ANALYSIS - Organic Food Booms as Consumers Seek Safety
Date: 19-Feb-07
Country: GERMANY
Author: Michael Hogan
She is in the front line of a global industry which achieved sales of about US$39 billion in 2006 from US$33 billion in 2005.
"Demand for organic food is excellent," Faika said. "People have lost trust in industrial agriculture."
"They want to do something good for themselves by buying food without poisonous chemicals in it."
This boom was clear to see at Europe's largest organic food trade BioFach, which attracted 2,455 exhibitors from 80 countries to Nuremberg's giant exhibition centre this week.
Slick presentations from marketing professionals in business suits are changing the image of alternative growers.
"Organic food is not about people with beards and sandals any more," European Union Agriculture Commissioner Mariann Fischer Boel said in a speech opening the fair, adding that it was now serious business.
Organic food has moved from niche markets to mainstream supermarkets in Europe and the US, which has dramatically increased volumes on sale.
"The current boom is caused by a combination of loss of trust in conventional farming and the dramatic increase in availability of organic products in the leading supermarket chains," said Swiss organic marketing consultant Toralf Richter.
"In Europe, especially Germany, there have been a series of reports and scandals over recent years about chemical content in food."
"At the same time availability has increased hugely and organic food is available in most supermarkets."
"Following a long period of purely stressing food price, consumers want more quality."
"If people are offered organic carrots next to conventional carrots many will buy the organic. Organic food is becoming a normal part of life, it is not particularly special any more."
German marketing consultant Carsten Schmidt agreed: "The more people hear about conventional farming the less they like it," he said. "The availability of organic food is also becoming so much easier."
"People can make the choice routinely in their supermarkets every week, they do not have to search out special organic shops.
SALES HEADING ABOVE US$40 BILLION
Global organic sales reached an estimated US$39 billion in 2006 from US$33 billion in 2005 and could rise by up to US$6 billion in 2007, said British-based consultant Amarjit Sahota.
About 97 percent of sales are concentrated in Europe and North America.
"The demand is coming from people with the purchasing power to buy organic food, many people are making a choice and are turning to what they see as safer food," Sahota said.
Consumer belief in the safety of organic food compared to conventional farm products coupled with the extra availability were the key factors in the current demand growth, said Helga Willer, of the Swiss-based Research Institute of Organic Agriculture.
"This growth is currently taking place even though we have not had any big food scandals recently," she said.
Faika also said she saw fundamental demand growth in her Hamburg markets. "It is not driven by food scandals," she said. "We saw a big surge in demand with food scandals like mad cow disease, but when the scandal disappears from the newspapers it drops again."
"But in recent years we have seen steady, constant growth."
German analyst Kai Kreuzer said German mainstream retailers have made a major expansion into organic food in the last year. He estimates Germany's retailers sold two billion euros worth of organic food in 2006, up from 1.6 billion euros in 2005.
He estimated total German 2006 organic food sales at 4.5 billion euros (US$5.90 billion), up by 17 percent on the year.
German big-name supermarket chains had decided to dramatically expand organic sales partly because of low profit margins on conventional foods, he said.
"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 hi