The Nitrofen scandal has caused a fall in consumer demand for organic foods in Germany with the organic meat sector being hit particularly badly.

A new report by industry consultants Organic Monitor shows that sales of organic meat products are projected to drop by 24% to €481m (US$472.6m) in 2002.

The German market for organic meat products remains the largest in Europe. However, consumer confidence has weakened since May 2002 when news broke that tainted organic wheat was fed to poultry at organic farms. This led to a sharp reduction in organic meat sales with consumer demand for organic poultry collapsing during the peak of the crisis. Organic Monitor projects that organic poultry revenues will fall by a half in 2002.

The supermarkets have experienced the sharpest sales decrease with many retailers withdrawing organic meat products altogether since the scandal. The loss in consumer confidence has not been as great in the specialist retailers with many reporting that sales were slowly returning to pre-scandal levels. Organic food shops and butchers remain the most important marketing channels for organic meat products and their market share is projected to increase due to ailing interest from the supermarkets.

Organic Monitor forecasts that organic meat sales will not return to pre-scandal levels for many years. Although consumer confidence is expected to gradually return and organic meat volumes are to return to 2001 levels, price erosion is to curb revenue growth. Prices of organic meat products have fallen considerably since May 2002 and overcapacity will continue to put downward pressure on prices.

The study shows that the German organic food industry faces many challenges. Apart from the loss of confidence caused by the Nitrofen scandal, the industry is becoming increasingly divided, a plethora of organic symbols and logos exist, and consumers are becoming more price sensitive in the current economic climate. Continuing state support may be guaranteed with the re-election of the coalition government however tighter controls are called for to protect future scandals and to strengthen confidence in the German organic food industry.

See the details of the full report, The German Market for Organic Meat Products, by clicking here.