By all accounts, things are looking up for organic fresh produce. According to a recently-released report on the UK organic market from the Soil Association, fresh produce accounted for 22% of total sales in the entire organic market last year, up 3.5% from the year before. Produce Business UK takes a closer look at the state of the market and the forces driving the anticipated growth ahead
Although organic vegetable and salads both experienced slight decreases, organic fruit purchases rose by 10.6% year-on-year and now account for 8% of total organic sales.
With such statistics in mind, it is perhaps hardly surprising that Jeff Martin, managing director of organic retail chain As Nature Intended, which runs six stores in London, is upbeat about prospects for growth in organic fresh produce sales.
“Fresh produce is a major part of our business – we’re all about fresh and organic and it’s one of the primary reasons why people will come to our stores,” he says. “Fresh produce alone is worth at least 10% of our overall sales. It’s something customers come to us looking for and one of the differences we make is we don’t airfreight any products and we use minimal packaging, if any at all, for our produce.”
Martin, who explains that the retailer stocks UK- and European-grown seasonal produce whenever possible, says As Nature Intended’s decision not to wrap fruits and vegetables produces more attractive displays that match the ethics of its environment-conscious clients.
“Overall, we’ve seen great growth in organics, especially in our produce section over the last few years,” says Martin. “During the recession, we saw it drop off quite a bit, but since the recession finished there has been a huge resurgence in organic purchasing.”
Emerging organic consumers
Newly health/environment conscious
Parents of babies
At-home juice and smoothie makers
Martin believes greater awareness of the environment and concerns about “what people are putting into their mouths” is helping to drive this growth, with new consumers and parents of babies identified as two important emerging groups for the sector. “There’s a growing trend for mothers making their own baby foods and they want to use organic produce to do that,” he says.
The trend towards making fresh juices and smoothies at home using ingredients such as kale and spinach has also been an important driver, according to Martin, who says the so-called ‘superfoods’ are increasingly becoming key products for the retailer.
“Superfoods such as kale, pomegranates and ginger are selling strongly, as well as our usual heroes – carrots, broccoli and bananas – which do extremely well,” he notes.
Top organic produce sellers
Finn Cottle, a fresh produce trade consultant at the Soil Association, says the recent performance of organic fruits and vegetables at a retail level paints a positive picture when compared with that of non-organic fresh produce. The sales growth being experienced by organic is startling alongside the unprecedented deflation and extremely low promotional prices affecting conventional fruits and vegetables, she argues.
In fact, the organic sector is continuing to grow year-on-year through grocery retailers, with sales having increased by 3.5% in the 52 weeks to the beginning of January this year compared with the same period 12 months previously.
Lack of organic options is stifling demand
Currently carrots, bananas and tomatoes are the top-selling organic products, accounting for some 30% of total organic sales in fresh produce, although Cottle stresses that organic options are available on most items available in supermarkets.
However, while there have been positive signs of sales growth, in particular for organic apples and pears, she argues that a lack of options in other categories, notably salads, is holding back development and stifling demand.
“Organic fruit has been a real success during 2015, due, in part, to good availability across supermarkets ranges and also ongoing multi-buy promotions, which appear to be encouraging pick up on topfruit,” says Cottle.
“Conversely there is insufficient organic range available within leafy salads even though this sub-category provides an opportunity within the typical organic customer base – those who want convenience and quality solutions for meals.”
Forces driving expansion ahead
Despite this, Cottle says the overall organic market is showing good, steady growth, which she attributes to consumers becoming much more aware of the benefits of organic fresh products for personal health and wellbeing.
There is also evidence, she says, that this upward sales movement will continue, citing trends for soup and juice making among so-called ‘millenials’ (18-35-year-olds), which she believes will drive interest in organic produce in the future.
Cottle says organic fruit and vegetable box schemes are still growing at pace among urban-dwellers, both through companies such as Riverford and Abel & Cole but now also online retailers including Ocado. In fact, Ocado last year accounted for 9% of total grocery retail sales, an increase of 19% compared with the year before.
