UK sales of organic products rose by more than 7% in 2016 – the market’s fastest rate of expansion for nine years – but the country’s certification body has forecast growth could ease this year.
The value of organic sales hit GBP2.09bn (US$2.61bn) last year, a rise of 7.1%, according to figures released today from The Soil Association. The last time the year-on-year growth in the market in the UK was higher was in 2007, when sales climbed by over 9% on 2006.
For 2017, The Soil Association is forecasting growth of “at least 5%”, with the organisation pointing to “uncertainty” in the UK organic market in the wake of the country’s decision to leave the EU.
Clare McDermott, business development director at The Soil Association, said the organisation was forecasting sales would hit GBP2.5bn in 2020 but said its prediction for growth this year was based on “a lot of uncertainty” in the market.
Annual sales of organic products in the UK
Source:Soil Association organic market reports
2016 organic sales by channel in UK
“We took a big dose of realism based on a quite uncertain future this year,” McDermott told just-food at an industry briefing to announce the results. “We don’t want to take things for granted. I know many of the brands in this room would be forecasting much bigger growth than that but we have to be mindful of costs and the biggest thing that I think that’s going to have an impact will be input costs and labour costs.”
The GBP2.09bn of sales of organic products in the UK includes non-grocery items such as beauty products and textiles. Food and drink account for the lion’s share of the market, with sales reaching GBP2bn last year.
Sales at UK supermarkets rose 6.1% to GBP1.43bn, with McDermott citing feedback from companies certified with The Soil Association, which have pointed to the growing availability of organic products. “Increased range of both fresh and grocery is driving this,” she said. “Licencees are seeing the main supermarkets increasing their listings and innovation is driving growth. More retailers are also including organic in their ranges – Aldi, Lidl and Costco have all either introduced or increasing ranging.”
The independent sector, meanwhile, saw sales climb 6.3% to GBP327.5m. McDermott said bigger ranges and the growth in demand for specialist ingredients were factors in the growth of organic products in the independent channel.
Home delivery sales – within which The Soil Association includes sales from Ocado but not sales made online through the UK’s multiple retailers like Tesco – jumped 10.5% to GBP260.8m. “There are many brands and independents selling direct to the customer and making the most of that opportunity,” McDermott said.
The foodservice channel, the smallest of the four measured by The Soil Association, saw sales rise 19.1% to GBP76.6m.
“Many customers are looking for much of the same values they want in their day-to-day shopping,” McDermott said. Organic is growing on the high street and in the cost sector. The one area it is probably under-represented is grab-and-go.”
Dairy remains the category where the share of organic products is the largest. Organic products accounted for 29% of sales within the category in 2016, with sales up 2% year-on-year.
Sales of organic fresh produce – which makes up just over 23% of the category – rose 10.3%.
However, not each category saw sales increase in 2016. The combined sales of meat, fish and poultry fell 1%, The Soil Association figures revealed. Sales of organic bakery and cake products fell 5.2%, while sales of organic frozen lines dropped 6.9%.
The Soil Association also provided data on the growth of the organic market in selected overseas countries. In Germany, the largest organic market in Europe, sales were up 11.1% year-on-year. In France, sales grew 14.6% in 2016.
The largest market for organic products worldwide is the US, where sales climbed 11% last year, The Soil Association noted.