Consumer confidence in organic foods is slowly returning in Germany after the Nitrofen scandal. A new report by Organic Monitor projects fresh organic fruit sales to expand by 8.1% to €236m in 2003.
The Nitrofen scandal caused some sectors of the German organic food industry to report negative growth in 2002. The organic meat and dairy sectors have been the most adversely affected, however sales of organic fruit & vegetables have been somewhat cushioned.
The new study by Organic Monitor finds that the exotic and tropical fruit category is showing the highest growth in the German organic fruit market. German retailers are adding more tropical and exotic varieties to their organic fruit ranges in response to renewed consumer demand. The product category accounted for 40% of total organic fruit volumes in 2002.
A number of conventional fruit companies have entered the organic fruit market in recent years. Competitive stakes are rising as large volumes of organic fruit come into a market that is showing slowing growth rates. Producer prices and industry margins fell significantly in 2002 and the trend is expected to continue in 2003.
The study found that the German organic food industry faces many challenges. Sluggish growth rates are expected to cause some industry sectors to suffer from overcapacity in 2003. Falling industry margins are likely to cause a reduction in the conversion rate to organic farming this year. The recessionary condition of the German economy is also increasing the price sensitivity of consumers, which is limiting demand for organic foods.