In terms of supermarkets, Sainsburys is the star performer with 29% of overall sales, followed by Waitrose and Tesco.
“Organic is maintaining a high level of consumer interest as it guarantees the provenance of products and the integrity behind the label,” she says. “More consumers are interested in quality assurance within products and therefore organic is a perfect solution.”
In fact, Cottle claims that fair trade is, with the exception of bananas, not so relevant within fresh produce, adding that a significant number of fair trade bananas are also organic.
“Newcastle University research in July 2014 showed organic crops were of a much higher nutritional quality than non-organic and consumers are becoming more aware of the benefit to their health in choosing organic,” she argues.
Looking ahead, Cottle believes there remains significant room for the organic fresh produce category to continue growing in the UK, as it still only accounts for a small percentage of overall sales.
“In some categories such as carrots, organic accounts for almost 15% of sales, whereas in other categories, it is still much lower,” she says. “This gives us confidence that if there is greater availability of organic products on shelf and online, which guarantee good quality and taste, consumers will become loyal across even more product areas within produce.”
Purchasing behaviour shift supporting growth
As chief executive of the Soil Association’s certification arm, Martin Sawyer works closely with businesses in the food and other sectors to help them through the organic certification process, while also certifying over 70% of all organic products sold in the UK.
Sawyer argues that fundamental changes in the ways people buy groceries are likely to support the future growth of organic, claiming that more people are opting to buy products from smaller outlets rather than doing a large weekly supermarket shop.
This suggests, he argues, that people are more concerned with fresh and healthy food, especially the next generation of consumers. These millennials represent the biggest growth in organic sales, according to the Soil Association, with the majority only having come into the market in the last five years.
“Organic is growing – we know this,” says Sawyer. “We’re seeing increases across all sectors, including supermarkets, independent retail, restaurants and catering. This tells us that organic is no longer a food trend, but is becoming part of mainstream shopping for many consumers.”
‘Expensive cost’ claims not an issue
Sawyer says Soil Association certification offers consumers reassurance that every stage from field to fork is of the highest standards, adding that the organisation’s symbol holders reported an additional 8% sales increase last year, compared to an overall organic market growth of 4%.
The reported sales rises come in spite of a survey, published earlier this year, which claimed that many organic foods cost significantly more than their conventional equivalents. The survey, which was released by Voucherbox – a voucher codes and discounts advertiser – found in a study of 19 own-brand essential grocery items from Tesco, Sainsbury’s, Asda, Morrisons and Waitrose that organic costs 89% more than conventional, at an average of £41.57, compared with £24.84 for non-organic.
Voucherbox said the biggest price differences were seen with organic carrots and organic broccoli, which were found to be 207.69% and 201.38% more expensive respectively.
The Soil Association, however, strongly disputes the study’s findings, arguing that while it is true to say there is a cost difference between the category and non-organic options, the difference continues to be reduced.
“The reality is that organic isn’t always more expensive, and you’d be surprised at how competitive discounters like Aldi and Lidl are – two chains not included in this study,” Sawyer argues.
“While non-organic may be cheaper, you’re paying costs in other ways. Unhealthy farms, animals and environments drag down our overall wellbeing.”
As regards to its claims on health benefits, Sawyer claims the study references data from 2009, rather than what he claims is a more comprehensive study published in 2014. “We now know that organic fruit, vegetables and cereals have significantly higher concentrations of desirable antioxidants and lower levels of undesirable cadmium and pesticide residues,” he says. “Many people are willing to pay a small premium for this huge health benefit.”
With more organic shoppers emerging and purchasing habits shifting in favour of buying fresh and healthy food, the organic industry is unsurprisingly upbeat about its prospects for growth and the expanding opportunities for organically-grown fresh fruits and vegetables to play a larger role in the mainstream produce market.
Read this article on PBUK about why the UK’s organic sector needs more backing to help the growing market thrive.