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Supermarkets blamed for organic market slump

1 commentBy Dan Colombini , 16-Jan-2012
Last updated on 20-Jan-2012 at 09:15 GMT

Organic food firm What on Earth's decision to trade with independent retailers has resulted in a strong 2011 performance
Organic food firm What on Earth's decision to trade with independent retailers has resulted in a strong 2011 performance

The decision by UK supermarkets to cut shelf-space for less profitable products has hit sales in the organic food market, according to industry representatives.

The organic food sector have hit out at the large retailers for a lack of in-store support and poor marketing of products, which they feel has resulted in a slump in the market.

Jeremy Jaffé co-founder and sales director of organic food firm What on Earth, told FoodManufacture.co.uk: “As is so often the case with supermarkets, everything is dictated by profit. If you don’t make the profit, you’re out. That is the simple formula.

“Supermarkets tend to fill the stores with what they feel will sell. They do not view organic food as a big seller as people who want them tend to go elsewhere. Organic food is a mind-set and quite an earthy industry.”

Price cuts

This lack of support had lead to a “general mood” that the organic market is suffering as a result, according to Jaffé.

His thoughts were echoed by the Soil Association, which said that huge price cuts at the multiples had drawn customers to cheaper, “less ethical products".

A spokeswoman told FoodManufacture.co.uk: “Supermarkets cutting shelf-space for organic products has certainly been a factor and has negatively impacted the market.

Huge price cuts in non-organic products, which tempted consumers away from more ethical alternatives was also a factor. The actions of supermarkets have not always been helpful.”

The Soil Association is currently working with multiple retailers who account for around 72% of the organic market. It also holds a twice yearly Retailer Organic Group where independent retailers come together to discuss issues in the market.

The spokesmwoman said the issue was "complex" and that the current economic climate had also hit the industry, as consumers become "more concerned with price".

Under pressure

The criticism was dismissed by the British Retail Consortium (BRC), however, which described the accusations as “entirely wrong”.

Richard Dodd, spokesman for the BRC told FoodManufacture.co.uk: “I accept that organic producers are under pressure but it is entirely wrong to blame supermarkets.

“Tough economic conditions have had an impact on organic producers certainly, and there is no question that many customers are now more concerned with price.”

UK supermarkets were currently the biggest sellers of organic produce and responsible for more sales than any other retailers, according to Dodd.

Ultimately the overwhelming influence on shelf-space is driven by customer demand.”

Jaffé believed that What on Earth’s loyal customer base of smaller, independent stores is the reason for the firm posting positive results for 2011, despite the general downturn in the market.

The firm claimed to have “generated high revenue” and delivered over half a million products to its customers last year.

Jaffe added: “We work with small, high end suppliers and I think this is why we have managed to buck the trend. It has offered some protection against the rising food prices that are affecting supermarkets across the country.

“Our customers have very loyal audiences so don’t need to worry about constantly keeping their prices low to attract cash-strapped consumers. Our products sell in the stores we supply because they aren’t available cheaper in any supermarkets.”

What on Earth is an organic food manufacturer, based in Battersea, South London. The firm claims to produce a range of food products, which are high in vitamins and mineral but that contain no gentically modified organisms, additives or pesticides.

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1 comment (Comments are now closed)

Dilution of eco-branding

While we can blame the supermarkets for many things, hasn't the addition of other eco-brand labels had much to do with this?

The addition of the Red Tractor and LEAF marques have given the consumer cheaper alternatives and they still think they are buying something with some values: be it true or not.

Do you blame the supermarkets for this, providing more choice, the consumers for lower their standards (even if they don't know it) or producers for diluting their premium offers?

We could twist these statements whichever way we want. But it's not all Tesco's fault.

We need to be more transparent as an industry and educate consumers about what they are eating.

Anyone know how the trends for organic, LEAF and Red Tractor all combine over the past 10 years?

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Posted by Tom Beeston
19 January 2012 | 11h17

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