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UK Recession Report - Organic Food Sales

6th April, 2009

UK sales of organic products present a mixed picture, according to a major report published by the Soil Association today .

Organic food sales have been hit across all sectors, as consumers tighten their belts in the face of the economic downturn. Although overall UK sales of organic products increased by 1.7% in 2008 to over £2.1 billion, this statistic must be seen in the context of overall food price rises rather than sales volume increases.

Peter Melchett, Soil Association policy director said,

"This has been a really difficult period for all retail, and organic sales have suffered along with the rest of the economy. This report describes a very mixed picture as consumers react to the financial crisis. But those consumers who are committed to organic products appear to be staying loyal. This shows the underlying resilience of the organic market, which we believe will grow again once the economy picks up."

The Soil Association’s Organic Market Report 2009 shows there has been a sharp fall in sales of certain products, including fruit, bread and bakery products, soft drinks and prepared foodstuffs, although even in these sectors, some brands are bucking the recessionary trend. In tandem there has been dynamic growth in sales of organic food through farmers’ markets where figures increased an estimated 18.6% to £23.7 million last year.

Asda showed the strongest growth of the multiple retailers, increasing sales of organic products by 25% in 2008 and its share of the market from 8% to around 10%. Tesco is still the market leader in terms of value despite a fall in organic sales of 9.9% in 2008. Other smaller areas of organic production such as textiles and health and beauty products have also experienced very significant growth.

Organic shoppers, like all consumers, have been buying fewer premium products and prepared foods, and switching to lower-cost retailers. There is also a focus on cutting waste and cooking from scratch - sales of organic home cooking ingredients increased by a remarkable 13.5% in 2008, while sales of organic prepared foods dropped sharply.

The report shows that there is a core of consumers who may be cutting back but are determined to stick to their organic principles. Thirty-six per cent of these committed organic consumers say they expect to spend more on organic food in 2009, and only 15% expect to spend less. Animal welfare issues attracted a high public profile in 2008 and sales of organic milk, cheese, some meatand poultry grow by 10.6%, 11.5%, 13.3% and 17.7% respectively, demonstrating that where the benefits of organic production are understood commitment remains firm among ethical consumers.

Research shows that over a quarter of consumers who do not currently buy organic food ‘would like to know more about organic products than they do’ suggesting potential to broaden the market still further in the future.

Whilst volatility in the organic market looks set to remain in 2009, environmental and political challenges to our current food and farming systems will demand that we develop sustainable production methods in the future. The government has agreed to cut greenhouse gas emissions by 80% by 2050. Such cuts can only be achieved in agriculture by deriving fertility from sunshine and organic matter – as organic farmers do – rather than from fossil fuel-based chemical fertilisers.

Additionally, rising fossil fuel costs now and in the long term mean the price differential between organic and non-organic products is diminishing (and is in some cases is non-existent, where consumers buy directly from producers), offering further strong potential for future growth in the organic market.

Helen Browning, Soil Association director of food and farming:

"Organic farms like all business face uncertainty and volatility. But there are still significant opportunities in some areas - fruit and arable for instance and in developing genuinely local and regional supply networks. Collaboration will also be key to the success of many farm businesses."

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