Organics – Going To Mass

06 June 2004 By db staff writer

d=”standfirst”>Organic sales are dropping in volume, and only just keeping their head above water in value terms. The answer to such problems could be hitting the mass market. But can organics do it? Chris Orr reports

There was a time, around five years ago, when organics was going to be big. Very big. It had, said its proponents, shed it’s beard and Birkenstock image and was on the path to mass appreciation and consumption.

Latest figures for last year, however, show the case to be otherwise. Growth in volume is negative and growth in value has slowed down considerably. According to figures from TNS, one of the few research companies to compile data on the organics trade within the UK.

In  September 2002, the organics market as a whole in the UK was showing volume growth of 9%, but by September 2003 volumes were falling by 2% year on year. Value fared better, but only marginally. It was growing 12% in September 2002, but by September 2003 growth had slowed to just 3% year on year. 

That’s quite a slump, and while early reports on the performance of the organics sector showed a slight pick up in the early part of this year, it doesn’t seem to be performing in the way that many devoted to organics had hoped.

Looking beneath the big figures and splitting the market into more defined categories the news is worse for some, better for others. Overall the category is worth just shy of £1bn in the UK, with some £700m going through key categories in the supermarkets such as chilled products, meat and milk. Of those categories the likes of Chilled and Fresh produce account for £182m and £176m respectively and saw 12% and 2% growth in value over the course of 2002-2003. The grocery sector saw £93m and 4% growth, while meat, fish and poultry rocketed away, selling £39m worth of produce, representing a 37% growth. Milk was another strong performer, selling £36m, up 35% on the previous year. In contrast bakery sales fell by 20% to £32m and impulse organic purchases fell 12% down to £38m. Worryingly for the drinks industry, the beers, wines and spirits category saw £20m worth of sales of organic wines, representing a 6% drop on the previous year.

So has the consumer tired of organics? Has it lost its edge and have we forsaken the planet for better prices and less sensible shoes?

“Well, it’s been obvious that growth in volume has halted or gone into a decline,” says Simon Thorpe, wine buyer at Waitrose, which has a strong organics theme running through its marketing generally. “And even though value increasing it’s only marginally.”

“I think part of the problem that has to be addressed is vintage variation. If you take Italy as an example, they had difficulties over 2002 to 2003 with vintages and that made it difficult to guarantee consistency to the consumer. Just because a wine is organic, it doesn’t mean the consumer should settle for less but when vintages go against a region it can hit hard. I think lots of consumers, unless they’re passionate about organics, don’t always appreciate the lack of consistency that can be seen with wine.”

When he refers to consumer passions, Thorpe has put his finger on the main problem affecting the organic, and in particular organic wine, market in the UK. “There’s something like 6-7% of consumers dedicatedly buying organic and they account for some 60-70% of all organic sales,” explains Simon Legge, marketing director for Brown Forman Wines, owners of the organic wine brand, Bonterra. “The problem is we’ve all done quite a good job – especially the supermarkets – of attracting and reaching out to that 6% or 7%.

“But that market is, I guess, somewhat saturated at the moment, so it’s not really a surprise that volume is remaining static and value growth slowing down. What we need to do is take organic mainstream and appeal to the broader audience.”

According to data from Tesco’s Clubcard scheme, they’ve shown that penetration of the organic wine market is as little as just 1% in beers, wines and spirits, compared to 12% for fresh produce, and just 3% for meat consumers. However, its data also shows that while fresh produce customers have a 13% loyalty rating, meat, fish and poultry customers have a 29% loyalty rating and beers wines and spirits have a similarly high rating of 23%. That would indicate that those who buy organic wines, in Tesco at least, are the type of people supermarkets and bigger retailers want to reach, as much for their loyalty factor as for their organic persuasion – it’s just a case of getting hold of more of them.

Legge believes that broadening the appeal of organic and going for more mainstream types of promotion and marketing, rather than just flogging the “green” route is the way ahead. “We need to persuade retailers to merchandise products in amongst the regular ranges rather than stick them in some organiconly graveyard. They need to be a part of the everyday purchasing presentation. If you look at something like Green & Black’s chocolate for instance, they’re lined up against all the other chocolate and they’ve seen phenomenal success. Add to that their packaging which has been redesigned in recent years and it’s not difficult to see why they’ve seen sales rocket. We’re looking at the Bonterra range and we’re going to polish up the packaging so that they have a more mainstream appeal.”

Thorpe is somewhat sceptical, however, about the ability for organic wine to appeal to a more mainstream audience. “We’ve had most of our organic range interspersed within the everyday wine section, rather than squirreled off somewhere – and although they are clearly labelled as organic, I don’t think it has made an enormous difference. One thing I think is important is that more and more producers are embracing an organic-led regime – even if they aren’t 100% organic. So the cache is slowly being eroded and the competition getting stiffer.”

In the specialist, rather than multiple sector, organic wine sales are seeing a similar slow down but it doesn’t seem to be creating the same sort of dilemma or mild panic. “We grew massively in the late 1990s,” explains Lance Pigott, a director of organic specialists, Vintage Roots. “For three years we saw business growing by 30-40%, and we knew that was kind of unsustainable. The last couple of years, however, growth has been down considerably, but that’s worked for us because it’s given us time to consolidate.”

Does he worry about the competition from the supermarkets, especially if they put some more mainstream marketing muscle behind the organic wine sector? “Frankly, it’s my opinion that the supermarkets don’t give a toss really,” claims Pigott. “With the exception of Waitrose, they’re pretty fickle when it comes to organic wine and I think they’ve shown that over recent years. From an independent view, we’re pretty positive. We’re taking on increased ranges, and I believe we’ll be seeing some very good organic wines coming out of Chile and Argentina as time goes on.”

Jem Gardener, managing director of organic wine specialists Vinceremos, is equally positive from the independents’ point of view. “We’ve seen pretty positive growth. I think we’ve benefitted in part from the fact that many of the supermarkets have trimmed down their organic ranges and people seem to want choice. We’re happy with what’s happening for us, although I do agree that organic wines need to be fed out to a wider audience if long term growth is going to be sustained.”

Perhaps, ironically, the organic sector should look to the fashion sector for inspiration, and in particular the shoe that has for some time been associated with the rather hippy-saturated image of old – the Birkenstock sandal. Last year it had a major revamp, spicing up its ranges with lurid pinks and funky fuscias, and headed for mainstream fashion. In a short while it became the darling of the fashion bibles and sales began to soar. Perhaps there’s hope yet?