MARKET REPORT The recipe for better food

Transcription

1 MARKET REPORT 204 The recipe for better food

2 CONTENTS THE ORGANIC MARKET A NEW START OUR JOURNEY TOWARDS CONSUMERS - that choose KRAV products Our Manifesto REFUSE PESTICIDES in food and the environment MISSION: BROADEN THE TARGET GROUP WHO BUYS KRAV-LABELLED PRODUCTS TODAY? CONSUMERS WHO BUY KRAV-LABELLED PRODUCTS A CLOSE-UP VIEW OF LOHAS LIFESTYLES OF HEALTH AND SUSTAINABILITY WHO IS A LOHAS CONSUMER? CHARACTERISTICS OF LOHAS CONSUMERS FIVE THINGS THAT LOHAS CONSUMERS DO MORE THAN OTHERS SPEAKING WITH LOHAS CONSUMERS MEDIA HABITS OF LOHAS CONSUMERS CHOOSE NATURAL FOOD without strange additives DEMAND DECENT CONDITIONS for farmers all over the world TREAT ANIMALS WITH DIGNITY let them root and graze DEMAND THE YEAR WHEN A LOT WENT WELL NEW INDEPENDENT SHOPS SHOPS THAT CREATE SALES SUCCESS MEASURING SALES SUCCESS SALES IN THE RETAIL SECTOR KRAV-LABELLED WINNERS SALES RESULTS THE ORGANIC TOP TEN SALES CHANNELS DAIRY EGGS PRODUCTION - in different sales channels CEREALS BREAD MEAT & PROCESSED MEATS FISH NON-ALCOHOLIC BEVERAGES SYSTEMBOLAGET THE ORGANIC FOOD CLUB IS GROWING INCREASED INTEREST FROM THE PUBLIC SECTOR MISE EN PLACE A GROWING SELECTION - of KRAV-labelled raw materials SPREAD COW PIES AND BIRD TWITTER every time you buy food CONVERSION TO KRAV A NEW KRAV-CERTIFIED FARMER PLANNING TO CONVERT TO KRAV KRAV-CERTIFIED LAND ANIMALS IN CONVERSION KRAV-CERTIFIED ANIMALS EGGS VEGETABLES POTATOES FRUIT & BERRIES DAIRY IMPROVED PROFITABILITY FOR DAIRY FARMERS ARLA DRIVES THE MARKET GRAIN, OIL PLANTS & LEGUMES DEVELOPMENT WITH SUSTAINABILITY IN MIND JR MEAT CHOSE A NEW DIRECTION EXPORT OF KRAV-CERTIFIED PRODUCTS THE WORLD S ORGANIC FARMERS AND THEIR LAND THE USA LEADS GROWTH IN ORGANIC PRODUCTION THE GLOBAL ORGANIC MARKET ORGANIC AGRICULTURAL LAND IN (HECTARES) STATISTICS KRAV IN NUMBERS - on KRAV-labelled products 53

