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| MP15491 |
| MAPS ORGANIC FOODS MARCH 2001 |
| Overview |
Editor: Market Assessment
ISBN:
1-86111-349-8
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| Executive Summary | 1 |
| 1. Introduction | 3 |
| 2. Definition | 4 |
| 3. Strategic Overview | 5 |
| Trends in Food Consumption | 5 |
| Table 1: Consumption of Main Food Groups in the UK (grams per person per week), 1989 and 1999 | 5 |
| Traditional Versus Organic Farming | 6 |
| Differing Methods | 6 |
| Organic Fruit and Vegetables | 7 |
| Organic Meat and Poultry | 7 |
| Organic Fish | 7 |
| Organic Milk and Eggs | 7 |
| Contentious Issues | 8 |
| Organic Standards | 8 |
| Pricing | 8 |
| Buying Power of the Grocery Multiples | 8 |
| Compassion in Farming | 8 |
| Environmental Issues | 9 |
| Biotechnology | 9 |
| Effects on Wildlife | 9 |
| Other Considerations | 9 |
| Health Issues | 10 |
| Fat Content in the Diet | 10 |
| Fresh Fruit and Vegetables in the Diet | 10 |
| Meat in the Diet | 11 |
| Fish in the Diet | 11 |
| Management of Organic Schemes | 11 |
| Criteria to Meet | 11 |
| Financial Incentives | 12 |
| The Organic Farming Scheme | 12 |
| Figure 1: Payments Under the Organic Farming Scheme | 13 |
| Table 2: Payments Under the Organic Farming Scheme (£/hectares) | 13 |
| Figure 2: Reduced Payments Under the Organic Farming Scheme (£/hectares) | 14 |
| Table 3: Reduced Payments Under the Organic Farming Scheme (£/hectares) | 14 |
| Information Services | 15 |
| Organic Conversion Information Service | 15 |
| Table 4: Number of Enquiries to OCIS, 1997-2000 | 15 |
| Figure 3: Number of Enquiries to OCIS, 1997-2000 | 16 |
| Initiative on Organic Research | 16 |
| Cultivating Communities | 16 |
| Training | 16 |
| Demonstration Farms | 17 |
| Certification Organisations | 17 |
| The Soil Association | 17 |
| Demeter | 18 |
| Organic Farmers and Growers Ltd | 18 |
| Organic Food Federation | 18 |
| Irish Organic Farmers and Growers Ltd | 18 |
| Scottish Organic Producers Association | 18 |
| Ministry of Agriculture, Fisheries and Food | 18 |
| National Farmers Union | 18 |
| Market size | 19 |
| Wholesale Value of Organic Food | 19 |
| Table 5: Estimated Wholesale Value of Principal UK-Produced Organic Commodities (£m and percent), 1997/1998 and 1998/1999 | 19 |
| Figure 4: Estimated Wholesale Value of Principal UK-Produced Organic Commodities (£m), 1997/1998 and 1998/1999 | 20 |
| Retail Value of Organic Food | 20 |
| Organic Food Market Shares by Value | 21 |
| Table 6: UK Market for Organic Food by Value (£m), 1996-2000e | 21 |
| Table 7: Organic Food Market Shares by Value (£m and percent), 1998/1999 | 21 |
| Figure 5: Organic Food Market Shares by Value ( percent), 1998/99 | 22 |
| Area Devoted to Organic Production in the UK | 22 |
| Figure 6: Organically-Farmed Area by Enterprise ( percent), April 1999 | 23 |
| Arable Production | 23 |
| Table 8: Organically-Farmed Area by Enterprise ( percent), April 1999 | 23 |
| Figure 7: Organically Farmed Arable Land by Segment ( percent), 1998/99 | 24 |
| Table 9: Organically Farmed Arable Land by Segment ( percent), 1998/99 | 25 |
| Figure 8: Organically Farmed Horticultural Land by Segment ( percent), 1998/99 | 25 |
| Table 10: Organically Farmed Horticultural Land by Segment ( percent), 1998/99 | 25 |
| Area Devoted to Organic Production in Other European Countries | 26 |
