According to IGD’s new report Organic Food: Niche or Mainstream? published today, the size of the organic food market will grow from £600 million today to more than £1bn in the next two years, which will be equal to approximately 1% of the total grocery market.
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The organic market is small and fragmented but is taking on some of the characteristics of mainstream products, while at the same time giving rise to new directions. Key trends include:
- Almost 75% of organic food is now sold through the major multiple retailers
- New ‘Natural Food’ stores which have organic products as their standard are opening in fashionable parts of London including Kensington, Notting Hill and Camden, and could be rolled out to other cities
- Established, large scale food manufacturers are entering the organic market for the first time, for example Heinz and Unilever
- New B2B exchanges are improving supply chain efficiency for organic food by providing a central point for sourcing, marketing and purchasing organic ingredients
- Organic foodservice in a variety of formats, e.g. restaurants, pubs, cafés and takeaways, is now becoming a reality.
IGD has identified the following factors which will influence the future direction of the market. These all point to further expansion.
Price
Price has been identified by consumers and industry as the main barrier to market expansion. 79% of respondents to an IGD industry survey believe that the gap between the price of conventional produce and organic food will close dramatically. This will open up the organic market to a wider group of consumers beyond the higher income groups who currently account for the majority of organic purchases.
Availability and Range
Organic products are now available in all food categories and increasingly in some non-food areas, e.g. cotton wool. The multiple retailers have both widened and deepened their ranges to offer the consumer more choice.
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By GlobalDataConsumer Views
Increasing numbers of consumers are moving away from conventional produce to the organic option. Earlier IGD consumer research indicated that:
- 36% thought organic food was healthier to eat
- 25% thought it led to improved taste
- 36% thought it was safer to eat
- 34% thought that the absence of pesticides benefited the environment.
Peter Whitehead, Senior Business Analyst IGD said “The main constraints that organic businesses identified as holding back the market, such as price and availability, are being addressed. As a result, the organic market seems set for a further phase of rapid expansion driven by falling prices, increased range and availability and growing concerns by some consumers about conventional produce.”
For further information please contact Jane Beard, tel: 01923 851910, mobile 07770 640448 or Catherine Ellwood, tel: 01923 851916.
EDITORS’ NOTES
- ‘Organic Food: Niche or Mainstream?’ is available from mid May, price £200 for members and £250 for non-members. Please contact IGD on 01923 851925 or e-mail: michelle.jarman@igd.com, alternatively, Visit the IGD website http://www.igd.com and order on line.
- IGD will be holding a Conference on Organic Food on 25th September 2001. Details coming soon on www.igd.com
- IGD is the leading research and education organisation for the food and grocery industry. Its membership is drawn from the total grocery supply chain, including retail, manufacturing, wholesale, distribution, catering, packaging companies and primary producers. IGD also has close links with consumer organisations.
