Organic market to grow but to sustain greater focus needed on education

October 31, 2003, The European organic food and drink market will see impressive growth over the next five years, predicts Datamonitor a market analyst in a recent report. But the analysts warn the high could be short lived without increased focus on consumer education.

The European natural food and drinks market, driven by extremely strong growth in certain sectors, will surpass the 20 billion Euro mark by 2007. In excess of 50% of the natural market is accounted for by organic food, sales of which are forecast to grow at an annual average rate of 10.4% over the same period.

The organic food and drinks market in the UK is set to grow by almost 75% between 2002 and 2007, when it will be worth GBP1.6 billion. The UK is the second biggest organic market in Europe but it is still a long way behind Germany, where the market was worth GBP2.1 billion in 2002.

The number of loyal users of organic products in the UK is set to grow from 2.4 million in 2002 to 11.4 million in 2007. Organic meat is set to have the largest gains and the market is predicted to more than double, from GBP152 million in 2002 to GBP351 million in 2007. Organic ready meals are forecast to grow at a compound annual growth rate of almost 17% over the same period. Consumer demand for better tasting and higher quality food and drinks has also lead to steady growth in the UK fresh foods market, which will grow to exceed GBP25 billion between 2002 and 2007.

Loss of trust in the food industry has been a great growth factor for organic and natural products. Consumers are increasingly conscious about safety of foodstuffs, methods of production and the ingredients used. The bulk of consumers of organic products are mainly between the ages of 25 and 55, peaking between 36 and 45. Key life events, such as childbirth, menopause, empty nesthood and senior lifestyles, are also 'trigger points' for natural food adoption.

Research indicates that over 50% of consumers trust organic and natural products more than conventional food and drinks. This has contributed to the positive development of the natural, and fresh, food and drink markets and provides a rationale for marketers continuing their activities in this area.

Although the UK organic market is showing impressive growth, high prices are limiting demand. Price premiums associated with organic food and drinks represent one of the most important deterrents against buying organic foods, and although consumers have an interest in foods produced in an ecologically sound manner they are equally not willing or able to pay the current prices for these products. Manufacturers and retailers should seek a price premium of 10-20% above conventional food counterparts, something which would be deemed acceptable to occasional and non-users of organic products.

Another obstacle to market growth is that consumer perception of improved taste and quality of such products varies considerably. The view that organic produce is tastier than conventional food and drinks is not widely proven in the eyes of consumers. A clearer understanding of nutritional and health benefits would also increase their consumption of natural food and drinks.

Consumers need to be more educated about organic produce and its benefits both to health and to the environment. Only this will impact on perceptions of and attitudes towards the current high price and may help present an argument that consumers are getting a good deal when all of the effects on human, animal and environmental health are factored in. Effective imagery and branding will become vital, especially in attracting new consumers. The onus is on manufacturers and retailers to develop more sophisticated product offerings that actually fulfill consumer expectations.

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