| Table 11: Area Devoted to Organic Production in Selected Countries in Europe (hectares and percent of total agricultural area), 1999/2000 | 26 |
| Figure 9: Area Devoted to Organic Production in Selected Countries in Europe (hectares), 1999/2000 | 27 |
| Foreign Trade | 27 |
| Table 12: Imports of Organic Foods ( percent), April 1999 | 28 |
| The Market for Organic Food Worldwide | 29 |
| The United States | 29 |
| Europe | 29 |
| Product Segmentation | 30 |
| Fruit and Vegetables | 30 |
| Table 13: UK-Produced Organic Vegetables Traded by Tonnage and Farm Gate Value (£m), 1998/99 | 30 |
| Table 14: UK-Produced Organic Fruit Traded by Tonnage and Farm Gate Value (£m), 1998/99 | 31 |
| Cereals | 32 |
| Dairy Products | 33 |
| Multi-Ingredient Foods | 33 |
| Beverages | 33 |
| Meat | 34 |
| Table 15: Organic Meat Production by Number and Farm Gate Value (£m), 1998/99 | 34 |
| Fish | 35 |
| Baby Food | 35 |
| Miscellaneous | 35 |
| 4. Consumer Issues | 36 |
| National Opinion Poll | 36 |
| Table 16: Agreement with Statements Concerning Organic Food ( percent response), 2000 | 36 |
| Frequency of Purchase | 37 |
| Table 17: Frequency of Purchasing Organic Food, 2000 | 38 |
| I Always Buy Organic Food Whenever I Can | 39 |
| I Buy Organic Food Occasionally | 39 |
| Place of Purchase of Organic Food | 39 |
| Table 18: Where Organic Food is Bought ( percent), 2000 | 40 |
| I Buy Organic Food from a Local Grocer | 41 |
| I Buy Organic Food from a Supermarket | 41 |
| Organic Food Schemes and Knowledge of Local Suppliers | 41 |
| Table 19: Organic Food Schemes and Knowledge of Local Suppliers ( percent), 2000 | 42 |
| I Take Part in an Organic Vegetable Box Scheme | 43 |
| I Know Where to Buy Organic Food in my Local Area | 43 |
| Price and Variety of Organic Food | 43 |
| Table 20: Organic Food Prices and Range of Food Available, 2000 | 44 |
| I Think Organic Food is Too Expensive | 45 |
| I Do Not Think There is Much Variety in the Range of Organic Food Available | 45 |
| Taste and Shelf Life of Organic Food | 45 |
| Table 21: Taste and Shelf Life of Organic Food, 2000 | 46 |
| I Think Organic Food Tastes Better than Non-Organic Food | 47 |
| I Think Fresh Organic Produce Does Not Keep as Long as Non-Organic Food | 47 |
| Nutritional Value of Organic Food and the Avoidance of Genetically Modified Food | 47 |
| Table 2: Nutritional Value of Organic and the Purchasing of Non-GM Food, 2000 | 48 |
| I Think Organic Food Contains More Nutrients than Non-Organic Food | 49 |
| I Avoid Genetically Modified Food Wherever Possible | 49 |
| Concern over the Use of Chemicals and the Treatment of Animals in Farming | 49 |
| Table 23: Concern over the Use of Chemicals and the Treatment of Animals in Farming, 2000 | 50 |
| I Am Concerned About the Use of Chemicals in Farming | 51 |
| I Am Concerned About the Treatment of Animals in Farming | 51 |
| Legislation on Food Labelling | 51 |
| Table 24: Opinion on Food Labelling, 2000 | 52 |
| I Think There Should Be Stricter Legislation on Food Labelling | 53 |
| Average Weekly Expenditure | 53 |
| 5. Supplier Issues | 54 |
| Production of OrganicFood | 54 |
| The Number of Processors and Producers | 54 |
| Trends in Supply | 54 |
| Going Mainstream | 54 |
| Table 25: Processors and Producers Registered by the Soil Association Certification Ltd, 1995-2000 | 54 |
| Reaching the End User | 55 |
| The Size of Organic Holdings | 55 |
| Competition | 55 |
| Retail of Organic Food | 55 |
