News Analysis: An unexpected advantage

Organic food is suffering, but observers suggest opportunities may emerge from the downturn.

Last week, Marketing revealed that rising costs and an accompanying consumer shift away from premium and mainstream supermarkets to their discount rivals could mean that the appetite for organic food is on the wane.

The Soil Association meanwhile claimed that this marked a plateau rather than a decline and that the sector will, in fact, grow 10% this year.

Nonetheless, the economic down-turn appears to have split organic consumers into four groups: the wealthy who are unaffected by the credit crunch; committed organic shoppers who refuse to defect in the face of consumer slowdown; the less committed; and lower-income customers who are budget buying.

The challenge for organic brands and retailers offering organic ranges lies in convincing the two groups to stay organic as they tighten their purse strings.

There are other obstacles the organic food market faces - organic brands, which can often cost up to 50% more than regular products, face non-economic consumer concerns such as the number of food miles they entail. Terms such as 'ethically sourced' and 'locally sourced' have also clouded consumer confidence in the sector.

Moreover, the European Commission's controversial organic logo, which has been criticised for its effect on more established schemes, looks set to cause further confusion when it is introduced in 2010. The Soil Association also warns that the universal logo 'goes against the trend for more local, regionally distinctive produce and could lead to dilution of organic standards'.

For their part, British consumers are beginning to raise questions about the health benefits of organic produce, including the absence of added vitamins and minerals. Weetabix's regular cereal, for example, contains added iron; its organic range, however, does not.

The Food Standards Agency stated last year that there is not sufficient scientific evidence to support the claim that organic food is safer or more nutritious than conventionally produced alternatives. In addition, it is undetermined whether organic food tastes better.

Given these challenges, we asked some key industry figures for their opinions on the state of the organic market.


Although the credit crunch may be hitting people's willingness to spend money on luxuries, premium food brands are seeing a trend of people eating out less and choosing to give themselves small treats at home more often. The credit crunch is providing a good opportunity for premium organic brands that deliver a great taste to become part of the meal repertoire.

- GEMMA KEW, Brand manager, Seeds of Change

Our 2008 ImagePower Green survey reveals that despite economic concerns, British consumers' desire to make an environmental contribution remains strong. 80% plan to spend as much, or more, on green products such as organic food and services this year as they did in 2007.

- STEPHANIE BROWN, Marketing and communications director, Landor

Organic is increasingly seen as a question of health rather than money, and another food scare could make organic food something consumers feel they can't afford to live without.

- BEN HOURAHINE, Futures editor, Leo Burnett

We have seen tremendous growth in recent weeks with clients that are niche organic brands. It is worth remembering that the organic market has grown to become more mass market, but was initially the choice of more discerning and affluent consumers. It may need to shrink a little and target its core shoppers before it grows again.

- GIDEON KARMILOFF, Managing director, Vivid Brand

All groups have been affected by the changes. Interestingly, you saw a change in the metrics almost on the day of Northern Rock, so it did have an impact. Richer groups are slightly less affected. People don't change; if you're the sort of person who buys organics or ready meals, your personality doesn't change just because there's been a Northern Rock crisis - but everyone wants a bit more value, so you see a little change right across the board.

- LUCY NEVILLE-ROLFE, Executive director of corporate and legal affairs, Tesco

Food miles are an extremely dangerous distraction, given that a lot of poor countries for whom agriculture is the best hope of enrichment are situated a long way from richer countries that will pay decent prices for their food.

- RORY SUTHERLAND, Executive creative director and vice-chairman, Ogilvy.