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Organic Food - UK - October 2011

“The organic market too needs to engage with people’s emotions rather than their vague ideas about whether pesticides are harmful or not, by clearly communicating tangible benefits. Happily, this is what the Organic Trade Board is looking to do with its Why I Love Organic campaign.”

– Alex Beckett, Senior Food Analyst

Some questions answered in the report include:

  • How can the market tackle the consumer perception that organic foods are overpriced?
  • How can marketing most effectively convey the benefits of organic?
  • Which age-groups offer the most potential to the organic market?
  • What can the organic market learn from Yeo Valley’s ‘rapping farmers’?

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: UK retail value share of organic food, by sector, 2010
            • Forecast
              • Figure 2: UK retail value sales of organic food, 2006-16
            • Market factors
              • Compared with other ethical food considerations, organic lacks importance…
                • …though the marketing is finally getting clearer and more accessible
                  • The UK population of 2016 should support demand for organic foods
                    • The consumer
                      • Organic is a relatively unimportant food issue for consumers
                        • Figure 3: Food-related issues seen as important, January 2011
                      • Usage of organic
                        • Figure 4: Changes in organic food and drink purchases, July 2011
                      • The 25-34s and ABs are the biggest users of organic
                        • Figure 5: Usage of organic, by age and socio-economic group, 2011
                      • Fewer consumers are convinced organic is worth the extra
                        • Figure 6: Agreement with the statement, ‘It’s worth paying more for organic food’, 2007-10
                      • Consumer attitudes
                        • Even users are doubtful of the organic proposition
                          • Figure 7: Agreement with statements on organic food, July 2011
                        • But cynical attitudes pervade non-users’ attitudes to organic
                          • Figure 8: Agreement with statements on organic food, July 2011
                        • Vegetables are the preferred type of organic food
                          • Figure 9: Types of organic food and drink purchased, July 2011
                          • Figure 10: Selected types of organic food and drink purchased, by age group, July 2011
                        • What we think
                        • Issues in the Market

                            • How can the market tackle the consumer perception that organic foods are overpriced?
                              • How can marketing most effectively convey the benefits of organic?
                                • Which age-groups offer the most potential to the organic market?
                                  • What can the organic market learn from Yeo Valley’s ‘rapping farmers’?
                                  • Future Opportunities

                                      • Trend: Guiding Choice
                                        • Trend: Prove It
                                        • Internal Market Environment

                                          • Key points
                                            • Organic is low on consumers’ list of priorities
                                              • Figure 11: Food-related issues seen as important, January 2011
                                            • Consumers are unconvinced of the value of organic food
                                              • Figure 12: Agreement with the statement, ‘It’s worth paying more for organic food’, 2007-10
                                              • Figure 13: Agreement with the statement, ‘It’s worth paying more for organic food’, 2011
                                            • Beneficial role of promotions
                                              • Women are more engaged with organic
                                                • Figure 14: Attitudes towards free-range and organic food and food origin, by gender, 2011
                                              • Additives deter women more than men
                                                • Figure 15: Agreement with selected lifestyle statements, by gender, 2011
                                              • German E.coli outbreak hits fresh produce sales
                                                • Waitrose rolls out Duchy lines, boosting the profile of organic food
                                                • Broader Market Environment

                                                  • Key points
                                                    • Organic faces pressure from lower consumer confidence
                                                      • Figure 16: Monthly consumer confidence index, January 2007-August 2011
                                                    • Rising price of chemical fertilizers could help narrow price gap
                                                      • Figure 17: Price of UK ammonium nitrate fertilizer, per tonne, September 2009-September 2011
                                                    • Commodity inflation hits organic
                                                      • Figure 18: UK prices of breadmaking wheat, barley, and milk, 2005-10
                                                    • Older population set for growth
                                                      • Figure 19: Projected trends in population growth, 2011-16, by age group, July 2011
                                                      • Figure 20: Projected trends in the age structure of the UK population in 2016, July 2011
                                                    • Forecasted growth of ABs and C2s should help market growth
                                                      • Figure 21: Forecast adult population trends, by socio-economic group, 2011-16
                                                  • Competitive Context

                                                    • Key points
                                                      • Appetite grows for locally sourced food
                                                        • Figure 22: Estimated UK retail sales of locally sourced foods, by value, 2005-15
                                                      • Fairtrade sales continue to soar
                                                      • Strengths and Weaknesses

                                                        • Strengths
                                                          • Weaknesses
                                                          • Who’s Innovating?

