Organic UK food sales defy market downturn to rise 4% in 2014

Organic UK food sales defy market downturn to rise 4% in 2014
Rebecca Smithers

Shoppers spent an extra £1.4m a week on organic products despite an overall drop in food prices and spending, according to Soil Association report

Tuesday 24 February 2015 12.59 GMT Last modified on Tuesday 24 February 2015 13.03 GMT

Sales of organic food and drink products have bounced back, rising by 4% last year at a time of tumbling food prices and spending.

Shoppers spent an extra £1.4m a week on organic products and the organic market exceeded £1.86bn - bringing sales levels back to the levels of 2009 - according to a report by the Soil Association, the organic industry trade body.

Dairy products and fresh fruit and vegetables were the most popular organic purchases. More than a quarter of spending on organic products (27.9%) is in the diary aisles, with yoghurt sales increasing by 13.8% and milk by 2.9% – in stark contrast to the 3% contraction of the non-organic dairy market.

Sales of organic eggs and poultry were up 15.8% and 8.2%, while non-organic sales dipped by 6.2% and 3.3% respectively.

The association hailed the figures as representing “significant growth” in a year when food prices were down 1.9% and food spending was down 1.1%. It said that over 83% of UK households purchased organic products in 2014.

The Soil Association said feedback from retailers indicated that shoppers were becoming more health conscious and – following the horsemeat scandal – were seeking guarantees about food quality and ethical sourcing. Even so, sales of organic red meat and sausages fell by 6.1%.

But the organic market is still dwarfed by the size of the overall food and drink sector – the largest manufacturing segment in the UK and now worth more than £92bn, according to the trade body, the Food and Drink Federation.

During recent tougher economic times organic purchases with a premium price were among the first food items to be ditched as consumers sought to save money on their weekly shopping.

On Monday it emerged that sales of Fairtrade goods have fallen for the first time since the ethical trading scheme was founded 20 years ago. The slide of almost 4%, after years of double-digit growth, reflects wider troubles in the grocery market as shoppers put less in their baskets and turn to cheaper chains such as Aldi and Lidl in a bid to save money.

However, the Soil Assocation hailed the moves by discount supermarkets to stock organic products, as having “the potential to make organic produce more affordable for some on low incomes”. Discounters Aldi and Lidl – with an established track record in this sector on the continent – increased their combined organic sales by around 20% last year, both gradually adding extra organic lines.

Overall, organic sales through the multiple retailers grew for a second successive year, increasing by 2.2% to almost £1.3bn – 70% of the organic market.

Leading the sales boost is the online retailer Ocado, which increased its organic sales by 14% to £80m. Ocado customers can now choose from an unprecedented 2,654 organic lines and 315 organic brands.

The three biggest multiples in organics are Sainsbury’s, Tesco and Waitrose, which together account for around 70% of multiple retail sales. Tesco’s organic turnover fell significantly in 2013, while sales through Sainsbury’s were little changed and those through Waitrose grew by 3.5%. At Waitrose, spending on organic products represents 4.5% of purchases at Waitrose – the highest proportion among the leading supermarkets.

The strongest growth among multiple retail’s ‘big four’ was at Morrisons, bolstered by the launch of online shopping for Morrisons customers at the end of 2013.

Helen Browning, Soil Association chief executive, predicted continued steady growth this year and beyond: “Three years ago, commentators were writing off the organic market in the UK. Now, with a third year of steady growth, and against a falling overall food market, it’s clear that reports of organic food’s demise were premature to say the least.

“This reinvigoration may be partly related to an improving economy, but it’s also testament to the fact that retailers and manufacturers who continued to invest in organic lines have continued to thrive. Now, even the discounters are beginning to stock organic ranges.”

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