UK retailer Tesco is planning to grow its organic food business to GBP1 billion. It has announced ambitious plans for the development of its organic foods over the next five years. It intends to launch hundreds of new organic products at the same time as making them both more accessible and more affordable to consumers. Organics may be the hot thing now, but its long-term future still faces significant threats.

Tesco is the latest UK retailer to promote its organic food ranges heavily, following on from Iceland's failed initiative and Sainsbury's recent announcement that it too is seeking high growth from its organic foods.

Although Tesco has been at the forefront of most things in UK retailing recently, organic foods has already seen most of the major grocery retailers seek to make the category their own, so far without any great success.

It is easy to see the appeal of organic foods. Although manufacturing costs are high, the goods can command high enough retail prices that allow retailers to make healthy margins on them. Consumers see organics as 'safe' foods, invaluable following the recent food industry scares that have affected both the UK as well as continental Europe. Suppliers also approve, since they too can earn higher margins.

A major benefit of organic foods is that consumers trust them - they feel that they have been produced using safe and traceable methods. Consequently, consumers see organic labels on foods as offering some form of guarantee as to how good for them the food will be.

However, non-organic foods are fighting back, as they increasingly provide consumers with greater ability to track the food from 'farm-to-fork' and reassure them about the farming and production methods used. This is weakening one of the key selling points of organic foods as being the "safer alternative", as well as its niche positioning.

Supply-side issues may also prevent the development of organics. Tesco has said that it intends to make organic foods more affordable. Organic foods are expensive to produce, and whilst suppliers will be willing to supply more as long as prices are high, if Tesco starts using its clout to push down manufacturer prices the current support from farmers may weaken.

The future for organics at Tesco therefore seems mixed - it has certainly been a high growth area, but consumers and suppliers alike may start to lose interest in the near future.

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