Selling Organic challenged the perception that the organic market is in the doldrums with the vibrant news that the Yeo! Valley TV advert had become a viral sensation. Alain Guilpain indicated that the multiple retailers have rethought their strategy of de-listing organic lines because it's the organic shopper who spends the most in their weekly basket. They now want us. And Ed Garner (amusing as ever) enthused us all by saying that Budget, Basic and Bargain have been consigned to the basement as shoppers no longer buy into the thrift agenda and that premium is gaining ground and seeing sales growth. However his optimism should be tempered by the slide showing that total organic grocery sales through the multiple retailers were down 9% year on year with only Waitrose showing any sales growth.
A mixed picture than which can be sumarised as still very tough but some signs of recovery.
But how does it translate to the organic cereal producer? Lets try and peer through the glare of powerpoints and see.
The messages for the cereal producer are mixed. Great news that the sector as a whole is seeing some recovery but.... .... and it is a big but. Of the £815 million of sales represented on Ed's graphs £545 million (67%) were represented by 5 categories with vegetables being the biggest and none being cereals. The areas that are most successful both in terms of sales value and frequency of purchase are those such as milk and yoghurt that show the least premium over the conventional alternative. Those areas such as eggs, poultry and other meats where the premium is greater the size of the market remains small and indeed in terms of penetration (a marketing terms for the number of households buying) has fallen year on year. Indeed eggs and poultry continue to show sales decline of 7.5% and 5.5% respectively.
The Feed Working Group gave a preview of the new Soil Association Feed Report which makes interesting reading and sets some tough challenges to meet
It is not the easy market of 2007 for the main consumers of organic grain, the dairy, egg and poultry producers. It's tough but there are reasons to be cheerful:
- Yeo Valley are investing in a significant advertising campaign
- the Organic Trade Board generic promotional campaign starts in earnest in Spring 2010
- the multiple retailers are no longer actively promoting budget lines at the expense of premium lines (including organic).
- The grain price is £40 above this time last year
However to believe that grain price increases can be passed through the supply chain to consumers without having an impact upon sales and the continued recovery of the organic market is not borne out by the data coming back from the retailers. Further increases in grain prices will not help the long term recovery of the organic market.
