How do we solve a problem like organics? Once the hills were alive with the sound of ringing cash tills, as the organic market continued its decade-long steady growth. But the organic idyll was recently upset by an ominous rumbling in the form of new data, which showed that the organics market suffered the first year-on-year downturn in sales this year in April (source TNS Global).
Alarm bells started ringing at BB when one of the Soil Assoc-iation’s own ’Organic Heroes’, the three-year-old Organic Cake Company - an artisan bakery supplying London and the south-east - went under, citing market pressures. "I stopped baking over a year ago and the whole venture cost me dear. I simply could not compete with the big bakeries," said baker Paul Kirby from the company.
But organics is facing a greater threat than rising costs - its identity. Luke Vincent, client director for Dragon Brands, said that organics faces an identity crisis. The concept has seen itself overtaken in the ’ethical products’ marketplace by Fairtrade and locally sourced. Having ’organic’ as a USP is no longer enough, especially as, he thinks, organics may be vulnerable to recession. "We need to see a shift in positioning," he said.
The proof appears in Mintel research, which shows that 25% of all UK food launches are now labelled additive-free, compared with 9% labelled as organic.
While consumers may have an implicit understanding that ’or-ganic’ means ’no chemicals’, additive-free labelling detracts from the organic message. "Or-ganic needs to compete with everything else that’s out there," continued Vincent. Fairtrade’s humanistic message has further muddied the waters. "They are better at articulating a story that’s relevant to consumers," he added. "Fairtrade and ’local’ both have a human face, but organic doesn’t. There is an awful lot to be learned in the way ’local’ is communicated in organic."
But Peter Melchett, chair of the Soil Association, insisted organic is not the poor relation. "Organic is not being drowned out - we’re still seeing healthy growth in the organic market. ’Local’ has gained in importance, but the fact that consumers are interested in other things apart from organic, shouldn’t really bother us," he told BB.
Organic producers say their ethical credentials are more rigorous than Fairtrade products, which only require 20% of one ’significant’ ingredient (dry weight) to be Fairtrade in order to carry the logo. But ’local’ is more of a sticking point.
A lack of home-grown organic wheat of breadmaking quality in the UK means that over two-thirds of it has to be imported. Consumer research from Mintel shows that those who purchase a wide range of organic products are also most interested in locally-sourced products. The focus on local has the perverse effect of discouraging farmers from putting their land under organic conversion, thus restricting the growth in organic food, said Mintel director David Jago. As conventional grain prices have rocketed, cereal farmers are getting much better prices than they’d expected.
While prices rise, half the people surveyed recently by IGD said expense was the biggest barrier to ethical shopping - a 10% price hike for organic products was cited as acceptable. But a price check last week showed an 800g Hovis square, thick, white loaf at 92p in Tesco, with Hovis’s 800g white organic bread at £1.30 - nearly 30% more.
Forecasters at the Ernst & Young ITEM club last month reported that customers might stop coughing up 50% premiums for organic, with Joel Segal, head of consumer products, suggesting higher-end consumers are facing a trade off - either sticking to their principles, or living without Fairtrade or organic food to avoid having to cut back elsewhere.
While some organic bakers are finding it hard to justify rising prices, Melchett finds a positive angle, saying, "Non-organic wheat prices off the farm have tripled, while organic have only doubled - so relatively speaking, organic bread has become slightly cheaper by comparison."
Room for optimism
But is the sun really setting on organics? One intriguing scenario predicts organics actually getting cheaper over the next 12-18 months. As soaring oil prices continue to drive up energy-intensive fertiliser costs, this may persuade farmers to switch to organic, which uses 26% less energy per kilogram of food. "That could happen this year or next, and that’s a very new way of thinking, because until now, people have thought conventional grain is cheaper," said Tom Russell, marketing manager for Shipton Mill. "Suddenly, that’s not going to be the case and we may see people switching to organic because the commercial model has changed."
Later this year, a three-year trial conducted by CCFRA and Newcastle University will an-nounce findings that should help farmers produce better protein home-grown organic wheats with greater yields - research areas that have been neglected for 60 years. Some of the supply chain issues that have dogged the organic movement will be addressed by the Organic Trade Board, formed last month with a brief to develop the organic supplier network. And, of course, a good harvest worldwide would be nice for driving down prices.
That leaves the issue of identity: how do we make it clearer in consumers’ minds what they’re paying for when they buy an organic bakery product?
"The question is, how long will people pay the premium for what is essentially a staple product?" asked Russell. "We believe they will continue to, but may look to buy from a local baker making traditional breads, with whom they have a relationship."
There is potential for significant growth in more traditionally baked bread, despite there being little nutritional research in that particular area, added Melchett: "The potential for the significant health benefits in quality bread is exciting for the industry," he said. Similarly, the huge growth in organic box schemes remains untapped in bakery.
Meanwhile, Joe Reade of Is-land Bakery Organics remains confident that organics will continue to grow as a marker of sustainable food with integrity and taste - as long as the marketing keeps pace with world developments.
"[The economy] has undoubtedly had an effect on sales, but how enduring this will be, only time will tell," he said. "It’s true that the organic consumer is used to slightly higher prices, but they are not more immune to the economic climate.
"Organic standards will have to evolve and be properly communicated to the consumer, so that the organic ’brand’ is a clear marker, showing that what they are buying is not only sustainably grown, but also low-carbon, responsibly manufactured, and of high quality."
=== Nuts! Organics drops to the bottom of the list of consumer ethical issue s ===
A recent survey of 1,500 women cited ’caring about the environment’ as the number one personality trait women find attractive in men. This, we think, is a pretty definitive snapshot of ethical attitudes today, especially given that the online poll was conducted by men’s boob mag, Nuts. However, you might prefer to cite the following data, from IGD Consumer Unit, in your Powerpoint presentations. It shows organics struggling to hold its own in an increasingly crowded ethical marketplace.
Q: Which of these are you interested in?
Animal Welfare (free range/not tested on animals) 69%
Environmentally friendly 53%
Fairly traded 48%
Organic products 32%
Source: IGD, March 2008
Consumers consider Fairtrade labels much more important than organic, states Mintel’s Food Labelling report (Jan 2008). More products have been launched organic than Fairtrade. "Even so, the fact that 16% of consumers have never even seen the organic logo, compared to only 6% for Fairtrade, is striking given all the media attention that organic receives," it said.