FDBusiness.com

Although global sales of organic products grew by 8.8% in 2010 with growth continuing into 2011, UK sales fell by 3.7% last year, according to the latest organic market analysis by the Soil Association.

Strong growth has continued in all other major European organic markets and in the US, the world’s leading organic market. Sales of organic products in China have quadrupled in the last five years, and Brazil is reporting an annual growth rate of 40%. Market analysts predict that organic sales in Asia will grow by 20% a year over the next three years.

In the UK, the main cause of the market’s overall decline was a 5% drop in multiple retail sales, which account for 71.4% of organic food sales. Reduction of choice, lack of communication about the reasons to buy organic products and a lack of investment in own-label organic ranges are the key factors of this decline.

Despite the tough environment, there are a number of UK organic success stories including baby food (+6.6%); lamb (+16%); poultry (+5.8%) and cosmetics (+8.7%). Innovation in retail has benefited the sector with sales through box schemes, home delivery and mail order up by 7.2%.

Dairy products and fresh fruit and vegetables continue to be the most popular organic categories accounting for 29% and 23% of sales respectively in the UK. Local and direct sales of organic fruit and vegetables and supermarket sales of organic fruit held their own during 2011, despite a drop in sales of organic vegetables and salads through multiple retailers.

Outside the retail sector, the restaurant and catering sector grew by 2.4%. Notable successes in 2011 include an increased take-up of organic food in schools, nurseries and hospitals through the Soil Association-led Food for Life Partnership and Food for Life Catering Mark.