Beards and sandals met commercial reality last week at the Organex show in London, as the organic sector struggled to come to turns with its increasingly mass market appeal without disillusioning its more committed followers. just-food.com’s Chris Lyddon took the temperature of a sector enjoying huge opportunity – yet facing great uncertainty.
At last week’s Organex show at London’s Olympia, food processors got a chance to talk over how they deal with a world in which some raw materials seem to be in permanent short supply, while the dairy sector at least has had to learn to deal with over production.
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Lizzy Vann, founder of the baby food maker Organix Brands, launched an attack on organic products she felt didn’t carry enough conviction. “I am horrified at what we’re doing to organic food,” she told the Soil Association conference held in the margins of the exhibition. “What will happen when people say, ‘but I came to organic food because I thought it was honest’?”
“I was stunned when I joined the food industry at how few people understood nutrition,” she said. “Consumers have put two fingers up at the conventional food industry by rushing into organic. They did that because they felt their needs weren’t being respected.”
One product she singled out for criticism was the organic pot noodle, introduced by Haldane Foods. But Haldane’s Jeanette MacGregor told just-food.com that products like the pot noodle were essential if organic food was to reach a wider audience. “If we’re going to take it out to a wider market we’re going to have to look at the options for more processed food,” she said. “We’re trying to take organic more mainstream.”
Haldane’s Peter Ireland stressed that moving into snacks meant a much bigger market for organic. “
The pot noodle market’s worth £100m (US$144m),” he told just-food.com. “If people are looking for organic products the potential is immense.”
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By GlobalDataRupert Maitland Titterton, general manager of organic foods for Heinz, was there to represent the biggest of the big. But there was no doubt in his mind that the big food companies needed to be in organic. “Organic is a key theme in the future of food,” he told the Soil Association’s conference. “Our customers would expect an organic offering from Heinz.” He pointed out that some 75% of people have bought organic food at one time or another.
Another company keen to break into the mass market with organics is Enjoy! Organic, set up by RHM to do just that. “Our aim is to be the beacon brand that takes organics mass market,” said supply chain director Gill Lowy. Selling into a bigger market was good news for the organic ideal. “A bigger market means more land being converted and that’s an incredibly important goal,” she said. There were trade offs. “Are both manufacturers and retailers willing to sacrifice some of their cash margin to keep prices down?”
The market had changed. Even though it was still small there were now organic versions of most products on the shelf. And supermarkets were now running promotions on organic food, something they wouldn’t have done a year ago. But still organic was not mainstream. The buyers were still more affluent than the rest of the population.
And they still lacked trust in all but small, committed operators. “Most of our consumers would worry about the motivation of big companies which are simply working with organic bolt ons,” Lowy said.
One company which did have to cut its margins in the organic market was Tryton Foods, a subsidiary of William Jackson. It’s turning out 20 million Yorkshire puddings a week and decided to go into organic puddings under its Aunt Bessies brand. “The research came back that shoppers would expect Aunt Bessies to provide such a product,” said Tryton’s Gavin MacNally.
But getting the ingredients was difficult. “We were able to source milk and flour without a problem. The key part was the eggs,” he said. The company had been forced to buy shell eggs, as well as processing eggs, just to maintain supply, adding considerable extra costs. It meant that organic Yorkshire puddings were less profitable than the conventional variety. “At a 10% (retail price) premium retailer margins were maintained, but we had to reduce our margins considerably,” he said.
It’s a different story in the dairy sector, where the Danish government’s encouragement for organic milk production has produced a surplus much of which has landed here, explained Graham Keating, managing director of Yeo Valley Organic. “We’ve gone from famine to feast. Last year we were desperately short of milk. At the moment we have an excess,” he said.
Even so it was still important to maintain close relationships with suppliers, he felt. “In the long term sustainability of supply for a manufacturer is vital,” he said. Even with a dairy surplus, the need was still there.
“Consumers are much more interested in what’s happening well down this chain” – Graham Keating, managing director of Yeo Valley Organic |
Close relationships between suppliers and processors had been a feature of the organic sector and now it was important to communicate to consumers that that relationship existed. ” Consumers are much more interested in what’s happening well down this chain,” he said.
He felt that much of the talk among dairy farmers about getting into processing was ill-advised. “We came from a dairy farm, but that was 30 years ago. It was low-tech and deregulated. Now start-ups are hugely expensive,” he told just-food.com.
Brands could be very strong in the organic sector, Keating felt. “Own label (organic yoghurt) didn’t grow at all last year, despite a lot of new products,” he said. “What we draw from that is that own label won’t expand where there is a reasonably strong organic brand.”
Soil Association director Patrick Holden gave the food industry credit for its close links with the consumer. “The relationship between traders, manufacturers and consumers and producers is tremendously important. You meet the consumer in the market place,” he said. “Food manufacturers meet the public. That’s why our relationship with you is so vital.”
And Mike Ansell, managing director of conference sponsors Tetra Pak, warned the organic sector that it needed to make sure it maintained its reputation with the public. “Consumers are looking for products that protect the environment. Above all they’re looking for safe products. I would say that increasingly they associate safe with organic. It’s essential that you maintain a clean bill of health,” he said.
He had no doubt that his company had a role to play in the development of the organic sector. “Cartons deriving from a natural sustainable source, that is to say trees, are a natural fit for organic products,” Ansell said.
By Chris Lyddon, just-food.com correspondent
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