Organic Foods: Reaching for the converted

Suddenly everyone wants organic food, and supermarkets are already gearing up to meet the increased demand.

Organic foods are suddenly big business and every major supermarket is making its push into the sector. Organic bread, milk, pizza, chips, coffee, sandwiches, beef, lemons and even gin (though not yet the tonic) are finding their way onto the shelves, often in special sections occupying prime front-of-store retail space. This, believe analysts, is the food market's prime growth area for the next year or two ahead. Competition is acute and no one can afford to be left behind.

As the market for organic food and drink in the UK rises towards the pounds 1bn-a-year mark, Tesco, Waitrose, Sainsbury's, Safeway, Asda, Iceland and Marks & Spencer are all rolling out significant organic initiatives that will increase product choice and turnover.

This October, Sainsbury's will be taking 20 per cent off organic groceries and increasing its organic range to 500 products in its 80 top stores - compared with just 10 products in 1986 - while a core of 50 products will be in all its 416 stores in the UK. This reflects the increase in its organic sales to pounds 2.5m a week, a 30 per cent increase since January.

Waitrose, which has been in the organic market continuously since 1983, and currently holds the title as the leading supermarket in the organics field, already has 500 product lines, and boasts the highest organic sales penetration in the UK through its 117 branches. And it is about to launch an organic home-delivery scheme, offering fixed-price salad, vegetable, fruit or mixed content boxes for nationwide delivery.

"The resurgence in organic started three years ago," says Waitrose agronomist Alan Wilson. "People are simply becoming more aware of how their food is sourced and want to know where it comes from, and demand will only grow as society becomes more food literate. Our organic grocery sales have tripled in the last year, with baby foods now reaching 50 per cent. Twelve per cent of out total fruit and vegetable sales are organic as are 10 per cent of our dairy lines. Our customers can now buy nearly everything in organic."

The strength of Marks & Spencer in foods has always been in sandwiches and ready meals, and this is its main focus as it adds 100 organic products to its range, nearly quadrupling its size. M&S famously got out of the organic market in the early Nineties, but it says the market is "a lot stronger now" and expects it to stay that way.

Asda is starting from a rather lower base - until September, only 96 of its 229 stores contained organic products. Now they are being introduced into every store in the country. "All the main food areas are represented," said a spokesman. "Over half of our organic sales are in fruit and veg but we want to spread into other grocery products and we will extend organics into our own label next year."

Iceland is also making a major foray into organics with 50 "everyday" products such as bread, milk, frozen chips, pizza and digestive biscuits to be brought into its 763 stores by Christmas.

"We are probably behind on organic food," concedes managing director Russell Ford. "But we aim to catch up with a vengeance next year. We see this as very, very important, the major growth area in the food business."

Iceland's problem has been that most of its customers are unable to pay hefty price premiums - which, its research shows, typically run at 50- 60 per cent. "Our customers told us they wanted organic food but they couldn't afford it," says Ford. "So our policy is to charge little or no organic premium - no more than 10 per cent more than the non-organic equivalent. We believe that customers should be able to eat natural food, and simply having it on shelves does not do that - it has to be affordable."

But what does all this enthusiasm for organic food by multiple retailers mean for growers and producers? Competition for supply is every bit as acute as that for customers, and most organic food on supermarket shelves has to be imported to meet demand - 70 per cent on average, mainly from Belgium, Holland, Denmark (for dairy products) and other EU countries.

But there is room for the UK's organic farmers to do well, too. Wheat, milk and fresh vegetables all win premium prices at the farm gate - in some cases as much as double the conventional price. The demand is also giving record numbers of farmers the confidence to commit to the three- year organic conversion to organic.

Simon Tomlinson, chairman of both the Organic Livestock Marketing Co- operative and the Organic Milk Suppliers Co-operative, says that suppliers will have to stick together if they are to balance growth in supply and demand - and therefore maintain prices - over the long term. The alternative is a "devastating slump" a few years ahead that could knock the organic movement into reverse.

