Sales of organic dairy products in Europe expanded by 26.2% in 2001 to top €1.2bn (US$1.08bn), according to a new strategic study by strategic research & consulting company Organic Monitor.
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Consumer demand for organic dairy products remains strong in Europe with many countries reporting sales growth in excess of 30% in 2001. The highest growth was observed in the Italian and German markets last year due to the BSE crisis elevating consumer demand. The BSE crisis has been responsible for a large rise in organic food sales from mainstream food retailers in these countries.
The supermarkets accounted for 63% of organic dairy revenues in 2001 and they are the most important marketing channels for organic foods in most European countries. The supermarkets have the highest market share in Scandinavia where over 90% of organic dairy products are sold via the major retail groups. The Scandinavians are also the highest spenders on organic dairy products with Danish consumers spending over eight times as much as German consumers.
The largest organic milk market is in Denmark where organic milk accounts for a third of all milk sales in leading retailers. The Danish market is to show the lowest growth in the coming years however, due to the market reaching maturity. Denmark had the fourth largest organic dairy products market in 2001 and it is set to become one of the smallest by 2005.
The Italian and German organic dairy product markets are forecast to show the highest growth between 2002 and 2007. The marketing efforts of the major retailers are projected to raise revenues by over 20% per annum in the short term. The German market is forecast to represent a third of European organic dairy revenues in 2007. The British and French markets are to remain the second and third largest respectively over the forecast period.
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By GlobalDataThe study shows that the organic milk segment comprises the bulk of European organic dairy revenues, 42.5% in 2001. Over half a billion litres of organic drinking milk was sold in Europe representing 3.1% of total drinking milk volumes. The organic yoghurt market has the highest market share however, comprising 3.6% of all yoghurt sales in Europe.
Organic Monitor predicts healthy growth to continue over the forecast period however the organic dairy sector faces many challenges. One of the most important is to overcome supply-demand imbalances. Overproduction caused over half of the organic milk produced in Denmark and the UK to be sold as conventional milk in 2001, whilst many parts of southern Europe suffered from supply shortages.
The organic dairy sector is also to become highly competitive as more country markets reach maturity. Large dairies are expected to gain market share as they are able to achieve economies of scale in the production and marketing of organic dairy products. Large conventional dairies already dominate the Scandinavian, French and Dutch markets and this trend is likely to spread to other European countries as market growth rates slow and competition becomes more intense.
To take a look at the selection of Organic Monitor reports available in the just-food.com knowledge store, click here.