| Grocery Multiples | 55 |
| Specialist Retailers | 56 |
| Organic Box Schemes | 56 |
| Farm Shops and Farmers Markets | 57 |
| The Internet | 57 |
| Supplier Profiles | 58 |
| Retailers | 58 |
| Tesco Plc | 58 |
| J Sainsbury Plc | 59 |
| Table 26: Tesco Plc Financial Summary (£m), 1999 and 2000 | 59 |
| Table 27: J Sainsbury Plc Financial Summary (£m), 1999 and 2000 | 59 |
| Safeway Plc | 60 |
| Asda Group Ltd | 60 |
| Table 28: Safeway Plc Financial Summary (£m), 1999 and 2000 | 60 |
| Marks & Spencer Plc | 61 |
| Table 29: Asda Group Ltd Financial Summary (£m), 1999 and 2000 | 61 |
| Table 30: Marks & Spencer Plc (UK Retail Division) Financial Summary (£m), 1999 and 2000 | 61 |
| Iceland Group Plc | 62 |
| Table 31: Iceland Group Plc Financial Summary (£m), 1999 and 2000 | 62 |
| Waitrose Ltd | 63 |
| Producers/Importers/Wholesalers | 63 |
| Whole Earth Ltd | 63 |
| Table 32: John Lewis Partnership Plc Financial Summary (£m), 1999 and 2000 | 63 |
| Seeds of Change | 64 |
| Baby Organix | 64 |
| Organic Farm Foods | 64 |
| Table 33: Whole Earth Ltd Financial Summary (£000), 2000 | 64 |
| The Village Bakery Melmerby Ltd | 65 |
| Growing With Nature | 65 |
| Table 34: Organic Farm Foods (Wales) Ltd Financial Summary (£000), 1999 and 2000 | 65 |
| Table 35: Organic Farm Foods (Scotland) Ltd Financial Summary (£000), 2000 | 65 |
| DeliOrganic | 66 |
| Riverford Organic Vegetables | 66 |
| Duchy Originals | 66 |
| Swaddles Green Farm | 66 |
| Suma Wholefoods | 67 |
| Wallaces of Hemyock | 67 |
| Graig Farm Organics | 67 |
| other supplier news | 67 |
| H J Heinz Company | 67 |
| Kellogg Company | 68 |
| Russell Burgess | 68 |
| Greenways | 68 |
| The Enjoy Organic Co. | 68 |
| Eating Out | 68 |
| 6. Distribution | 69 |
| Retail Distribution | 69 |
| Table 36: Retail Distributors Shares of the Organic Food Market ( percent), 1994, 1997 and 1999 | 69 |
| Figure 11: Retail Distributors Shares of the Organic Food Market ( percent), 1994, 1997 and 1999 | 70 |
| Wholesale Distribution | 70 |
| The World Organic Commodity Exchange | 71 |
| 7. Future Prospects | 72 |
| Matters Affecting Retail Distribution | 72 |
| Area of Land Given Over to Organic Production | 72 |
| Legislation | 72 |
| Pesticides | 72 |
| The Water Bill | 72 |
| Projected Values | 73 |
| Conclusion | 73 |
| Table 37: Forecast for the UK Market for Organic Food by Value (£m), 2000/2001-2003/2004 | 73 |
| 8. Sources | 75 |
| Glossary of Terms | 84 |
| A-Z of Definitions | 84 |
| Above-the-Line or Main Media Expenditure | 84 |
| Annual Growth Rate | 84 |
| Below-the-Line Advertising | 84 |
| Cif | 84 |
| Constant Prices | 84 |
| Current Prices | 84 |
| Fob | 84 |
| Forecasts | 85 |
| MSP | 85 |
| Real | 85 |
| RSP | 85 |
| About the Sources Used | 85 |
| ACNielsen MMS | 85 |
| Prodcom | 85 |
| NOP | 86 |
| Trade Association Data | 86 |
| Trade Sources | 86 |
| Key Note Research | 87 |
| The Range of Reports | 88 |
Since the end of the Second World War, the business of food production has changed from a localised, or even self-sufficient operation, into a global industry. As the worlds population has increased and space, in many cases, is at a premium, so different methods of farming and food processing have evolved, assisted by developments in the chemical industry. These methods include intensive farming, the use of pesticides and fertilisers, hydroponic cultivation and, controversially, genetic engineering.
