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Distillation Session 1. Supply side issues & retail challenges Simon Wright, O&F Consulting. 1 . Supply side issues - current issues & future challenges. Protecting organic integrity from GM Organic ingredients - are they a limitation to the development of the organic market?

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distillation session 1

Distillation Session 1

Supply side issues & retail challenges

Simon Wright, O&F Consulting

slide2

1. Supply side issues - current issues & future challenges

  • Protecting organic integrity from GM
  • Organic ingredients - are they a limitation to the development of the organic market?
  • Why is there so much ‘poor’ organic food?
  • How to increase production as customer demand increases
  • Linking organic to global warming & sustainable development
  • Should the various organic certification bodies be unified?
protecting organic integrity from gm

GM issue not dead - alive & kicking!

  • Consumers do not want GM contamination
  • New EU proposed standards would allow 0.9% contamination by GM
  • Conclusion
  • Keep GM out of organic food - this is a USP of organic products
  • Action required: use concern over GM to grow the sale of organic food

Protecting organic integrity from GM

slide4

Organic ingredients - are they a limitation to the development of the organic market?

  • Yes!
  • Organic ingredients can limit the market because of price, availability, consistency & reliability of supply
  • But, the market will correct itself so long as demand increases &
  • integrity is upheld
slide5

Organic ingredients - are they a limitation to the development of the organic market?

  • Conclusions
  • We need to improve knowledge through the supply chain from farmer to retailer
  • We need more support from NGOs regarding dissemination of information (trends, opportunities & training)
  • The solution is increased demand & volume to drive efficiencies, sustainability & better information sources
why is there so much poor organic food

Role of organic food awards should not be judged by foods but by “normal people”

  • Warrants better entries?
  • Organic products can be poor cosmetically -does this matter?
  • Taste is subjective
  • Conclusions
  • Increased target (only way is by offering more conventional style
  • products)
  • Offer a mainstream product made with organic principles
  • Bench-mark organic vs non-organic in same area
  • Consider authenticity of product
  • Communicate the role of processing aids permitted in non-organic
  • products

Why is there so much ‘poor’ organic food?

how to increase production as customer demand increases

How to increase production as customer demand increases

  • Need to take into account the barriers to producers/farmers converting, such as:
  • conversion time & cost
  • historical influence & price deflation at the retail end
how to increase production as customer demand increases1

How to increase production as customer demand increases

  • Possible Solutions
  • Upstream supply chain contracts
  • Use imports to ensure continuity of supply
  • Collaborative working e.g. between farmers
  • Knowledge transfer e.g. packers holding workshops for growers
  • Widening of specs e.g. Class 2
  • Investment in R&D into growing better varieties specifically for organic
slide9

Linking organic to global warming & sustainable development

  • Global warming - the single biggest issue of our time - organic farming is part of the solution
  • For new entrants to organic production the environment is now the biggest reason for buying organic food
  • We can quantify and prove environmental benefits
  • To be more sustainable the public need to eat less meat
  • The organic industry has not yet communicated this to ‘the people’ -
  • (rural employment, enjoyment of work, rural economies)
  • Action: To campaign to clearly convey these basic ‘people’ issues
slide10

Should the various organic certification bodies be unified?

  • EU standard to be raised to set a standard worthy of superior quality
  • Lobby UK government to support the creation of this high standard
  • Single certification body, one core logo to remove current confusion
  • Conclusions
  • UK should adopt Soil Association full (higher) standard
  • We should push for this to be accepted across Europe
slide11

2. Retail related challenges

  • Branded packaged organic - how to justify shelf facings when major conventional brands out-sell in the same shelf-space
  • Location, location, location - parent department or organic section?
  • Price - what do we really think?
slide12

Branded packaged organic - how to justify shelf facings

when major conventional brands out-sell in the same shelf-space

  • Poor retail buyer perception of organic beyond fresh
  • Supermarkets have to ‘hit numbers’ which influences range review decisions
  • The message that organic is a retailers investment in the future needs to be enforced by supplier & organic industry together
  • Need to influence retail buyer outside the one hour meet
slide13

Branded packaged organic - how to justify shelf facings

when major conventional brands out-sell in the same shelf-space

  • Conclusions
  • Organic to be mainstream not premium
  • Organic alone is not enough - market proposition must be clear
  • Organic movement needs to learn from Fairtrade brand proposition
slide14

Location, location, location - parent department or organic section?

  • Pros of integrating in main fixture
  • Attract more occasional/lighter users if price not too high
  • In main fixture greater likelihood of frequent replenishment
  • Some customers don’t like going down the ‘worthy’ aisle
  • Cons of integrating in main fixture
  • Annoy dedicated customers so they can’t do whole shop in aisle
  • Risk of committing offence through mixing up organic & conventional
  • If organic premium more than 20% consumers less likely to buy if side by side
  • Conclusion - probably worth integrating experience so far positive
slide15

Price - what do we really think?

  • People may not pay more for organic but they will spend more if you tell them why a product is better
  • Justify price by talking about trading relationships, cost of ingredients etc.
  • Committed vs dabblers have different attitudes towards price premium
  • No consensus if organic would sell more if cheaper
  • People will pay a lot for high quality - organic is unsophisticated at proving this and is therefore still vulnerable to price
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