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Organic farming: 20% increase in global sales of organic products in 2001

October 19, 2001 Europe Agri
Strong growth in organic food sales in Germany.

In these times of mad cow disease and salmonella, shops selling organic produce are benefiting from strong consumer confidence in ecological products , reporting a sustainable expansion of their client-base of about 20 %. More so that "bio-shops", which rarely cover more than 100 m2, bio supermarkets have enjoyed very strong growth averaging +40 %. New outlets are constantly being opened, and this trend is only beginning. In Germany, the Basic supermarket, which has proved to be a great success in Munich, is shortly to open a 700 m2 store in Stuttgart, whilst Berlin's "Bio-company" has opened its fourth subsidiary covering 620 m2 and stocks 7,500 articles. Stuttgart's "1,000-K"rner-Markt" ("1000 grains market") stocks some 10,000 articles. Offering a range of 1,200 products, Dusseldorf's leading discount bio shop, the "Supernatural der Oekoland AG ", has beaten all forecasts, serving some 1,200 clients daily. SPAR was the last major supermarket chain in May 2001 to introduce 70 organic articles to its range under the "Pro Natur" brand. The market giants have been more or less successful according to their competence and commitment. Besides Tegut, which has been committed for years to the organic sector and now secures 10% of turnover from quality organic produce, EDEKA is also enjoying rapid progress despite the late introduction of organic foods to its range. The company has reported that over the first quarter of 2001, 2,500 sales outlets from a total of about 13,000 propose an organic assortment, and turnover from organic produce is now 50% higher than that from sales of similar conventional articles. Whereas the competition has reported weak or falling turnover, EDEKA has recorded a growth rate of 4.7%. Organic produce has also become an important range for REWE which has been offering its "Fullhorn" range in 3,000 shops for ten years. Organic potatoes and carrots account for about 10 and 15% of sales respectively, and onions 25%.

In spite of these remarkable growth rates, organic produce continues to represent just 1 to 1.5% of the total turnover of conventional food retailers, according to a partial survey commissioned by a German environment and nature protection association. In general, the results of this survey are regarded as disappointing, though it does reveal that turnover has doubled compared to the results of previous inquiries. Experts estimate that organic produce has since cornered a good 3% of the entire food market in Germany. Consumers have never been more disposed to pay more for organic produce. According to a survey conducted in January by Emnid, shoppers are essentially motivated by the fact that organic products taste better (37%) and don't contain chemicals (33 %). Direct sales outlets have benefited most from the new bio wave (farm shops, market stalls and home deliveries of organic produce). Long term growth is expected to be about 27%.

Organic dairy products and meat leading the way.

Owing to pressure from consumers, almost all German distribution circuits now supply fresh organic milk. Manufacturers of UHT milk have also benefited greatly. Large conventional producers plan to, have or are in the process of committing to organic produce. According to experts organic milk now accounts for 4.6% of the German market (compared with 2.1%in 1999. 35% growth in sales of fresh organic milk alone has barely caused any bottlenecks, since significant excess quantities were previously used in the manufacture of conventional products. In Denmark, fresh organic milk already represents 30% of the market. Although London-based consultants Frost & Sullivan predicted 8% growth in 2001 in demand for cheese, conventional producers appear reluctant to go down the organic path. This is largely due to the fact that European Union regulations require the existence of a clean production chain, and the sorting of different grades of milk. The conventional food industry has thus far shown little inclination towards organic cheeses because of the need for qualified staff.

Although sales of beef and veal have stabilised in Germany at about 80% of previous volumes, the Nuremberg-based consumer research institute GfK has reported a 13% fall in total meat consumption. Consumers express a preference for poultry (+7.6%), fish, flour-based dishes and vegetables. The German distributor Markant Sud has responded by only stocking organic-quality beef and veal. Whereas Tegut has been able at certain periods to increase organic grade sales by 700%, EDEKA has reported that its "Gutfleisch" organic meat brand represents a market share of 14 %. Experts suggest that over the fist half year, consumers have accepted price increases of 65 to 75% for organic meat. However REWE and Globus, which sell organic meat at prices three times that of conventional products, have not been successful. Interest in organic meat is closely linked to investment in efforts to inform consumers. Whereas the French spend an average of a quarter of their revenue on food, the figure for Germany is just 11%, the lowest level in Europe.

Organic produce in the catering sector.

The expansion of the organic sector also extends to caterers and restaurants. The leading German caterer Aramark, which daily supplies 500 restaurants feeding 200,000 diners, now only offers organic meat. Owing to increased procurement costs, prices on menus have also risen, though by an average of less than a Euro. The "nature in the plate" campaign, is directed primarily at company canteens. The Dusseldorf-based insurance company "Provinzial Versicherung" now offers organic meals to its 2,000 staff, 25% of whom have expressed a preference at the change. The Vienna association of hospitals and healthcare centres introduced organic meals in April 2000, and aims to increase the share of organic produce to 30% by 2002.


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