The Dutch organic food industry is to be given a boost by the restructuring that is occurring at the retail sector. The reorganisation of the Laurus Group supermarkets is to widen availability of organic foods and put competitive pressure on Albert Heijn’s market domination.
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The retail giant, Albert Heijn, has attained market leadership in the organic food industry since it launched its “AH Bio” label in 1998, and it now stocks organic foods in all its 670 supermarkets. It has been unchallenged due to its domination of the food retail sector. It has been described by some industry participants as having a reactionary attitude towards organic foods as it initially introduced them in response to consumer requests.
The Laurus Group is reorganising its eight chains of supermarkets under one flagship, Konmar. The number of Konmar supermarkets will expand from 30 in 2000 to 800 in 2002 due to supermarkets like Edah and Super de Boer coming into the fold. Konmar has been widely regarded as the pioneer in the organic food industry, however its small number of retailers has limited its market share. It first started stocking organic foods as early as 1991.
The reorganisation of Laurus supermarkets is currently taking place in the Netherlands. The new Konmar supermarkets will all stock organic foods and a private label is to be introduced that will rival that of Albert Heijn. The company has also entered a multi-million guilder television advertising deal with SBS Broadcasting SA to promote the new chain.
Further competitive pressure on Albert Heijn is being put from the organic food shop sector. Organic food shops are also being reorganised in which the three previous chains of Natuurwinkel, Groenewinkel and Gimsel are coming under the Natuurwinkel chain. In this process, over 100 organic food shops are being refurbished and standardised into a consistent retailer format. Organic food shops were the principal marketing channels for organic foods prior to the entry of Albert Heijn.
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By GlobalDataOrganic food sales have risen sharply in recent years in most European countries, however the Dutch organic food industry has shown much promise but has failed to deliver for a number of years. Several attempts have been made to revive the industry, which include government incentives and marketing programmes. With organic farmland at 1.39 percent of total farmland, and organic food sales stagnating at 2 percent of total food sales, the organic food industry has become a laggard compared to others in Europe.
Organic Monitor cites the intensive nature of the agriculture industry as the major barrier to industry development. This is responsible for resistance at the farmer level to convert to organic farming, and it also generates exceptionally low prices of conventional foods, which raises the price premium for organic foods.
About Organic Monitor
Organic Monitor provides strategic research & marketing consulting on the international organic food industry. International consultants continuously track the organic food industry for market trends and developments. Visit us at www.organicmonitor.com