                                                            • Key points
                                                              • Organic NPD continues to slide
                                                                • Figure 23: Share of organic products in all food NPD, 2006-11
                                                                • Figure 24: Share of organic launches of total launches within each category in the UK food market, 2009-10
                                                              • Waitrose’s Duchy deal bears fruit for NPD levels
                                                                • Figure 25: Top 15 brands, by number of launches in the UK organic food market, 2009-10
                                                              • Duchy Originals from Waitrose leads NPD in the organic market
                                                                • Portfolio expansion and relaunches drive NPD at Daylesford Organic and Organix
                                                                  • Marks & Spencer organic plans remains unclear
                                                                    • Own-label accounts for one in five organic launches
                                                                      • Figure 26: Share of own-label in organic launches in the UK food market, 2008-11
                                                                  • Market Size and Forecast

                                                                    • Key points
                                                                      • Organic food slowly recovers
                                                                        • Figure 27: UK retail value sales of organic food, 2006-16
                                                                      • The future of the market
                                                                        • Organic food market forecast
                                                                          • Figure 28: UK retail value sales of organic foods, 2006-16
                                                                        • Forecast methodology
                                                                        • Segment Performance

                                                                          • Key points
                                                                            • Baby food is the only growth area
                                                                              • Figure 29: Year-on-year % change in organic food, by category, 2010-11
                                                                              • Figure 30: UK retail value sales of organic food, by sector, 2009-11
                                                                            • Sales decline slow down
                                                                              • Baby food
                                                                                • Figure 31: UK retail sales of organic baby food and infant formula, by value, 2006-11
                                                                                • Figure 32: New product development, by company, 2009 and 2010
                                                                              • Fruit and vegetables
                                                                                • Figure 33: UK retail sales of organic fruit and vegetables, by value, 2006-10
                                                                              • Dairy
                                                                                • Figure 34: UK retail sales of organic dairy products, by value, 2005-10
                                                                              • Meat, poultry and fish
                                                                                • Figure 35: UK retail sales of organic meat, poultry and fish, by value, 2006-11
                                                                              • Bread, bakery and cereals
                                                                                • Figure 36: UK retail sales of organic breads, bakery produce and cereals, by value, 2006-11
                                                                            • Companies and Products

                                                                                • Rachel’s
                                                                                  • Yeo Valley
                                                                                      • Figure 37: Products launched by Yeo Valley in the Organic Food Market between October 2010 and July 2011
                                                                                    • Duchy Originals from Waitrose
                                                                                      • Organix
                                                                                          • Figure 38: Selected other products launched by Organix in the Organic Food Market between October 2010 and July 2011
                                                                                        • Seeds of Change
                                                                                          • Green & Black’s
                                                                                            • Organic Farm Foods
                                                                                              • Trade bodies
                                                                                                • The Soil Association
                                                                                                  • The Organic Trade Board
                                                                                                  • Brand Communication and Promotion

                                                                                                    • Key points
                                                                                                      • Topline ad spend recovers from 2009
                                                                                                        • Figure 39: Main monitored media advertising expenditure on organic foods, 2008-10
                                                                                                        • Figure 40: Advertising expenditure on organic foods, by company, selected advertisers, 2008-10
                                                                                                      • Organic Trade Board launches an industry-wide ad campaign
                                                                                                      • Channels to Market

                                                                                                        • Key points
                                                                                                          • Multiples dominate sales of organic foods
                                                                                                            • Figure 41: UK retail value sales of organic foods, by outlet type, 2008-10
                                                                                                          • The online channel continues to offer potential for organic
                                                                                                          • Consumer – Usage of Organic Foods

                                                                                                            • Key points
                                                                                                              • Over seven in ten adults have bought organic
                                                                                                                  • Figure 42: Changes in organic food and drink purchases, July 2011
                                                                                                                • 25-34s are most geared towards organic
                                                                                                                  • Figure 43: Changes in organic food and drink purchases, by age, July 2011
                                                                                                                • ABs are biggest users
                                                                                                                  • Figure 44: Changes in organic food and drink purchases, by socio-economic group, July 2011
                                                                                                                • Nearly two fifths of consumers have bought more organic food and drink than a year ago
                                                                                                                  • Figure 45: Changes in organic food and drink purchases, July 2011
                                                                                                                • Those consumers who have bought more…
                                                                                                                  • Figure 46: Agreement with the statement, ‘I bought more organic food and drink than the year before’, by age, July 2011
                                                                                                                  • Figure 47: Agreement with the statement, ‘I bought more organic food and drink than the year before’, by socio-economic group, July 2011
                                                                                                                • And those who are reducing spend…
                                                                                                                • Types of Organic Food Purchased