Stores such as Waitrose, Sainsbury's and to a lesser extent Safeway have made long-term commitments and agreed prices with the organic co- ops for years ahead, giving much-needed stability to the market. Waitrose's Organic Assistance Scheme gives suppliers who wish to convert to organic production both financial help and a guaranteed market, and Sainsbury's deal with OMSCo guarantees 29.5p a litre for organic milk for a rolling five-year period as production rises from 30 million litres in the current year to 155 million litres in 2003-04. Waitrose and Sainsbury's are also directly supporting both salmon farmers in Orkney, and English apple growers through the difficult conversion period.

However, Tomlinson fears that some new entrants into the organic market, who find the limited volumes of produce are already committed to established players, threaten to leave producers high and dry. "A lot of buyers are offering high prices for scarce product, but the danger is that they will fragment the marketing efforts of producers."

Low-price retailers such as Iceland, Tesco and Asda bring another kind of danger, Tomlinson believes, by using low prices to fuel demand too far in advance of supply, creating an unreal market that will ultimately let down consumers. "You have to use the price mechanism or the product will simply run out by 9am every morning," he says.

Sport
footballHe started just four months ago
News
Nigel Farage celebrates with a pint after early local election results in the Hoy and Helmet pub in South Benfleet in Essex
peopleHe has shaped British politics 'for good or ill'
News
One father who couldn't get One Direction tickets for his daughters phoned in a fake bomb threat and served eight months in a federal prison
people... (and one very unlucky giraffe)
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
ebookNow available in paperback
ebooks
ebookPart of The Independent’s new eBook series The Great Composers
Arts and Entertainment
(L-R) Amanda Peet as Tina Morris, Melanie Lynskey as Michelle Pierson, Abby Ryder Fortson as Sophie Pierson, Mark Duplass as Brett Pierson and Steve Zissis as Alex Pappas in Togetherness
TV First US networks like HBO shook up drama - now it's comedy's turn
News
i100
Travel
Pool with a view: the mMarina Bay Sands in Singapore
travel From Haiti and Alaska to Namibia and Iceland
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

    Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

    Ashdown Group: Senior Marketing Executive- City of London, Old Street

    £40000 - £43000 per annum + benefits: Ashdown Group: Senior Marketing Executiv...

    Ashdown Group: Marketing Manager

    £40000 - £43000 per annum + benefits: Ashdown Group: An international organisa...

    Ashdown Group: Internal Recruiter -Rugby, Warwickshire

    £25000 - £30000 per annum: Ashdown Group: Internal Recruiter -Rugby, Warwicksh...

    Day In a Page

    Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

    Aren’t you glad you didn’t say that?

    The worst wince-and-look-away quotes of the year
    Hollande's vanity project is on a high-speed track to the middle of nowhere

    Vanity project on a high-speed track to nowhere

    France’s TGV network has become mired in controversy
    Sports Quiz of the Year

    Sports Quiz of the Year

    So, how closely were you paying attention during 2014?
    Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

    Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

    From Armstrong and Miller to Pointless
    Sanchez helps Gunners hold on after Giroud's moment of madness

    Sanchez helps Gunners hold on

    Olivier Giroud's moment of madness nearly costs them
    A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

    Christmas without hope

    Gaza fears grow that conflict with Israel will soon reignite
    After 150 years, you can finally visit the grisliest museum in the country

    The 'Black Museum'

    After 150 years, you can finally visit Britain's grisliest museum
    No ho-ho-hos with Nick Frost's badass Santa

    No ho-ho-hos with Nick Frost's badass Santa

    Doctor Who Christmas Special TV review
    Chilly Christmas: Swimmers take festive dip for charity

    Chilly Christmas

    Swimmers dive into freezing British waters for charity
    Veterans' hostel 'overwhelmed by kindness' for festive dinner

    Homeless Veterans appeal

    In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
    Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

    'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

    Yazidi girls killing themselves to escape rape and imprisonment
    Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

    Ed Balls interview

    'If I think about the deficit when I'm playing the piano, it all goes wrong'
    He's behind you, dude!

    US stars in UK panto

    From David Hasselhoff to Jerry Hall
    Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

    Grace Dent's Christmas Quiz

    What are you – a festive curmudgeon or top of the tree?
    Nasa planning to build cloud cities in airships above Venus

    Nasa planning to build cloud cities in airships above Venus

    Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect