Credit crunch effects

Organic effect of credit crunch

Is the UK organic sector defying food industry and media sceptics who’ve predicted that the organics and fair trade sectors will be the first to be hit by the credit crunch? And whose figures on the size of the UK organic retail market should we believe anyway?

Recent research from retail analysts TNS reveals that organic food sales grew by 13.4% in the year to 23 March 2008. According to TNS, dairy and produce still hold the largest share of the organic market, largely due to their perceived health benefits (41% of consumers stated they chose organic because they considered it healthier).
The over 45s, children under five and women remain the key organic consumers, while teenagers and young adults are the groups least likely to buy organic. Affordability remains an issue, with 65% of consumers saying they would buy more organic food if products were cheaper.
Interestingly, the 2007-2008 TNS survey of the organic food market – based on bar code information – estimates total retail sales to be £1.1 billon. This contrasts with the 2007 Soil Association Organic Market Report, which includes direct sales and bodycare and textiles, and which values the market at some £2 billion.

The Soil Association, whose annual Organic Market Report looks set to be delayed until the end of this year, is projecting “a very healthy 10% growth” in 2008. SA director, Patrick Holden, comments – “Perhaps it is inevitable that we might see some decline in demand among less deeply committed organic consumers, but this is more likely to be a plateau than a reverse.

“It’s important to note that Government-funded research has shown that organic uses 26% less energy than non-organic per kilogram of food, largely because we do not use energy-intensive artificial fertiliser, which should give organic food a competitive advantage as oil prices go through the roof,” he says.

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