Manufacturers must not only be genuinely different, they also have to think differently if the full potential of the organic food market is to be realised for both retailers and consumers.
That was the advice given to European food business executives by Graham Keating, managing director of Yeo Valley Organic Company Ltd, Britain’s fastest growing organic dairy company, at Organic Business 2000, an international conference held in Paris earlier this month.
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“Get the manufacturing and marketing model right, and organic food has the potential to re-engage with consumers who have become suspicious of the food industry,” he said. “It will help grow previously static market sectors, rekindle confidence in British farming and develop better links between farmers and the retailers selling their food.
“Be simply ‘pseudo organic’ however, by adding an organic line to an existing brand simply because the sector seems to offer growth potential, or apply ‘conventional’ thinking to the business and the result could be danger, not dynamism,” Keating warned.
“Too much ‘me too’ marketing and the fast-expanding organic sector will be damaged before it has ever had a chance to become firmly established.”
Demand for organic food might be growing at an impressive 40 per cent year on year, but risks that could slow its progress could be just around the corner, he told the conference. These include the entry into the market of conventional food companies not really dedicated to the organic ethos. If these are public companies, with a duty to satisfy the demands of institutional shareholders, then short-term profits rather than the development of quality products with long-term potential will most likely become the main business motivator he told the audience.
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By GlobalData“Organic food production should be efficient and effective and structured for growth, but it should also involve an ethos in which profit and market share are not the most important motives. To underline this we have written into our constitution as part of our aims ‘the production of healthy organic food, for which suppliers receive a fair return and consumers only pay a fair price’.
“Our company objectives are also to promote the production of organic foods using ingredients resulting from environmentally friendly farming techniques and good animal health and welfare practices.
“We believe successful organic production means close links with suppliers and fair and ethical dealings with them, so we give the farmers supplying us long-term contracts that are set at a level to offer them an opportunity to farm at a profit.
“We believe this is vital if farmers are to be encouraged to turn organic and if supplies of British produced food are to keep pace with consumer demand. There should also be an aim to minimise wastage and the use of energy and to adopt environmentally efficient production processes and packaging. It’s a business model we believe is not only ethically correct, but also one that is practical and can form the basis for the future success of the organic market in the UK.
“With its help, Yeo Valley Organic has already developed dairy into one of the largest organic food sectors in the UK and is expanding by around 100 per cent year on year. With similar sustained commitment, other companies should be able to create similar success for organic foods created for other markets.”
By Stephen Blake
Editor of Food Industry News
