The organic food and drinks market grew rapidly over the first part of the decade, with sales in the US and the nine largest European markets reaching more then $40bn in 2007. However, the rate of growth in the market appears to have slowed in 2008, with the economic downturn of 2009 expected to test consumer willingness to pay more for organic and other ethical products. Nevertheless, demand for organic food and drinks is proving to be resilient in a number of key markets and product sectors, due to a combination of key factors. Firstly, heavy purchasers of organics typically have significantly higher than average disposable incomes and have so far been largely unaffected by the global downturn. Secondly, the price differential between many organic and regular products has contracted steadily in recent years, and this has increased consumer reluctance to revert to cheaper non-organic alternatives.
‘The Evolution of Organic Food and Drinks: Growth opportunities, NPD and the impact of the economic downturn’ is a new report published that evaluates which regions, countries and products are expected to grow in the organic market over the next five years. This report provides an understanding of underlying consumer purchasing triggers as well as an in-depth analysis of NPD to assess current and future trends in organic food and drinks.
Key Findings
...Organic food and drinks outperformed the wider grocery sector in 2008, although the rate of growth slowed in the second half of the year. Organic food and drinks sales in the US and the nine largest European markets amounted to $40 billion in 2007.
Europe has overtaken North America (41%) as the main region for new organic products, accounting for over 45% of launches in 2008. Asia-Pacific accounted for less then 7% of global organic NPD in 2008.
‘Upscale’ overtook ‘natural’ as the leading product tag for new organic products in 2008. The use of the ‘upscale’ tag reflects manufacturers reinforcing the link between organic and premium quality.
Use this report to...
* Quantify the performance of the organic food and drinks markets and their growth potential based on market value and volume sales data between 2007 and 2012 by category, region and product tag.
* Improve the targeting and effectiveness of your NPD strategy using this report’s analysis of product launch data of 8,000 organic products launched globally between 2005-2008.
* Identify key trends that are shaping the organic food and drinks market, and evaluate the trends that are likely to become important over the coming years.
* Understand how companies are looking to maximize the inherent strengths of the organic proposition by developing organic food and drinks with a nutritional benefit and reinforcing the ethical values of organic.
Key issues...
The proliferation of ethical labels and claims across the food and drinks market is generating consumer confusion and doubt over the reliability of claims.
Standardised labelling of organic food and drinks. The new pan-European organic label is set to become compulsory by July 2010. This may increase costs for organic food and drinks manufacturers.
Calls to relax certification criteria have been made by some organic producers, reflecting growing cost pressures. Certifying organisations have not compromised on adherence to strict organic criteria including use of organic feed.
The organic sector’s rate of growth is expected to slow considerably in 2009 and into 2010 and total sales may remain flat in markets like the US, the UK and Germany. Demand for meat and produce is also expected to weaken, with packaged grocery sales holding up well.
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