Organic goods sales decline in UK

13 April 2010

LONDON: Organic goods have suffered a drop off in demand in the UK last year, a trend indicative of the broader challenges facing premium brands during the downturn.

Sales of organic products contracted by 12.9% on an annual basis in 2009 to £1.84bn overall, according to the Soil Association, the trade body.

The proportion of households buying items in this sector also fell from 88.9% to 88.3% in this period, although revenues remained 50% higher than was the case five years ago.

More specifically, just 9% of households – the "committed core" – were found to be responsible for 56% of organic purchases made in 2009.

Consumers in the three highest income groups delivered 67% of all expenditure, an uptick of 2% on 2008, while their lower-income counterparts posted a modest drop of 2% on this measure, falling to 33%.

The ethical health and beauty segment was one area where figures improved, up by a third to £36m year-on-year, but confectionary, cereals and biscuits with the same positioning all recorded declines.

The average outlay on organic products per shopping trip also decreased by 2.9%, as customers either traded down to cheaper organic offerings or switched away from the category altogether.

Yeo Valley, the dairy specialist, and Green & Black's, the premium chocolate brand, were among the advertisers which launched high-profile campaigns last year.

These firms have allied with 80 other manufacturers, including Rachel's and Organix, to provide £1m in funding over three years for a communications effort on behalf of the industry as a whole.

Looking forward, the Soil Association predicted the market would enjoy growth in the 2% to 5% range this year, based on signs of "increasing confidence among consumers" observed in 2010 thus far.

"Over 60% of the UK's biggest organic brands are planning for growth in the coming year," its report argued.

Data sourced from The Soil Association; additional content by Warc staff