Organic farming, where food is guaranteed to be free from chemicals, has strengthened its position in the market almost as a backlash against what is perceived as interference with nature. It has been brought to the forefront over the last decade, particularly in the ongoing BSE crisis. Organically reared animals are not fed antibiotics, growth hormones or artificial food and graze on land that must have no residual pesticides. Fruit and vegetables are treated with neither pesticides nor chemical fertilisers.
When consumer interest began to take off in the early 1990s some multiple retailers, such as Asda, test-marketed organic foods, only to pull out when sales did not meet expectations. However, growing concerns, in recent years, over the origins and growing methods of foods have resulted in a resurgence of interest and there are, of course, its exponents who maintain that, aside from any other considerations, organic food quite simply tastes better than intensively farmed, forced and processed foods.
In response, the major grocery retailers have rejoined niche operators and are increasingly encouraging their suppliers to adopt organic methods of production and banning genetically modified (GM) produce. For example, the name of Iceland Group Plc was, from an early stage, synonymous with a stance against GM food, winning the chain the Retail Initiative of the Year Award in 1999. It also claims to be the first retailer to try large scale marketing of frozen organic vegetables. However, the company has recently admitted that its policy decision to move to 100 percent organic vegetables was a mistake and a move that its customers simply were not ready for.
This is somewhat surprising as Friends of the Earth maintain that other supermarket chains are increasing their ranges. For example, in its campaign More Choice Because its Your Choice, J Sainsbury found that a significant proportion of its customers wanted to see more organic foods despite their being considerably more expensive. The multiple consequently introduced many more lines in new packaging, making organic produce more easily identifiable.
However, the entry of the multiple retail trade has always been seen as a mixed blessing by the movement. While it is necessary for any significant growth, restrictions that supermarkets often place on, for example, the size and shape of fresh produce, are at variance with the very concept of organic production. Furthermore, adverse publicity regarding their demands on suppliers have put them in a bad light to the extent that their practices were the subject of an investigation by the Competition Commission.
Supermarkets currently account for almost three-quarters of the value of sales of organic food, but there has also been a phenomenal growth in the number of farmers markets where local producers sell their own products, organic or not, directly to the public. The National Association of Farmers Markets was formed in 1999 to raise public awareness of such events, to support existing markets and to promote new ones.
If the retail market is undergoing a change in structure, so too is the production of organic food with the entry of the huge multinational food producers such as H J Heinz Company and Mars. This will inevitably change consumer perceptions of organic produce and not necessarily for the better.
However, the entry of large operators has also helped extend the choice of organic produce available and has contributed particularly to the growth in sales of ready meals and multi-ingredient foods.
The industry is still of the firm opinion that there is insufficient support for farmers wanting to convert to organic farming and that a policy of sustainable agriculture will require more financial support and more resources devoted to research.
The amount spent specifically on supporting organic farming in the UK out of the total agriculture budget is, according to the Soil Association, about half the European Union (EU) average and the UK is one of only three European countries that has not provided maintenance payments after the five year conversion payments.
With demand far outstripping supply, the majority of organic food is imported into the UK and its production offers great potential for developing countries. Indeed, organic food production is inextricably linked with the concepts of fair trade as well as with compassion in farming and has some influential advocates, perhaps most prominently HRH The Prince of Wales. What began as an alternative culture, with something of an earthy, hippy image has become more mainstream, illustrated by the increasing involvement of the huge, multinational food processors.
Text © 2001 MAPS
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© 2001 www.the-list.co.uk Ariadne
Last updated by Mandy Porteous September 2001