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Global Organic Market: Time for Organic Plus
Strategies...
The
economic slowdown is impacting global organic food sales. After
reporting high growth rates
for over a decade, 2009 could be the
first year of single-digit market growth.
Growth in the
global organic food market is slowing because of the financial crisis.
Demand has been affected by the reduction in consumer spending power and
declining industry investment. The UK market has been
the most adversely affected, with just 2% growth reported in 2008.
Some argue it is difficult to increase
organic food
sales in the current economic climate because of the price premium.
Rising consumer expectations
is another factor. Consumers are demanding
more from organic food products; they are increasingly looking at
ethical sourcing, traceability, the carbon footprint,
sustainability and corporate social responsibility.
Organic food
producers and retailers need to respond to changing consumer
expectations to remain successful. Organic
food pioneers (known as ‘bioneers’ in some countries) are already rising
to this challenge and have adopted Organic
Plus strategies.
In the UK, Green
& Black’s organic chocolate has become a household brand. Its success is
attributed to the product marketed as an ethical chocolate. It is made
from ethically sourced cocoa from developing countries. Apart from
certified organic, many of its ingredients are sourced fairtrade.
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The importance of
ethical sourcing is leading some organic food companies to invest in
developing countries. Some have gone further and invested in war-torn
areas like
Sri Lanka.
Palestine-based Canaan Fair Trade was
financed by such social investment. The company is a major success
story in a region that has been ravaged by
conflict for decades. This year, it became
the first company in the world to introduce certified organic and
fairtrade olive oil.
AgroFair, the
leading supplier of organic and fairtrade fresh produce in Europe,
has made a number of such ethical investments. It has set up a
number of enterprises to help marginalised producers in Africa and
Latin America. In recognition of its strong corporate ethics,
AgroFair was awarded the Dutch Award for Corporate Social
Responsibility a few years ago. |
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Some organic food companies are
strengthening their environmental credentials by offsetting carbon
emissions. EOSTA, a leading trader of organic fruit & vegetables, is
the first to launch a range of climate-neutral fruits & vegetables
in Europe. Its product range comprises Egyptian oranges, South
American top fruit, New Zealand kiwi fruit, South African citrus
fruit and Dutch tomatoes. The products are marketed via the Nature &
More scheme which enables consumers to trace
organic products to the farms where
grown.
Other companies
are focusing on sustainability. Hipp, the largest organic food
processor in the world, has pioneered many sustainability
initiatives. It uses renewable energy to make organic baby food, is
cutting carbon emissions and recycles 97% of its waste. Hipp’s
environmental performance has been recognised by
a United Nations Millenium Business Award. In the UK, the
organic cosmetics firm Neal’s Yard
Remedies has become the first high-street
retailer to become carbon neutral.
The Swiss
supermarket chain Co-op has responded to
consumer demand for locally grown products by launching a dedicated
private label. Pro Montagna represents a range of Swiss mountain
food products, many of which are organic.
Certification
agencies are responding to the growing sophistication of the organic
food market by integrating aspects of
sustainability into their standards. IMO and Ecocert have introduced
fairtrade standards that complement organic production methods. The
EcoSocial standard of IBD which covers biodiversity, is gaining
popularity in Latin America. Others like Soil Association are
looking at reducing the environmental impact of organic food
products.
In conclusion,
2009 brings fresh challenges to the organic food industry. The
global economic slowdown coupled with changing consumer behaviour is
affecting organic food sales.
Food companies and retailers need to
re-align their organic product ranges to meet rising consumer
expectations. With consumers increasingly looking
at sustainability, companies are advised to follow the
‘bioneers’ and adopt organic plus strategies.
Sustainable
Foods Summit
Case studies
of companies who have successfully implemented
such strategies were given at the Sustainable Foods
Summit (Amsterdam) in June 2009.
For more details, including the
conference proceedings, go to the
Sustainable Foods Summit website
Posted: May 29th 2009
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