Developments in organics

In the last month two pieces of news caught our attention, illustrating the increased interest in the organic food and drink market.

NaturéO reported a 42% increase in sales for last year.

La Vie Claire reported sales growth of 27% for 2016.

Biocoop in France has yet to report its sales but has added 48 more stores in 2016 to take its total to 431.

El Corte Inglés launched a new shop in shop concept called La Biosfere which is to be entirely dedicated to ecological, bio and organic products.

As Europe struggles out of recession and the aftermath of the global financial crisis and Euro crises, we have seen renewed interest in organic products and announcements from many leading retailers. Carrefour, for example, launched its Bio brand last Autumn. Auchan has its Coeur de Nature brand and Leclerc has Go Pure.

NaturéO

NaturéO is tiny in the French market, even last year its sales were under €100 million in a grocery market worth over €200 billion and its dramatic sales growth was mostly down to new store openings. But that is not really the point. The key message is that the company is able to open this many stores with a realistic expectation that there is sufficient demand in the market to support them.

La Vie Claire

La Vie Claire is double the size of NaturéO, and its success is noteworthy because up until 2005 it had been loss making. Its recovery has been due to its emphasis on organics and the growing interest in the sector.

El Corte Inglés

ECI, operating in one of the markets worst hit by the economic downturn, now also sees the opportunity to develop its organic offer. ECI, with its Hipercor Hypermarkets and other food retail outlets is well placed to try a development like this, though Carrefour sells its Bio range in Spain as well.

The opportunity

For many people organic just means premium or better quality or more tasty. And for others, of course, there is real concern about the environment and the effect of fertilisers, weedkillers and pest controls. But whatever the reason, there is a significant proportion of the population that wants to buy organic goods.

Take the following chart from Mintel’s tracker research and quoted in the report on Supermarkets - Europe, November 2016. In France and Germany a fifth of the population thinks they are worth paying up for. The proportion is lower in Italy and Spain, but they were hard hit by the downturn and recovery has been slow. More surprisingly the response from Poland is on a par with Germany and France.

The key statistic is that 20% value organic products and that is easily a big enough minority to warrant special attention.

Figure 1: Europe: those agreeing that organics are worth paying up for, Q3, 2016
Base: internet users aged 16+; 1,000 in each country
[graphic: image 1]
Source: Lightspeed/Mintel

There are similar results to the statement “I am buying more organic goods”. The positive response rate is between 15% and 20% (with Poland on just 12%).

Where next?

The two developments we’ve highlighted this month are just a couple among a steady stream. This is an important niche market and one where European retailers see scope to innovate and justifiably so as Mintel’s consumer research shows.

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