According to a arecent report from the Soil Association, the market for organic bakery fell by nearly 17% last year, following a 40% decline in 2009. Last year's slump far outstripped the overall decline of the organic market, which fell 5.9%. Indeed, organic bakery products were the second-biggest loser in the sector, with only organic chilled convenience products experiencing a larger decline.
The Soil Association report said that the fall in sales was partly because supermarkets had cut back their ranges of organic products - a view echoed by organic cake company Honeyrose, which supplies Sainsbury's and Waitrose.
"When the recession hit, the supermarkets' reaction was to take away organic lines in favour of value ranges. If products are not on shelf, consumers cannot buy them, so it became a self-fulfilling prophecy," said Honeyrose marketing director Adrian Apodaca.
Despite this, Honeyrose saw "low double-digit" sales growth last year. "We were able to find targeted opportunities with supermarkets and foodservice suppliers by highlighting provenance and quality. We're a family business and our products are hand-baked, and 'by the way' we're organic," he added.
Paul Matthews, joint MD of miller FWP Matthews, which supplies organic flour, said the sluggish economy and high wheat costs would impact the sector this year.
"Organic flour used to represent 60-70% of our business, with conventional flour accounting for the other 30-40%, but that figure has now reversed. Our sales stabilised in 2010, but the high wheat costs at the end of last year and into 2011 mean it's going to be another tough year. Supermarkets just aren't accepting price rises and the people in the middle are being squeezed."