The organic market and its shoppers
Consumer spend hit £1 billion for the organic market in the 52 weeks ending February 2018.
This is a growth of 2% versus the same time a year ago. However, despite steady growth since 2015, performance is slowing and currently lags behind the total grocery market. Organic is still only a small part of the total grocery market at 0.9%.
Dairy products hold the largest share of the organic market (32.1%) followed by fruit, vegetables and salads (26.2%). Fresh poultry/game (2.9%) and meat (2.7%) come in lower. Year-on-year percentage spend growth for organic in the 52 weeks ending May 2018 is being driven by chilled convenience (+31.2%), alcohol (+23.1%) and hot beverages (+21.8%), whereas fresh meat sees the opposite trend and has declined (-21.9%).
The 2% spend growth is mainly being driven by a price increase (+3%) as volume is actually declining by 1% year-on-year. The growing price premium may be hindering overall organic performance, as consumers claim price is the biggest barrier when shopping in the category. While around a 30% price premium is expected of the organic market, the premium paid is higher for certain organic produce, e.g. 55% for fresh pork chops. This indicates the market may be stretching its shoppers in terms of what they are being asked to pay.
Coupled with this, justifying a price premium needs a shopper to understand what they get for the additional cost. There is a general understanding of what organic means, however, perceptions linking to the environment, animal welfare and personal benefits are much lower:
Among consumers who agree organic is worth paying more for, there is a perception that organic produce tastes better (73%), is healthier (81%) and is more nutritious (58%). The research highlights that these perceptions are higher among organic red-meat buyers than organic dairy buyers. This indicates that organic red-meat buyers are more engaged with the category (probably because of the higher end price).
A clear opportunity lies with linking organic to animal welfare claims, where applicable. For both red-meat and dairy shoppers, animal welfare is the top purchase driver among those who claim organic is worth paying more for. Conversely, among those who do not agree organic is worth paying more for, animal welfare does not feature and their top purchase driver is value for money. This highlights an area organic can differentiate itself by communicating this benefit to shoppers.
To read more about the organic market, including additional information on the organic shopper profile as well as retailer share and performance in organic, click here.
Kim Malley, Senior Retail Insight Analyst
Kim.Malley@ahdb.org.uk, 024 7647 8852