The last five years have not been easy, again 3,8% organic turnover less in 2012. The organic market is subdued on the high street but booming online and in large specialist retailers. Organic shoppers are increasingly choosing the convenience and variety offered by home delivery and specialist shops over the inconvenience and frustration of finding more limited ranges and stock at many supermarkets.
The three leading organic home-delivery specialists (Ocado, Abel & Cole and Riverford) increased their combined turnover by 10.3% in 2012, while the seven leading multiple retailers saw their organic sales fall by 3.8%. The organic market as a whole contracted by 1.5% to £1.64 billion.
Online purchases now represent 10.1% of spending through the major retailers on organic products, compared to just 5.7% of all food and drink spending. The online boom means that shoppers now spend £4.1 million on organic products online every week.
In the supermarkets the most popular organic purchases are dairy and ‘chilled convenience’ products (31% of spending) and fresh fruit and vegetables (23%). Between them these two groups of products accounted for 54 pence in every pound spent in 2012.
The most encouraging trends are in the dairy sector, where sales of yoghurt and cream increased by 9.9% and 14.1% respectively and milk sales began to grow again towards the end of the year. Yeo Valley Organic, the biggest dairy company in the market, increased its sales by 6.6% and is predicting further growth in 2013. Rachel’s Dairy increased its sales by 15%, buoyed by particularly strong growth in demand for its large fruit yoghurts.
Ocado is the striking success story among the major retailers in 2012. The online grocer increased its organic sales by 6.4%, overtaking Asda and Morrisons to become the UK’s fourth-largest organic retailer.
It extended its range of fresh produce and anticipates further growth of 10-15% in 2013.
Of the 1,400 organic products available from Ocado’s website, around 10% are branded products from Daylesford and Laverstoke Park. waitrose own- label organic products account for eight out of ten of Ocado’s biggest-selling organic lines. waitrose itself also increased its organic sales, by 1.1%. Its results were buoyed by the increasing popularity of the Duchy Originals from waitrose range.
The only other major retailer reporting growth is Morrisons, supported by its expansion in the south of England. It has also reviewed its organic offering and has just relaunched its M Organic range. There is a striking contrast between sales of organic brands in the leading supermarkets (up 2.2% in 2012), and the performance of own-label products (down 11.2%). In this context it is encouraging to see Morrisons making a renewed investment in its own-label range.
Ocado’s success reflects a broader trend of organic shoppers looking increasingly to specialist retailers and online shopping as organic ranges and shelf space on the high street are cut by some super- markets. Organic sales across the multiple retailers fell by 2.4% to £1.16 billion in 2012, while their online sales increased by 4.1%.
Tesco has introduced a new organic zone on its website and is piloting an online home-delivery box scheme in London, while Sainsbury’s saw its online organic sales increase by a remarkable 48%.