Report Overview...

The organic food and drinks market grew rapidly over the first part of the decade, with sales in the US and the nine largest European markets reaching more then $40bn in 2007. However, the rate of growth in the market appears to have slowed in 2008, with the economic downturn of 2009 expected to test consumer willingness to pay more for organic and other ethical products. Nevertheless, demand for organic food and drinks is proving to be resilient in a number of key markets and product sectors, due to a combination of key factors. Firstly, heavy purchasers of organics typically have significantly higher than average disposable incomes and have so far been largely unaffected by the global downturn. Secondly, the price differential between many organic and regular products has contracted steadily in recent years, and this has increased consumer reluctance to revert to cheaper non-organic alternatives.

‘The Evolution of Organic Food and Drinks: Growth opportunities, NPD and the impact of the economic downturn’ is a new report published that evaluates which regions, countries and products are expected to grow in the organic market over the next five years. This report provides an understanding of underlying consumer purchasing triggers as well as an in-depth analysis of NPD to assess current and future trends in organic food and drinks.

Key Findings

...Organic food and drinks outperformed the wider grocery sector in 2008, although the rate of growth slowed in the second half of the year. Organic food and drinks sales in the US and the nine largest European markets amounted to $40 billion in 2007.

Europe has overtaken North America (41%) as the main region for new organic products, accounting for over 45% of launches in 2008. Asia-Pacific accounted for less then 7% of global organic NPD in 2008.

‘Upscale’ overtook ‘natural’ as the leading product tag for new organic products in 2008. The use of the ‘upscale’ tag reflects manufacturers reinforcing the link between organic and premium quality.

Use this report to...

• Quantify the performance of the organic food and drinks markets and their growth potential based on market value and volume sales data between 2007 and 2012 by category, region and product tag.
• Improve the targeting and effectiveness of your NPD strategy using this report’s analysis of product launch data of 8,000 organic products launched globally between 2005-2008.
• Identify key trends that are shaping the organic food and drinks market, and evaluate the trends that are likely to become important over the coming years.
• Understand how companies are looking to maximize the inherent strengths of the organic proposition by developing organic food and drinks with a nutritional benefit and reinforcing the ethical values of organic.

Key issues...

The proliferation of ethical labels and claims across the food and drinks market is generating consumer confusion and doubt over the reliability of claims.

Standardised labelling of organic food and drinks. The new pan-European organic label is set to become compulsory by July 2010. This may increase costs for organic food and drinks manufacturers.

Calls to relax certification criteria have been made by some organic producers, reflecting growing cost pressures. Certifying organisations have not compromised on adherence to strict organic criteria including use of organic feed.

The organic sector’s rate of growth is expected to slow considerably in 2009 and into 2010 and total sales may remain flat in markets like the US, the UK and Germany. Demand for meat and produce is also expected to weaken, with packaged grocery sales holding up well.

Your questions answered...

• How has the credit crunch impacted demand for organic food and drinks during 2008?
• Who are the leading companies/brands in the organic food and drinks market?
• How fast will the organic market grow over the next three years and which regions will experience the fastest growth?
• How will changes in legislation affect NPD in organic food and drinks?
• What are the major trends likely to impact organic NPD over the next three years?
• How can food and drinks manufacturers position their products to capitalize on the key areas of growth in organic food and drinks?

 

Executive summary

Introduction

Organic demand and industry development

Organic food and drinks NPD

Trends and growth opportunities

Future directions

Chapter 1 Introduction

Summary

Introduction

Organics defined

Certification and labeling

The legal framework

Organic labeling

Organic as ethical

Ethical benefits

Natural food, ingredient concerns and animal welfare

Fairtrade and ethical production

Organic production and the environment

Redefining the organic proposition

Chapter 2 Organic demand and market development

Summary

Introduction

Organic market development

The market up to 2007

Organic food and drinks demand: 2008 and beyond

US

UK

Rest of Europe

Long-term development potential

Development of main product sectors

Evolution of the organic industry

Leading independent specialists

US

Europe

Investment by major food manufacturers

Chapter 3 Organic NPD

Introduction

NPD growth

Growth by product category

Organic brand development

Sector analysis

Bakery and cereals

Confectionery

Dairy

Ready meals

Soft drinks

Snacks

Other products

Regional development

Conclusions

Product positioning

Innovation in organics

Chapter 4 Trends and growth opportunities in organic food and drinks

Summary

Introduction

Promoting health benefits of organics

Using nutrient-rich organic ingredients

Antioxidants

Omega-3

High fiber

Organic functional products

Kids’ organic food and drinks

Resilience and the impact of food scares

Ian’s Natural Foods and other specialists

Products for toddlers and younger kids

Vegetable-rich organic foods

Healthy convenience for kids

Maximizing ethical values

Chapter 5 The future of the organic market

Summary

Introduction

Organic sector SWOT analysis

Impact of the recession on demand

Brand resilience in the downturn

Targeting future growth

List of Figures

Figure 1.1: New EU organic logos

Figure 1.2: Ethical benefits of organic food and drinks

Figure 1.3: The organic positioning under threat

Figure 1.4: Price premiums in UK eggs

Figure 1.5: Defining the organic proposition

Figure 2.6: Sales of organic food and drink in leading national markets ($m), 2007

Figure 2.7: Estimated sales of organic food and drink, top five markets ($m), 2008

Figure 2.8: National market penetration of organic food and drink (% value), 2008

Figure 3.9: Share of organic product launches by category, 2005-2008

Figure 3.10: Share of organic NPD by product category, 2005 & 2008

Figure 3.11: Stretching organic brands, Amy’s Kitchen and Green & Blacks

Figure 3.12: New organic versions of major dairy brands, 2008

Figure 3.13: Leading brands in ready meals in Germany: organic versions launched in 2008

Figure 3.14: New organic versions of major snack brands, 2008

Figure 3.15: New organic versions of other category leading brands

Figure 3.16: % share of organic products launched by region, 2005 & 2008

Figure 3.17: Upscale organic food and drink launches

Figure 3.18: Flavor innovation, Rocks Organic and Sapori dell’Oasi

Figure 3.19: Innovative functional ingredient use, Julie’s Organic and Wildwood Organics

Figure 4.20: Healthy-eating organic fruit and vegetable products

Figure 4.21: Organic products with high nutrient levels

Figure 4.22: Selected organic functional products

Figure 4.23: Selected organic brands for kids

Figure 4.24: Organic products targeting younger children

Figure 4.25: Adding and hiding vegetables in organic food for kids

Figure 4.26: Selected organic convenience products for kids

Figure 4.27: Organic products incorporating Fairtrade ingredients

Figure 5.28: SWOT analysis for the organic sector

Figure 5.29: Developing value resilience in the organic sector

Figure 5.30: Focal areas for future growth in organics

List of Tables

Table 1.1: Standard and main organic labels in use, by country

Table 2.2: Sales of organic food and drink in leading national markets ($m), 2007

Table 2.3: Estimated sales of organic food and drinks, top five markets ($m), 2008

Table 2.4: Estimated market penetration of organic products by broad product sector, US and Europe (% value) 2008

Table 2.5: Leading private North American suppliers of organic food and drink

Table 2.6: Major organic company acquisitions, 1999-2008

Table 3.7: Launches of organic versions of selected major brands, 2008

Table 3.8: Top ten tags on organic food and drinks launched, 2005-2008