                                                                                                                  • Key points
                                                                                                                    • Organic vegetables top the list
                                                                                                                      • Figure 48: Types of organic food and drink purchased, July 2011
                                                                                                                    • Organic eggs more typically bought than meat and dairy
                                                                                                                      • Younger consumers are top shoppers for most organic sectors
                                                                                                                        • Figure 49: Selected types of organic food and drink purchased, by age group, July 2011
                                                                                                                      • Women show higher usage of organic’s main sectors
                                                                                                                        • Figure 50: Types of organic food and drink purchased, by gender, July 2011
                                                                                                                    • Consumer – Users’ Attitudes towards Organic

                                                                                                                      • Key points
                                                                                                                        • Even organic users are cynical
                                                                                                                          • Figure 51: Agreement with statements on organic food, July 2011
                                                                                                                        • Availability is key
                                                                                                                          • Suspicion limits appeal of organic
                                                                                                                              • Figure 52: Agreement with the statement, ‘The organic label is an excuse to charge more money for food,’ July 2011
                                                                                                                            • 16-24s are particularly concerned about the planet
                                                                                                                              • More consumers think organic is healthier than non-organic than see it as tastier
                                                                                                                                • Figure 53: Agreement with the statement, ‘organic food is healthier than non-organic food,’ July 2011
                                                                                                                              • Taste only deemed superior by a minority
                                                                                                                                • Figure 54: Agreement with the statement, ‘organic food tastes better than non-organic food,’ July 2011
                                                                                                                              • Healthy demand for more variety in supermarkets
                                                                                                                                • Figure 55: Agreement with the statement, ‘I would buy more organic foods if more were available in my local supermarket,’ July 2011
                                                                                                                            • Consumer – Non-users’ Attitudes towards Organic

                                                                                                                              • Key analysis
                                                                                                                                • Price dominates non-users’ concerns
                                                                                                                                    • Figure 56: Agreement with statements on organic food, July 2011
                                                                                                                                  • Appeal of locally sourced food and appearances remain strong
                                                                                                                                    • Surplus of ethical food labels creates confusion
                                                                                                                                    • Target Groups

                                                                                                                                      • Key points
                                                                                                                                        • Four target groups
                                                                                                                                          • Figure 57: Target groups based on attitudes towards organic food, July 2011
                                                                                                                                        • The Disbelievers (26%)
                                                                                                                                          • The Unresolveds (31%)
                                                                                                                                            • The Devotees (20%)
                                                                                                                                              • Price-Leds (23%)
                                                                                                                                              • Appendix – Internal Market Environment

                                                                                                                                                  • Figure 58: Food-related issues seen as important, January 2011
                                                                                                                                                  • Figure 59: Attitudes towards free-range and organic food and food origin, by demographics, 2011
                                                                                                                                                  • Figure 60: Agreement with selected lifestyle statements, by demographics, 2011
                                                                                                                                              • Appendix – Broader Market Environment

                                                                                                                                                  • Figure 61: GDP, PDI, consumer expenditure and savings, at current prices, 2006-16
                                                                                                                                                  • Figure 62: Trends in the age structure of the UK population, 2006-16
                                                                                                                                                  • Figure 63: Price of UK ammonium nitrate fertilizer bags, £ per tonne, September 2009-September 2011
                                                                                                                                                  • Figure 64: Prices of breadmaking wheat, barley, milk, UK, 2005-10
                                                                                                                                              • Appendix – Competitive Context

                                                                                                                                                  • Figure 65: Estimated UK retail sales of locally sourced foods, by value, 2005-15
                                                                                                                                              • Appendix – Who’s Innovating?

