    • Figure 80: Consumer attitudes to statements about buying organic foods “I am prepared to pay a premium for organic food and drink “, August 2010
                                                                                                                                                                    • Figure 81: Consumer attitudes to statements about buying organic foods “If an organic product I usually buy is not available in-store, I look for it somewhere else (eg farm shop/ farmers market, other store) “, August 2010
                                                                                                                                                                    • Figure 82: Consumer attitudes to statements about buying organic foods “I buy organic foods from box schemes (eg Riverford, Abel & Cole “, August 2010
                                                                                                                                                                • Appendix – Reasons for not Buying Organic Foods

                                                                                                                                                                    • Figure 83: Agreement on statements about organic food and drink, by demographics, August 2010
                                                                                                                                                                    • Figure 84: Agreement on statements about organic food and drink, by demographics, August 2010
                                                                                                                                                                    • Figure 85: Agreement on statements about organic food and drink, by demographics, August 2010
                                                                                                                                                                    • Figure 86: Agreement on statements about organic food and drink, by demographics, August 2010
                                                                                                                                                                    • Figure 87: Agreement on statements about organic food and drink, by demographics, August 2010
                                                                                                                                                                    • Figure 88: Agreement on statements about organic food and drink, by demographics, August 2010
                                                                                                                                                                    • Figure 89: Agreement on statements about organic food and drink, by demographics, August 2010
                                                                                                                                                                • Appendix – Targeting Opportunities

                                                                                                                                                                    • Figure 90: Target groups, by demographics, August 2010

                                                                                                                                                                Companies Covered

                                                                                                                                                                • A G Thames Holdings Ltd
                                                                                                                                                                • Abel & Cole Limited
                                                                                                                                                                • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                                                • Asda Group Ltd
                                                                                                                                                                • Assured Food Standards
                                                                                                                                                                • Ben & Jerry's (UK)
                                                                                                                                                                • British Retail Consortium
                                                                                                                                                                • Co-operative Group
                                                                                                                                                                • Danone UK Ltd
                                                                                                                                                                • Dean Foods Company
                                                                                                                                                                • Doves Farm Foods Ltd
                                                                                                                                                                • Duchy Originals
                                                                                                                                                                • Ella's Kitchen Ltd
                                                                                                                                                                • Emma Bridgewater
                                                                                                                                                                • Facebook, Inc.
                                                                                                                                                                • Fairtrade Foundation (The)
                                                                                                                                                                • Food Standards Agency
                                                                                                                                                                • Government Actuary's Department (GAD)
                                                                                                                                                                • Graig Farm Organics
                                                                                                                                                                • International Federation of Organic Agricultural Movements
                                                                                                                                                                • J. Sainsbury
                                                                                                                                                                • Kantar Media
                                                                                                                                                                • Kraft Foods UK
                                                                                                                                                                • Lidl (UK)
                                                                                                                                                                • Marine Stewardship Council
                                                                                                                                                                • Marks & Spencer
                                                                                                                                                                • Ocado Ltd
                                                                                                                                                                • OMSCo
                                                                                                                                                                • Organic Farm Foods
                                                                                                                                                                • Organic Farmers and Growers
                                                                                                                                                                • Organic Food Federation (The)
                                                                                                                                                                • Organic Green Orchards
                                                                                                                                                                • Organix Foundation
                                                                                                                                                                • Pollybell Organic Farm
                                                                                                                                                                • Produce World Group
                                                                                                                                                                • Rachel's Organic Dairy
                                                                                                                                                                • Royal Horticultural Society
                                                                                                                                                                • Soil Association
                                                                                                                                                                • Solanum
                                                                                                                                                                • Stonyfield Farm
                                                                                                                                                                • Tesco Plc
                                                                                                                                                                • Waitrose
                                                                                                                                                                • Wm Morrison Supermarkets
                                                                                                                                                                • Yeo Valley Farms (Production) Ltd

                                                                                                                                                                Organic Food - UK - October 2010

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