The Organic Consultancy

Exciting Times for Organic Food

by Simon Wright

This article originally appeared in the May/June 1997 edition of International Food Ingredients and is reproduced by kind permission of the Editor, whose contact details are:

• telephone +44 171 861 6039
• fax +44 171 861 6223
• web site www.dotfood.com

1. About the Author

Simon Wright is a Consultant Food Technologist specialising in the development of organic food and drink. He is the editor of the Handbook Of Organic Food Processing and Production, published by Blackie Academic.

2. Introduction

IFI last reviewed the area of organic foods in 1994. The definition of organic food given then still holds; "the product of a farming system which avoids the use of man-made fertilisers, pesticides, growth regulators and livestock feed additives. Instead the system relies on crop rotation, animal and plant manures, some hand weeding and biological pest control". This definition serves to distinguish the use of the word ‘organic’ in this context from its more traditional scientific meaning as a description of a carbon-containing molecule. ‘Organic’ is the description used only in English-speaking countries; in other markets ‘Bio’ , ‘Oko’ or ‘Eco’ are the more usual descriptions.

3. Consumer Attitudes - why buy organic ?

In the UK the Consumers Association interviewed over 2000 consumers to find out why they bought organic food. Table 1 summarises the results.

Table 1. Reasons given by UK consumers who buy organic food

Consumers agreeing with statement	Statement
83%	To avoid pesticides
75%	Because it’s kinder to the environment
70%	Worried about intensive rearing of animals
68%	Better taste
40%	Support local farmers
36%	Worried about BSE

Another survey was carried out by the polling group MORI in the UK. MORI found that "six out of ten people would chose organic food if it was easily available and cost no more than conventional food". Among the reasons for buying organic food "health was by far the most important, 46% of those buying organic food gave it as their primary concern... 40% claimed that organic food tastes better." The MORI report gives a profile of the typical organic food consumer as being social grouping AB, age 25-34, and shopping at one of the two most upmarket supermarkets in the UK (Sainsburys or Waitrose).

4. Market Growth

Frost & Sullivan have estimated that the 1996 market for organic vegetables in Europe is worth $200 million, and forecast that it will reach $510 million per annum by the year 2003. Germany is the dominant market for organic vegetables at 18% of overall revenue, followed by Denmark at 16.6% and the UK at 14%. Over the period to 2003 Germany is expected to decline to 16.4%, France increasing to 15.9% with the UK increasing to 15.1%. "The high market growth in France and the UK stems from increased retail availability, the result of a more active role of the major supermarkets in the market". The European market for organic meat and dairy products is currently valued at $1004 million per annum, with Germany accounting for a third of all sales. By 2002 the market is estimated at £3100 million per annum.

Frost & Sullivan conclude "the presence of a major supermarket is vital to make the foods widely available to the public ... marketing support is a crucial factor for it stimulates consumer demand by raising public awareness of organic foods." In the UK the supermarket Safeway report that "Only 2% of the fruit and vegetable trade is organic but it accounts for 80% of our telephone enquiries". Safeways supermarket rival Sainsburys have paid for ten of its conventional fruit and vegetable suppliers to attend a conference on organic farming. The major UK supermarket Tesco have cut the price of organic fruit and vegetables to match that of conventionally grown produce and reported a significant increase in sales, estimated at 500%. However 70% of these sales are imported as only 0.3% of UK farmland is currently certified as organic, compared to 12% of farmland in Austria. Table 2 gives the distribution of organic farmland throughout Europe, and shows some dramatic increases over a ten year period.

Table 2. Certified organic and in-conversion land area in Europe 1986-1996 (000 hectares)

Country	1986	1996
Austria	7.0	250
Belgium	0.7	5.0
Denmark	4.8	42.1
Finland	1.2	44.7
France	50.0	97.0
Germany	24.8	310
Greece	0	4.5
Ireland	1.1	11.1
Italy	5.5	204
Luxembourg	0.4	0.6
Netherlands	2.7	13.5
Portugal	0.3	10.2
Spain	2.5	28.1
Sweden	6.5	105
UK	7.0	47.9

Source; Dr Nick Lampkin, Welsh Institute of Rural Studies
quoted in The Grocer 8.2.97

The Danish Environment Minister Svend Auken has predicted that organic food will account for 20% of all food sold in Denmark by the year 2000. The Danish supermarket chain Irma now only stocks organic milk, citing lack of demand for non-organic milk. Major Dutch chains such as Albert Heijn and Konmar are planning to expand their existing organic foods sector. Albert Heijn limits the price differential between organic and non-organic products to 50%. Konmar plans to offer an organic alternative to every major food group, and to give organic products more shelf space than mainstream products. The Dutch government is embarking on a programme to increase organic foods market share from less than 1% of total food consumption to between 6 - 10% and has agreed to pay US$33 million to stimulate production, distribution and sales of organic food. The French company La Vie has recently entered the Belgian market with a range of 150 organic food products, available through GB, Nopri, Unic and Biggs supermarkets. The range includes muesli, cornflakes, jams, biscuits, chocolate, coffee, yoghurt, cheese, butter, pasta, rice, ice-cream and ready meals.

