Organic food sales hit as credit crunch bites

Although overall UK sales of organic products increased by 1.7% in 2008 to over £2.1 billion, these figures must be seen in the context of overall food price rises rather than sales volume increases. Peter Melchett, Soil Association policy director said: "This has been a really difficult period for all retail, and organic sales have suffered along with the rest of the economy. This report describes a very mixed picture as consumers react to the financial crisis. But those consumers who are committed to organic products appear to be staying loyal. This shows the underlying resilience of the organic market, which we believe will grow again once the economy picks up." The market report also found that there has been a sharp fall in sales of certain products, including fruit, bread and bakery products, soft drinks and prepared foodstuffs, although even in these sectors, some brands are bucking the recessionary trend. On a more positive note, there has been dynamic growth in sales of organic food through farmers' markets where figures increased an estimated 18.6% to £23.7 million last year. Asda showed the strongest growth of the multiple retailers, increasing sales of organic products by 25% in 2008 and its share of the market from 8% to around 10%. Tesco is still the market leader in terms of value despite a fall in organic sales of 9.9% in 2008. Other smaller areas of organic production such as textiles and health and beauty products have also experienced very significant growth. Organic shoppers, like all consumers, have been buying fewer premium products and prepared foods, and switching to lower-cost retailers. There is also a focus on cutting waste and cooking from scratch - sales of organic home cooking ingredients increased by a remarkable 13.5% in 2008, while sales of organic prepared foods dropped sharply. Further research found that 36% of these committed organic consumers say they expect to spend more on organic food in 2009, and only 15% expect to spend less. Animal welfare issues attracted a high public profile in 2008 and sales of organic milk, cheese, some meatand poultry grow by 10.6%, 11.5%, 13.3% and 17.7% respectively, demonstrating that where the benefits of organic production are understood commitment remains firm among ethical consumers. And over a quarter of consumers who do not currently buy organic food 'would like to know more about organic products than they do' suggesting potential to broaden the market still further in the future.