Supermarkets are missing out on £200 million in sales of organic food and drink as shoppers increasingly turn to online and independent retailers for better choice and convenience, a new report has warned.
After a tough time in recent years, the organic grocery sector is once again in healthy growth, with shoppers spending an extra £1.73 million a week on organic products last year and total sales up 4.9% to £1.95bn, the Soil Association’s 2016 Organic Market Report revealed today (23 February).
Supermarkets saw organic sales increase by 3.2%, but were outpaced by box scheme/online retailers and independent high street retailers, which saw sales soar 9.1% and 7.5% respectively.
Consumers were buying more organic online because they realised they “cannot get a good comprehensive choice of organic at supermarkets” and are increasingly motivated by the “convenience of home delivery and online ordering,” the report said.
It pointed to the success of recipe-based box schemes from dedicated organic brands like Riverford and Abel & Cole, as well as companies that use some organic produce such as Gousto and Hello Fresh.
Meanwhile, the shift away from big weekly shop towards more frequent, smaller shops in local stores has boosted organic sales through independents on the high street, particularly those with specialist ranges such as Planet Organic, As Nature Intended and Wholefoods.
“A decade ago, supermarkets had around 80% of organic sales, now they have less than 70%. This equates to a £200 million sales switch,” the report claimed.
Supermarkets still dominated organic in terms of total sales, amounting to £1346m, compared to £236m for box schemes/online and £308m for organic.
Ocado, Sainsbury’s, Tesco and Waitrose were the biggest organic retailers, with over 80% of the total supermarket sales of organic between them.
But while Ocado boosted its organic range by 26% last year, others cut back organic lines as part of wider range rationalisation.
This could force more people to change where they shop for organic in the future, warned the report.
The anticipated national roll out of Amazon Fresh and Amazon Pantry across the UK would “open up another channel for organic brands”, it added.
Organic growth
After growing for three consecutive years, organic has a 1.4% share of food and drink and is now significantly outperforming the non-organic grocery market, where sales fell 0.9%, the report claimed.
The top six performing grocery categories last year were jams and spreads (+28.1%), fish (+25.1%), oils and vinegar (+17.5%), bananas (+14.4%), poultry (13.1%) and tea (12.8%). Sales of organic health and beauty products were up 21.6%.
The “sustained interest” in organic was being driven by “young and social conscious millennieals” with strong social, ethical and environmental values, said the report.
“This is a hugely exciting time for the organic sector, with the market set to break through the £2 billion mark in 2016 and reach levels seen before the recession,” said Martin Sawyer, CEO of Soil Association Certification.
“Thanks to the growth of online, it is now possible for retailers to connect consumers with the broadest choice of organic products.”
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