Is Organic Food Set to Become a Luxury Consumers Can't Afford?

[S.Annadana]

Posted on: Wednesday, 6 August 2008, 03:00 CDT

By Bokaie, Jemima

As the credit crunch bites, experts are warning that consumers worried about rising costs have lost their appetite for organic food. Despite soaring 70% since 2002 to a value of Pounds 1.5bn last year, according to Mintel, sales of organic food have slowed as consumers defect to discount grocers.

The organic sector has also been hit by consumer concerns about food miles. Only 66% of organic produce in supermarkets last year was British, according to reports.

A long-term shift could affect sales of organic brands such as Duchy Originals and home-delivery service Abel & Cole. Organic superstore Whole Foods Market, meanwhile, is repositioning as a shop for everyday goods.

Supermarkets, too, are focusing their own-brand efforts on standard ranges as consumers trade down. Tesco is plotting to roll out an own-label low-cost brand and, along with Asda and Morrisons, it has slashed grocery prices.

Aldi, which has grown its share of the supermarket sector to almost 3%, equalling Waitrose, credits its success to a simplified offering of 1000 own-brand lines and 15 brand names, compared with an average 25,000 lines in mainstream supermarkets.

Verdicts

'Decline in demand among less committed organic consumers may be inevitable, but it is more likely to be a plateau than a reverse.'

Patrick Holden

Director, Soil Association

'The organic boom was a marketing phenomenon. If consumers were really concerned about provenance, it wouldn't matter whether times were tight. Terms such as "ethically sourced" have confused the debate; in a downturn, consumers will refer back to simple terms such as price.'

Simon Threadkell

Creative director, Fitch

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Organic food: consumers defecting to discount retailers

Copyright Haymarket Business Publications Ltd. Jul 16, 2008

(c) 2008 Marketing. Provided by ProQuest Information and Learning. All rights Reserved.



Source: Marketing