One area of particularly strong sales growth is organic baby food. Most European supermarkets have at least one brand of organic baby foods, with many having both branded and own-label formats. The principal UK producer Baby Organix commands sales of up to 30% of babyfood sales in some UK supermarkets, whilst the German organic baby food manufacturer Hipp claims in its trade advertising to be ‘the largest manufacturer of organic products in the world’.

5. Legislation

In 1991 the EU passed a Regulation which lays down in detail how food must be produced, processed and packaged to qualify for the description ‘organic’ . The regulation also specifies detailed criteria for the inspection and subsequent certification of food producers and processors.

The significance of this Regulation should not be underestimated. By harmonising organic legislation throughout the EU the Regulation has established a level playing-field for manufacturers. This in turn has lead to easier transfer of organic ingredients and finished organic foods within the EU. The Regulation also provides for the import of products from outside the EU, albeit in a rather bureaucratic manner. After some initial difficulties the Regulation has been welcomed by the Organic Food industry as it has enabled consumers to buy organic produce with confidence, and has reassured producers and processors that their market will not be contaminated by fraud.

A major amendment to the original EU Regulation was made in 1995. This amendment divides organic processed foods into three categories, depending on the proportion of organic ingredients present;

Category 1. Organic

Product contains a minimum of 95% organic ingredients by weight. Product can be labelled ‘Organic’ eg Organic Cornflakes

Category 2. Special Emphasis

Product contains 70 - 95% organic ingredients by weight. Product can be labelled ‘Made with Organic Ingredients’ eg Tomato Ketchup made with Organic Tomatoes. The total percentage of organic ingredients used in the product must be listed in the format.

Category 3. Transitional

Product contains 70 - 50% organic ingredients. Valid only till 31/12/97 but in all other respects as per Category 2 (Special Emphasis). From 1/1/98 organic multi-ingredient foods will by law have to contain a minimum of 70% organic ingredients to permit any mention of the word ‘organic’ on the product label.

From the perspective of the food ingredient manufacturer Regulation 2092/91 and its subsequent amendment places some unusual restrictions on the ingredients that a manufacturer of organic foods can use. Annex VI of the Regulations contains a list of the only ingredients which can be used to make up the non-organic ingredients in an organic food. These comprise 40 ‘Non-Agricultural’ ingredients, 30 processing aids and a further 49 ‘Agricultural’ ingredients. Organic regulations also specifically exclude the use of Genetically Modified ingredients in organic food, which in recent times has been a considerable selling point to consumers who wish to buy foods which are guaranteed to be free from Genetically Modified ingredients.

6. Role of Traders

Recent growth in the organic ingredient market has meant that virtually every ingredient is available in organic form. With the growth of the organic ingredient market has come the development of traders in these organic ingredients. Typically organic ingredient traders buy from farmers, co-operatives and factories; frequently they are involved in setting up and financing organic agricultural projects. The advantage of using a trader is that it permits the organic food manufacturer to contract for their future organic ingredient requirements and also permits the manufacturer to minimise the number of suppliers involved, a form of ‘one-stop shopping’.

7. Case Study : Green & Black’s Organic Chocolate

The Green & Black’s Organic Chocolate brand was launched in 1991; since then it has become well-known throughout the food industry with listings throughout UK health-food shops, UK multiple retailers and and an export presence throughout Europe and the USA. The development of the Green & Black’s brand provides a case study of organic success.

The initial launch was a single product, a 100g Dark Chocolate bar made with 70% cocoa solids and using organic cocoa beans. The product was successful immediately, largely because it combined a persuasive organic message with excellent taste and attractive packaging. In 1993 an Organic Milk Chocolate bar was added, followed by a Fair Traded bar (Maya Gold), an Organic Mint Chocolate bar and most recently a range of 20g mini-bars.

In 1996 it was decided to expand the Green & Black’s brand into other areas. After a trial launch of organic chocolate truffles and novelties 1997 saw the launch of Green & Black’s Hot Chocolate, Green & Black’s Chocolate Ice Cream and even Green & Black’s Easter Eggs. A joint branding exercise with the specialised organic baker The Village Bakery has lead to the development of a range of baked goods, including Organic Chocolate Almond Cake, Organic Florentines and Organic Pain Au Chocolat. Most recently Green & Black’s have launched Organic Dark Chocolate and Organic Milk Chocolate couvertures in 25kg bags in response to demand from other manufacturers.

The development of the Green & Black’s range illustrates that to be organic alone is not enough; to encourage repeat purchases products must taste good, be attractively packaged and be presented in formats appropriate to end use. Whilst organic products inevitably attract a price premium the experience of Green & Black’s is that increased sales lead to economies of scale and a virtuous circle is created, where cost of production can be reduced without compromising product quality or organic integrity. The widespread commercial success of Green & Black’s and other well-marketed organic brands suggests a healthy future for organic processed foods and the organic ingredients they contain.