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Cost of Living Crisis and Organic

Cost of Living Crisis and Organic

With the cost of living crisis very much front of mind, naturally there will be concerns around future prospects for the organic market.  

How is the organic market performing?  

The short answer is that we are not immune to wider economic forces and data for multiple retail suggest that for first time since 2008, organic food and drink sales are in slight decline. The good news is that this same data shows the decline in organic food and drink is currently only half that of non-organic. The trend is not unique to the UK market, with other EU markets reporting returns to 2019 level of growth.

Why are things slowing down in supermarkets?  

The decline in multiple retail sales is believed to be partly due to wider economic factors but is also a consequence of  year-on-year comparisons. The incredible sales growth periods seen during lockdown were always going to be tough to follow. Other factors include a rebound from Covid stockpiling and less at-home prep as pre-covid life returns.  

Challenges around the cost of organic  

Organic can be more expensive but not always. Price comparisons have shown that in categories, particularly supermarkets' own label, the price difference can be absent or small. Whilst cheaper food may not be costing in its full impact,  it’s clear that some consumers will be facing real challenges with household budgeting and  may either trade across to other offers they believe to also be sustainable or be forced to compromise their values altogether.

Are there more reasons to remain positive?   

Although this will be a tough period for many, there are reasons to remain confident. Organic has seen good growth over the last 11 years and history indicates that despite periodic downturns the market has quickly returned to growth.    

Supermarkets only account for two-thirds of all sales of organic and data from some of our licensees suggests that post-Covid and post-Brexit, organic may be performing better in other channels like online, out-of-home and export.   

In addition, demand for sustainable products among consumers has significantly increased since the last downturn. Consumer research shows that health and sustainability trends are here to stay with 60% of consumers predicted to be ‘eco-actives’ by 2030. Organic is no longer seen simply as a premium product but increasingly as a sustainable offer and retailer strategies increasingly recognise this.   

What are we doing?  

As well as continuing to provide campaign , marketing and trade support to our licensees, we’ll be monitoring the situation and are staying in touch with data providers, retailers and our licensees  to ensure there is a good understanding of the challenges and opportunities.  We’ll also continue to provide insight to trade press, an examples of which can be found in the recent focus on organic and cost-of-living published by The Grocer on 16th July.