Mainstream German Retailers Move into Organic Food
Date: 16-Feb-07
Country: GERMANY
Mainstream retailers sold an estimated two billion euros worth of organic food in 2006, up from 1.6 billion euros in 2005, Kai Kreuzer told a conference at the BioFach organic food trade fair.
He estimated total German 2006 organic food sales at 4.5 billion euros (US$5.91 billion), up by 17 percent on the year.
This means big established supermarket chains are becoming the dominant force in Germany's organic food market. Mainstream chains were continuing organic expansion in 2007.
Germany's organic food sector was becoming increasingly moulded by marketing professionals and many small shops set up in past years by ecologists were likely to close.
"Only five to 10 years ago organic food sales were largely confined to a small number of ecologically-minded people," he said. "Now about 80 percent of the population buy at least some organic food."
Organic production had moved beyond the basic range of foods like butter, milk and potatoes offered a few years ago. About 35,000 products now carry Germany's official organic symbol.
German big-name supermarket chains had decided to dramatically expand organic sales partly because of low profit margins on conventional foods, he said.
Germany has some of Europe's cheapest food, largely because of constant price wars among discount supermarket chains.
"Retail profit margins on conventional food are around two percent," he said. "It is unclear how much margins are on organic food but they are considerably higher."
"Raising organic sales is also part of a public relations campaign by retailers, especially discounters."
Greenpeace and other pressure groups have in past years repeatedly published surveys showing cheap fruit and vegetables sold by discounters had very high levels of pesticides, which were embarrassing to supermarkets and hit their sales.
Ironically, Germany's organic food industry had tried to cold-shoulder discount supermarkets, with wholesalers refusing to supply them.
When the discount chain Lidl introduced organic milk, it had to buy it from Denmark, he said.
But discounters had now developed sufficient sources to include organic food in their high-volume outlets.
Organic industry resistance to discounters had now given way but there was still mixed opinion about their expansion into the sector, he said.
"Some people believe that the more organic food which is sold the better for the industry," he said. "Others are concerned that it is only a matter of time before discounters use their market power to force the industry to accept big price cuts, as they have with producers of conventional food."
