Natural Foods Merchandiser

Never mind the price -- Brits buy organics

The United States has often looked to the United Kingdom for trends in music and fashion, but not in food. There was never a British invasion of haggis or Marmite. But things have changed—chicken tikka masala is now Great Britain's most popular dish, and even pubs serve Thai food. And with organic foods there seeing steady double-digit growth and consumers demanding fair trade and local products, U.S. naturals retailers should take note of some emerging trends that may soon jump the pond.

Where and why Brits purchase organic
Although the U.K. organic sector experienced its strongest growth— 55 percent—in 2000 because of the mad cow and foot-and-mouth food scares, it continues to grow at 11 percent annually, according to The Soil Association's "Organic Market Report 2005." Organic products sales in 2004 were an estimated $2.2 billion, with independent retailers owning 12.9 percent of the organic market, box schemes (community-supported agriculture) and farmers' markets representing 11.9 percent, and supermarkets controlling the rest of the pie with a 75 percent share, according to the U.K. certifying agency. Even though supermarkets sell the largest segment of organics, their share of the market decreased for the third year in a row while independent retailers' share increased by 43 percent. And, as in the United States, the organic market is seeing stronger growth than the nonorganic grocery sector.

Now that food scares are no longer the driving force behind U.K. consumers buying organic, another factor has emerged. A 2005 Soil Association poll of 4,000 people found that consumers are motivated by supporting the environment, animal welfare and local economies. A 2005 consumer study by Harris International for Seeds of Change Ltd. echoed this, reporting that 42 percent of U.K. shoppers are buying organic for environmental reasons.

Consumers are motivated by supporting the environment, animal welfare and local economies.
"There is a new, younger generation of organic consumers entering the market, and their prime driver is sustainability," said Simon Wright of London-based Organic and Fairtrade Consulting. "These new consumers are concerned about climate change and feel the way to address this is to buy organic." Wright said this awareness may be attributed to recent media coverage of environmental problems caused by climate change as well as government-endorsed reports on organic agriculture's effect on the environment.

Brits are less concerned with food cost when it comes to purchasing organic. Shoppers surveyed by the Soil Association last year said that supporting animal welfare, buying good-tasting and quality food, and avoiding pesticides, artificial coloring and additives were more important than purchasing based on price. Even low-income consumers picked taste and quality (94 percent) over low prices (65 percent).

"The findings give public backing to the government's support for organic farming and their efforts to increase production of organic food in the United Kingdom," said Helen Browning, SA's food and farming director. "Farm shops, farmers' markets, box schemes and those supermarkets which offer high-quality produce rather than food that is as cheap as possible are reflecting what most people want from their food."

Consumers are also learning about organic and whole foods from British celebrity chef Jamie Oliver, whose work with the SA's Food for Life program led to the 2005 TV show "Jamie's School Dinners," an exposé of the poor quality of food in U.K. school cafeterias and children's unhealthy eating habits. Schools are now offering organic and locally produced meats and vegetables. And in the weeks after the show aired, Sainsbury's, the supermarket chain that Oliver is a spokesman for, saw 20 percent growth in organic produce sales. In May, the TV show began airing in the United States on The Learning Channel.

The hottest categories
This public awareness of children's eating habits should help grow the already robust category of organic finger foods for children, which grew 52 percent in 2004, according to SA. Organic baby food sales account for close to half (43 percent) of the entire U.K. baby food market. At the Organic Products Europe trade show in London in April, some new product launches in this category included organic ice creams made with parsnip and pear, apple and peas, and orange and carrot to encourage children to eat their vegetables, and organic frozen meals for children under age 10.

The organic meat category is seeing some of the strongest growth, with sales increasing 139 percent between 2001 and 2004, reported Organic Monitor, a London-based market-research firm. The organic milk category saw a 30 percent spike in sales in early 2005 after University of Newcastle researchers found that organic milk has higher levels of vitamin E, antioxidants and omega-3s than conventional milk, according to SA.

Graeme Gunn, managing director of the Health Store, a cooperative buying group of 450 U.K. health food stores, is seeing strong sales in sports nutrition products, organic beverages, fish and flax oils, foods with added nutrients and prepackaged organic whole foods.

But prepared meals are not big sellers at the three-store Planet Organic chain in London. "Our experience is that our customers shop for ingredients rather than meals, and the message we portray is very much to do with simple, wholesome, delicious cooking," said buyer Al Overton. "I think consumers still see organic as being healthy, good-quality food, and the bulk of ready meals as unhealthy and poor quality."

Overton's top movers are organic olive oil, wheat-free muesli, soymilk and specialty diet products. Planet Organic's up-and-coming categories include superfoods and functional foods.

Other organic categories on the rise are personal care and fiber products. Gunn said consumers are demanding paraben-free and organic body care products, which can be certified under SA's health and beauty standards.

"The explosion of new product development in organic textiles and organic beauty products shows the U.K. organic market moving into a more lifestyle positioning," Wright said.

Brits think globally
There's also consumer demand for fair trade products in the United Kingdom, where all major supermarket chains carry fair trade items. The Fairtrade Foundation, which has certified more than 1,500 products, reported that sales of fair trade products grew 40 percent in 2005, totaling $360 million. And a 2005 Market and Opinion Research International poll found that half of British adults now recognize the fair trade logo.

Harriet Lamb, executive director of the Fairtrade Foundation, attributes the growth to heavy media coverage of the Make Poverty History campaign, which called on Prime Minister Tony Blair and other world leaders to ensure fair trade practices in the world's poorest countries as well as provide more aid and erase their debts.

"When people understand the difference fair trade can make, they are all too willing to choose the products," said Lamb, who predicts U.K. fair trade sales will double in the next two years.

Brits act locally
Retailers have also seen consumer interest in buying local products and reducing pollution from the energy used for transportation. An SA survey released in April found that 82 percent of British organic staples—potatoes, apples, carrots, onions, pork, beef, chicken and lamb—were sourced locally in five of the eight top supermarkets.

Independent retailer Planet Organic's meat and fish department is sourced entirely from the United Kingdom and its produce is labeled if it is of local origin. "The rise of farmers' markets shows a desire to buy fresh as well as local produce," Overton said. "I think 'food miles' is becoming more of an issue, [so] we do ask ourselves questions such as should we be selling water from the United States or pasta sauce from Australia?"

Natural Foods Merchandiser volume XXVII/number 6/p. 40-41

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