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Are Confidence Issues Slowing UK Organic Sales?

11 September 2013

UK - UK organic sales have dropped by 1.5 per cent in comparison to increases on a global scale of 25 per cent since 2008, according to a recent market report released from the Soil Association.

The decrease in UK organic sales to just £1.64 billion in 2012 is based, according to the report, on multiply factors.

They are all likely to stem from the effects of the prolonged economic downturn and the associated confidence issues in the supply chain.

Retailer Confidence

The Soil Association report explained the role major retailers have in promoting and supplying organic products to consumers.

But with the majority of retailers having planned for the economic slowdown, many have taken disproportionate actions, which have depressed sales further than was expected.

By limiting organic products on the shelf and consequently limiting orders to producers, there are concerns this will ensure a long term reduction in supply, strangling any prospects of growth in the market.

James Twine, Soil Association Business Development Management Director explained how the retailers differ in their approach.

“Waitrose and more recently Morrisons have been extremely committed to organic products, and their increase in organic sales has represented this.

“Specialist online retailers Ocado, Abel & Cole, and Riverford have also been loyal to organics during the economic down turn, which has lead to their increased combined turnover of 10.3 per cent in 2012,” said Mr Twine.

“Some mainstream retailers have not wanted to put their head above the parapet in terms of promoting the message of food ‘quality’, when there has been so much talk between retailers of ‘price comparison’.”

Consumer Confidence

The report identified price promotions as being the key driver for reviving the organic market.

Mr Twine was keen to point out that it is not just about price when it comes to promotions.

“It is vital retailers use in-store promotion to drive consumers to organic products in store, with clearly identified displays.

“The benefits attributed to organic produce should also be publicised through retailer promotion to drive consumer confidence.”

He added, “Promotional pushes such as ‘Organic September’ are designed to raise consumer awareness.

“The anticipated sales spike following last years’ organic September promotion carried right on through to Christmas, demonstrating how promotional campaigns do sustain consumers.”

Producer confidence

The Soil Association does not view the extent to which some major retailers are reducing and side lining their organic offering as good news.

The negative impact this is having on producer confidence and UK production also needs to be considered.

The report implies that farmers and producers in many incidences are becoming disillusioned with organic production, buoyed by the increased farm gate prices overall.

The amount of land set aside to organic production in the UK has reduced by 8.7 per cent since 2009 to just 656,000 hectares.

An example of this is UK organic pig production. Due to the viewed poor economic outlook and high feed prices, 30 per cent of UK organics pig producers have now moved away to other forms of business.

With the future growth of organic production in mind, there has been a significant reduction in agricultural land in conversion to organic with a 16 per cent drop.

The report infers this is based on farmers and growers having major concerns relating the uncertainties of the CAP reform, and a lack of retailer commitment, amongst other factors.

Mr Twine said: “We are really concerned that as the market starts to improve, and sales increase, the supply is not going to be there to meet demand.

“We must not be naive about the implications of this drop in producer confidence.”

To attempt to combat this dip in producers’ confidence the Soil Association are targeting three key areas said Mr Twine.

“We need to lobby the government to ensure our British producers are on an even playing field with EU producers in terms of the CAP reform.

“Secondly, it is important we work with producers to demonstrate the long term economic benefits of organic production.

“Finally it is vital we work with producers, suppliers, and retailers to create stable routes to markets to maintain confidence in all aspects of the supply chain, and reduce any problems with supply not meeting demand,” warned Mr Twine.

“We don’t want to end up in a situation where we struggle to meet the supply and demand with British produce where we should be able to.”

Confidence throughout the supply chain from the producers, to the consumers is imperative if UK organic sales are to increase and remain buoyant.


TheMeatSite News Desk

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