Organic – a resilient market set to grow post COVID-19
With COVID-19 related food supply chain issues on the rise, markets becoming increasingly unstable, and insecurity around people’s income streams, it’s easy to feel uncertain about the impact these things are having on organic businesses and brands.
However, during this moment of crisis, the public are still looking for clarity around the availability, value for money and provenance of their food. Whether due to the current pandemic, or recent trends around sustainability and integrity, it’s clear the organic market is performing exceptionally well.
We speak to industry experts, Simon Wright - an independent Consultant from OF+ Consulting who’s been immersed in the organic sector for over thirty years – and Trade Consultant for Soil Association Certification, Finn Cottle, to find out more.
What are your ‘watch outs’ for the organic sector post COVID-19?
Simon Wright: Those of you who’ve been around for a while will remember 2008-2009 as the annus horribilis of organics in the UK. Up until that point, UK organic sales had shown healthy, double-digit growth, peaking in 2007 at a shade under £2 billion.
Then came the banking crisis and the resultant financial crash. The reflex action of most supermarkets was to give organics the boot. Some virtually eliminated their organic range; others cut back drastically. Sales plummeted – if consumers couldn’t find organic lines, they couldn’t buy them. The two exceptions were Ocado and Waitrose & Partners, who kept faith with organics, and as a result, today both significantly overtrade relative to their overall market share.
It wasn’t until 2017 that UK organic sales returned to the £2billion mark. In 2019 (pre COVID-19), the sector was trading at around £2.45 billion per annum at retail.
Finn Cottle: Clearly COVID-19 has had a major impact on all food and drink markets - some positive effects and some disruptive – yet, in a general sense, organic sales have benefited greatly, from the panic buying during March to the more settled sales in April.
2020 is the 9th consecutive year of growth for the UK organic market, and despite the current challenging times, we’re still expecting to surpass the £2.5B sales mark by year-end, achieving more than 50% growth in a decade.
We’ve had much positive news from processing licensees supplying into supermarkets, endorsing the 25.6% increase in sales reported by Nielsen (52 weeks to 28th March 2020), as well as even more positive news from box schemes and online delivery operators, who never in their dreams, thought they would have to turn away customers ever!
Even local shops are enjoying the loyalty of their local customers again, and new ‘food sourcing’ relationships are being set up through home delivery, and local click and collect systems.
How are customers reacting to organic during this period of change and uncertainty and who is benefiting most?
FC: For organic, the turbulent years of the late noughties are long gone. We now have an established shopper base that values the benefits of organic, and no longer sees it as a lifestyle choice, but a ‘must have’ for personal health and wellbeing.
COVID 19 has, unknowingly, recruited a huge new group of online shoppers who are currently enjoying the wider catalogue of organic products available through online shopping, as well as new box scheme customers realising the previously unvalued convenience.
Organic products deliver on most of the benefits that the ‘post COVID’ consumer may seek out: natural, healthy and tasty food and drink that’s been sourced and farmed with care. The integrity of organic, during a period of uncertainty and mistrust, is likely to be more important to many, and the transparency of sourcing – including British, where possible - could become a key choice for more shoppers.
SW: The decision to purchase organic is increasingly based on scientific fact, rather than woolly belief. I was working for a multiple retailer just before the 2008-9 crash and it was clear to me then that many people were buying organic without really understanding the benefits. The new, young and totally digital consumers buying organic now are much better informed.
Consumers are not as dependent on bricks-and-mortar supermarkets for organic food and drink as they were in 2008-9. Every year, non-supermarket channels outperform the total organic market. The big winners in the current pandemic have been the likes of Abel & Cole, Riverford, Ocado, and Milk & More. Their values of sustainable food delivered to your door will remain relevant for the foreseeable future.
Organic is the answer to so many consumer concerns - a safe place in a time of enormous uncertainty. At a time when staying healthy is crucial, knowing you’re avoiding pesticides and artificial ingredients makes a lot of sense.
Organic food really delivers when you cook from scratch, and a lot of people are cooking more than ever before, as witnessed by hugely increased sales of eggs, flour and cooking chocolate!
How might consumers’ habits and motivations change in the future?
SW: Supply chains have been completely rethought to promote local and sustainable sources - box schemes have blossomed, and producers are selling direct to the public. This plays to organic’s key strengths of promoting local-sourcing and sustainability, while reducing packaging use and food miles.
FC: Arla Foods have curated some interesting insights around the consumer response post COVID-19 – here are a few highlights:
- Consumers experiencing clean air and the wonder of nature during the crisis period may have a stronger desire for more sustainable products in the future
- They may look for the reassurance of quality and safety
- The focus on internal wellbeing might accelerate, and new habits are being formed, such as online shopping and finding new brands - these may be taken into a ‘normalized’ future
What are your predictions for the organic market as the situation progresses and what advice do you have?
SW: So far, so good: Ecovia Intelligence say that the Coronavirus pandemic has been positive for organic sales. However, it would be irresponsible to ignore the economic recession that seems inevitable, as incomes fall, and unemployment rises. With consumer expenditure under pressure, can we justify the organic premium? The key here is to ensure that we eat modest levels of meat, fish and dairy, and have a diet built around organic grains, pulses, fruit and vegetables (we could call it macrobiotics…).
Then, we can say:
- Yes to cooking more from scratch to save money, deliver healthier food and maximise flavour
- Yes to supporting local producers and independent retailers that have responded to the current challenge with such creativity
- Yes to reducing our carbon footprint by becoming more plant-based, reducing packaging and minimising food miles
- Yes to protecting our health by building our diet around products that don’t contain pesticide residues or artificial ingredients
FC: We have great building blocks for a very positive period for organic, with strong brands who are communicating well with their loyal customers during the crisis, innovative products that use creativity to keep the flow of choice open during restricted times, and supermarkets maintaining availability of key organic lines at a time when the efficiency and speed of logistics is most important.
2020, and the next decade, provides a new opportunity for organic products that have already weathered many storms before this one. Organic’s preparedness is proved through the resilience of its performance during the last decade, and its relevance to a new ‘appreciative’ customer that may value the values of organic more than ever before.
Organic businesses and brands should keep doing what they are good at and seize the opportunity to loudly communicate the value of organic.
SW: There are undoubtedly bad times just around the corner, but for increasingly large numbers of people, organic food and drink is not part of the problem; it’s part of the solution.