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Carla Ogeia GNPD Consultant - Mintel Custom Solutions 17th May 2006

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Organics Market Intelligence. Carla Ogeia GNPD Consultant - Mintel Custom Solutions 17th May 2006 . Today’s presentation. Market drivers Market size Market segmentation Consumer typologies Supply & distribution New claims Advertising & promotion Main trends New product introductions

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Organics Market Intelligence

Carla OgeiaGNPD Consultant - Mintel Custom Solutions17th May 2006

today s presentation
Today’s presentation
  • Market drivers
  • Market size
  • Market segmentation
  • Consumer typologies
  • Supply & distribution
  • New claims
  • Advertising & promotion
  • Main trends
  • New product introductions
  • The future
market drivers
Market drivers
  • Heightened consumer interest in healthy eating and nutrition = consumers more receptive to the organic movement
  • Government support for organic expansion (Organic Entry Level Stewardship Payments)
  • Increased emphasis on local/domestic produce - greater awareness of food miles
  • Further promotion of an organic lifestyle beyond food & drink: e.g. clothing, toiletries
  • Close association between organic and fair trade (growing by 50% year on year)
market size
Market Size
  • 2000-04 the market increased by 74%
  • A further 12% growth is expected in 2005
  • Fruit & vegetables account for 38% of sales
  • Sales growth in most categories growing faster than non-organic counterparts

Source: Mintel

market segmentation
Market Segmentation
  • Dairy overtakes prepared foods in 2005
  • Organic poultry enjoys growth impetus
  • In growth terms the overall market is closely aligned with the organic fruit & veg sector

Source: Mintel

consumer typologies
Consumer Typologies

Reticents: more men than women, under 35s, AB/ABC1 families with kids aged 5-15. Read broadsheets and use the Internet.

Taste is important, they will pay a premium, but need convincing why they should buy organic.

Dismissives: Retired DEs. Read popular tabloids and watch TV 5+ hours/day.

View organic as overpriced, high level of disinterest.

Price Deterred: ABC1 families. Target via mid-market tabloids and in-store promotions.

Too expensive- would buy more if cheaper – need to understand difference between organic and ‘natural’.

Safers: ABC1 families with young children or third agers. Target via mid-market tabloids and broadsheets.

Costs are a key consideration although this group will turn to organic produce when food safety issues are under scrutiny eg BSE.

Fans: more women than men, 55-64s, ABs. Target via broadsheets and women’s lifestyle magazines.

Health is a priority but superior taste and food safety is also important. Lack of availability biggest deterrent.

  • In the UK, by April 2004, around 3.7% of total agricultural land were fully organic, representing an increase of 37.4% from April 2002
  • Under-supply in certain areas (i.e. dairy), increased dependence on imported goods
  • The number of licensed organic food processors increased by around 1% between April 2003 and 2004
  • Sectors such as vegetables, fruit and meat are highly fragmented; while others such as dairy and eggs are dominated by a small number of large suppliers
  • The involvement of large companies has had a positive impact on the market, as they can more easily gain listings with the major multiples and have larger advertising and promotional budgets
  • The leading retailers also play a significant role, both with their own organic ranges, and in their levels of commitment to the organic movement as a whole
  • 2002-04 multiples’ share shows slight decline
  • Committed organic consumers switching to farmers markets and organic box schemes?
  • Concern over food miles

Source: Mintel

organic claims
Organic claims
  • In May 2005, Committee of Advertising Practice approves 22 organic claims for use in the promotion of organic produce:
    • “No system of farming has higher levels of animal welfare standards than organic farms working to Soil Association standards”
    • “No food has higher amounts of beneficial minerals, essential amino acids and vitamins than organic food”
    • “The best method of reducing exposure to potentially harmful pesticides would be to consume organically grown food, where their use is avoided”
    • “Eating organic food allows people to avoid hydrogenated fats completely”
advertising expenditure
Advertising expenditure
  • Above-the-line spend stood at less than £1.8m in 2004 - less than 0.2% sales
  • Two-thirds invested in press media
  • Yeo Valley tops tables in 2004 , followed by Cow and Gate, and Unilever’s Go Organic

Source: Nielsen Media Research//Mintel

new product introductions milk juices
New product introductions - milk & juices

Welch Foods’ Organic 100% Concord Grape Juice, USA

A Dohrn & A Timm’s Bioness Organic Vegetable Juice with Sea Salt, Germany

Yeo Valley Organic Fresh Skimmed Milk, UK

new product introductions alcoholic beverages
New product introductions - alcoholic beverages

Mack & Schühle’s Bio Inzolia, organic white wine from Sicily with 12% ABV, Germany

Neumarkter Lammsbräu Weisse, organic alcohol free wheat beer, Germany

new product introductions lunchbox treats
New product introductions - lunchbox treats

Lyme Regis Foods’ Kidz Organic Fruit Bar, said to have 70% more fruit than before, and be free from added sugar, preservatives, wheat, gluten and dairy, UK

Organix’s Goodies, Organic Fruit Dippers said to be ideal for lunchboxes, containing no added sugar, UK

new product introductions kids meals
New product introductions - kids’ meals

Annie’s Homegrown Mac & Cheese, made with organic pasta, USA

Hipp Biologico Taan Grande, organic prepared meal, Spain

Hipp Organic Toddler Meal range, including Spaghetti Bolognese, UK

new product introductions other
New product introductions - other

Del Monte Foods’ Organic Vegetables range, including Whole Kernel Corn and Sweet Peas, USA

Sainsbury’s So Organic Spaghetti, said to have a low GI, UK

new product introductions yogurts
New product introductions - yogurts

Rachel’s Dairy organic bio-live Wicked Wholemilk yogurts, with indulgent flavours, UK

Pur Natur’s Omega 3 Yogurts, organic natural yogurts enriched with omega 3, Spain

new product introductions snacks
New product introductions - snacks

Kettle Chips’ Organic potato crisps, with sea salt and crushed black peppercorn, UK

new product introductions bath shower
New product introductions - bath & shower

Fresh Body Market’s Strawberry Milk Bath, made with organic coconut milk, USA

Matron Products’ Bio Handwash Gel, said to kill MRSA, MSSA, salmonella, E.coli and streptococcus, formulated with organic aloe vera, UK and Ireland

Harbor’s Oliva Cosmesi, a range of body & bath products formulated with organic olive oil, including shampoo, bath foam, soap and body lotion, Italy

new product introductions personal care
New product introductions - personal care

Primavera’s Aromatherapy Prima Naturelle fragrance range, made from plant based organic ingredients, UK

Original Additions’ Wax Away, mini wax strips formulated with organic lavender, UK

new product introductions dog food
New product introductions - dog food

Yarrah Organic Pet Products’ Organic Dog Food, said to be 100% organic, UK

the future
The Future
  • Advertising and promotion should become more clear and consistent, with the new approved claims
  • Ethical and food safety issues remain important but mainstream trends such as healthy eating, premiumisation and convenience will influence NPD and product positioning
  • The market is wide open for new entrants; innovation in NPD is coming from the pre-packaged/prepared foods sector, which appeals to the convenience-driven consumer
  • Locally sourced produce is becoming more high profile
  • Natural or “free-from” products are to some extent clouding the issue; as are varying levels of organic status (organic and all natural/organic and free-from)
  • The industry needs to decide whether it wants to be associated with this end of the spectrum or to stand apart
  • In-store location is critical: more than half of UK consumers don’t seek out organic foods, so don’t merchandise them in isolation!

Presented by:

Carla Ogeia

Consultant, GNPD Custom Solutions