According to the most recent sales forecasts of Rabobank, the sales of organic food in Western Europe and the United States will grow significantly. The Rabobank expects that the market share of organic food will double to almost 7 percent of the total food market in 10 years’ time. Nevertheless, the Netherlands is somewhere in the middle, relative to the rest of Europe.
Innovation strengthens position
“It is expected that the consumption of organic food will increase by 7 percent every year until 2025. This is roughly three times quicker than the total growth of the food consumption,” says John David Roeg, Senior Consumer Foods analyst of the Rabobank. “Food producers should increase their focus on organic food by developing new products and brands, or by reformulating their existing products that help with the increase of their revenue. This will also support their position as a responsible company.”
Retail has leading role, specialist stores offer quality impulse
The expected growth is preceded by interactions between retailers and specialists. “A large part of the revenue increase is attributable to the supermarkets, simply because they are expanding their shelves or because they have already done that. This will show itself in an increase of sales and consumption. The specialist stores are always the ones that raise the bar with their focus on quality and local production. Whatever they are selling now will in time be sold by supermarkets,” says Sebastiaan Schreijen, Senior Analyst Food&Agri Netherlands, of the Rabobank.
Nevertheless, it has only been a short time since the Dutch food retailers really began to use organic products. Sebastiaan: “In the past years, the Dutch retailers were mostly involved with each other and price competition, not necessarily with showing a distinctive profile. However, I really do see some change in that respect. Enough retailers understand that they cannot compete with discount stores on price and that they have to distinguish themselves in another way.” That does not mean that discount stores are not getting more active within the organic segment. For example, Lidl has certified a significant part of its assortment as organic, with its new store brand Bio Organic. “Now that discount stores are joining the competition again, it sets a new standard. This gives a major impulse to the organic segment, because other supermarkets do not want to be left behind.”
Netherlands in the middle
Even though the Netherlands has exerted itself with respect to organic food, it only has a position somewhere in the middle of all European countries. “There are many reasons for this. In general, food in the Netherlands is not expensive. The consumer is mainly raised with the idea that food should be cheap. This means that – because organic food is relatively expensive – the price difference rapidly increases. In countries such as Switzerland, Denmark, and Sweden, it really helped that the leading retailers rallied behind organic food.”
Competition between quality marks
Some product categories compete with the organic quality mark. “It is obvious that there are other labels that have successfully positioned themselves and that they compete with organic quality marks. The consumers state that they are often looking for healthy, reliable food,” Sebastiaan observes. That does not mean that an organic quality mark is a determining factor. “There are several claims that have been taken by other quality marks, such as the Better Life-mark. These quality marks do not meet the requirements that the organic quality mark requires, but they are very close. That is ‘good enough’ for most customers. In the United Kingdom, we can see this phenomenon as well. That is why the market share of organic products is relatively low over there.”
For more information:
John David RoegRabobankjohndavid.email@example.com