                                                                                                                                                  • Figure 66: Top 15 organic food brands, by new product launched, Jan 2008-July 2011
                                                                                                                                                  • Figure 67: % share of Organic launches by food category, by year, Jan 2008-July 2011
                                                                                                                                              • Appendix – Market Size and Forecast

                                                                                                                                                  • Figure 68: UK retail value sales of organic foods, 2006-16
                                                                                                                                                  • Figure 69: Best- and worst-case forecasts for organic food, 2011-16
                                                                                                                                              • Appendix – Consumer – Usage of Organic Foods

                                                                                                                                                  • Figure 70: Changes in organic food and drink purchases, by demographics, July 2011
                                                                                                                                              • Appendix – Types of Organic Food Purchased

                                                                                                                                                  • Figure 71: Most popular types of organic food and drink purchased, by demographics, July 2011
                                                                                                                                                  • Figure 72: Next most popular types of organic food and drink purchased, by demographics, July 2011
                                                                                                                                              • Appendix - Consumer – Users’ Attitudes towards Organic

                                                                                                                                                  • Figure 73: Agreement with statements on organic food, July 2011
                                                                                                                                                  • Figure 74: Agreement with statements on organic food, July 2011
                                                                                                                                                  • Figure 75: Agreement with statements ‘I used to buy organic foods, but have cut down over the past year to save money’ and ‘I would buy more organic foods if more was available in my local supermarket’, by demographics, July 2011
                                                                                                                                                  • Figure 76: Agreement with statements ‘Organic food tastes better than non-organic food’ and ‘Organic food is healthier than non-organic food’, by demographics, July 2011
                                                                                                                                                  • Figure 77: Agreement with statements ‘I buy organic foods as they are better for the environment’ and ‘I am prepared to pay more for organic food’, by demographics, July 2011
                                                                                                                                                  • Figure 78: Agreement with statements ‘The organic label is an excuse to charge more money for food’ and ‘Organic food is fashionable’, by demographics, July 2011
                                                                                                                                                  • Figure 79: Agreement with statement ‘If an organic product I usually buy is not available in-store, I buy a non-organic alternative’, by demographics, July 2011
                                                                                                                                              • Appendix – Consumer – Non-users’ Attitudes towards Organic

                                                                                                                                                  • Figure 80: Agreement with statements ‘Organic food is not worth the extra cost’ and ‘It’s more important that food is locally sourced than organic’, by demographics, July 2011
                                                                                                                                                  • Figure 81: Agreement with statements ‘I am not concerned about how my food is sourced’ and ‘Price is my biggest consideration when buying food’, by demographics, July 2011
                                                                                                                                                  • Figure 82: Agreement with statements ‘The large number of ethical label schemes for food is confusing’ and ‘Some chemical pesticides actually make food safer’, by demographics, July 2011
                                                                                                                                                  • Figure 83: Agreement with statements ‘Organic food is healthier than non-organic food’ and ‘The organic label is probably just an excuse to charge more money for food’, by demographics, July 2011
                                                                                                                                                  • Figure 84: Agreement with statements ‘I buy the food that looks best, irrespective of the labels’ and ‘I have tried organic food, but didn't notice any difference in terms of quality’, by demographics, July 2011
                                                                                                                                              • Appendix – Consumer – Target Groups

                                                                                                                                                  • Figure 85: Target groups, by demographics, July 2011
                                                                                                                                                  • Figure 86: Changes in organic food and drink purchases, by target groups, July 2011
                                                                                                                                                  • Figure 87: Types of organic food and drink purchased, by target groups, July 2011
                                                                                                                                                  • Figure 88: Agreement with statements on organic food, by target groups, July 2011

                                                                                                                                              Companies Covered

                                                                                                                                              • Advertising Standards Authority
                                                                                                                                              • Asda Group Ltd
                                                                                                                                              • Danone UK Ltd
                                                                                                                                              • Dean Foods Company
                                                                                                                                              • Duchy Originals
                                                                                                                                              • Ella's Kitchen Ltd
                                                                                                                                              • Heston Blumenthal
                                                                                                                                              • International Federation of Organic Agricultural Movements
                                                                                                                                              • J. Sainsbury
                                                                                                                                              • Kraft Foods UK
                                                                                                                                              • Organic Farm Foods
                                                                                                                                              • Organix Brands Ltd
                                                                                                                                              • Soil Association
                                                                                                                                              • Tesco Plc
                                                                                                                                              • Waitrose
                                                                                                                                              • Wm Morrison Supermarkets
                                                                                                                                              • Yeo Valley Farms (Production) Ltd

                                                                                                                                              Organic Food - UK - October 2011

                                                                                                                                              £1,995.00 (Excl.Tax)