3 THE ORGANIC MARKET IN - A NEW START If was a year with large structural changes in the Swedish market for organic production and a year with economic instability in the surrounding world which cooled down the curiosity of consumers then was quite the opposite. During, the big players in organic production could relatively undisturbed do what they do best marketing, campaigns, and product and assortment development. Perhaps not revolutionising, but it worked! At the same time, society s interest for organic products increased. When school kitchen after school kitchen was able to purchase organic food within their normal budget, the debate on expensive organic food disappeared. The Swedish Society for Nature Conservation started their campaign for organic food and carried it out skilfully. There were a number of scandals during the year that favoured the clean and well-inspected organic food. The worst were the horse meat scandal during the winter and banana problem in the summer. The only thing missing was political will and clarity about the rules of the game at the national and EU levels. Interestingly, there are instead many municipalities that dare to take the lead and show leadership. A Market Lift When so many factors coincide, there should be a lift in the market! The year had a rather weak beginning as a whole, but in about the middle of the year development slowly gained speed and during the fourth quarter exceeded most expectations. Market shares have increased in almost all categories, with the exception of Systembolaget. 2 The year 204 started with a high rate of increase, and it looks like it will grow even more. ICA 3 stated in their comment to Ekoweb s market report that they have ambitious goals and a lot planned for organic sales. Coop describes in the same report how they amongst other things plan new initiatives for fruit and vegetables. Martin & Servera continue strategic initiatives of their organic product range for the catering industry. Our Market Sector For us at KRAV, the organic market sector is our home market when things go well for the organic market sector, things goes well for KRAV certification. Right now, it is a market sector that is growing by leaps and bounds. During 204, we are going to put a lot effort into raising the profile of KRAV-labelled meat of various types, first and foremost to address the surplus of beef and lamb. We are also going to continue our efforts to recruit restaurants for certification, on the one hand to develop stability in the market and on the other hand to show consumers that it is possible to prepare KRAV-labelled food at all gastronomic levels and in all price classes. Johan Cejie Sales Manager, KRAV. Fast growth involves challenges. One of the biggest is that consumption of KRAV-labelled goods looks like it is growing faster than KRAV-certified production in agriculture in Sweden. This can be explained in part by the economic conditions for future agriculture being uncertain, or actually getting worse. Since consumers will deal with this by buying products from other places, there is a risk that Swedish agriculture will lag behind. We have to avoid that situation. We can do it together! Lastly, I dare to make a prognosis for growth of the market for KRAV-labelled food in 204. I think it will be about 20%. THIRD-PARTY CERTIFICATION KRAV is a third-party certification system. This means that each one of the 6,000 companies that use the KRAV label are inspected by an independent party at least once a year. The inspections ensure that the companies implement the standards required for KRAV-certified production. The strength of this type of certification is that in addition to guaranteeing that products with the label meet the promised requirements, it creates confidence among consumers. KRAV MARKET REPORT 204 In Sweden, school lunches are provided in the public school system. 4 2 Systembolaget (The Swedish Alcohol Retailing Monopoly). KRAV MARKET REPORT ICA is the largest multiple retailer in Sweden.

4 THE RECIPE FOR BETTER FOOD Our Journey Towards Sales of KRAV-labelled food is incr easing steadily. We want to give a big than k you to everyone who makes it possibl e. Thank you for your support. Thank you for creating a market for farmers who grow food without pesticides and rais e animals with respect. Thank you for mak ing it possible for consumers to choose the recipe for better food. sustainably. It s food produced r fo l be la a is KR AV w raw materials it is produced, ho w ho d an od fo about. It s about what oducts produced pr e th d rth an n ow are gr e is only one Ea es and how ther di bo r ou ng to ki in or t we pu e believe in w is connected. W and everything each other, with with nature and er th ge to, er th toge with everyone their customers, d an s er om st cu our anure and the, prefers cow m do e w e lik. st ju who and E-numbers tificial fertiliser ar to s rd bi of er twitt 4 2 Last year we introduced our manifesto. It is both a proclamation and an invitation. have Join us on the journey towards We be to a clear goal. We want a lot more people toxic able to eat good food grow n without substances and strange additives, and with is respect for animals and people. Our goal 2020 that 20% of all food sold in Sweden in will be KRAV-labelled. It is an ambitious goal, but we can reach it together. ts is grow n protec tified food that ity al ip ic Every KR AV-cer un.am exposed to toxins nno land from being es ac nt chain that repl or large restaura can protect ls ia er at m ganic raw organic with or ological diversity nd and create bi. large areas of la ture and toxicity ead of monocul and vitality inst d? te have you protec How much land 5 For KRAV, food produced sustaina bly is just as much about quality as abo ut the environment and social respons ibility. And taste often comes with quality. And then all the added values are in place, righ t? The best food produced the best way. Now it s time for more people to acquire a tast e for what is good. Follow along with us tow ards 2020!

5 # CONSUMERS who choose KRAV-labelled products 65% OF THE POPULATION OF SWEDEN have a positive attitude towards the KRAV label MISSION: BROADEN THE TARGET GROUP The goal is clear: 20% of all food sold in Sweden in 2020 will be KRAV-labelled. To get there, more people have to buy KRAV-labelled products more often. How do we reach the goal? More consumers need to see, hear and understand the added value the KRAV label represents. It means that many people who only buy organic products once in a while have to change their behaviour. Singles, stressed parents on their way home to a Thursday supper, buyers for large chain stores, food managers in the public sector and restaurateurs around the country, all have to move their hands on the shelves (or in the Excel document) and choose an alternative that is not sprayed with toxic substances. Who will be first? Where is the greatest potential? This chapter gives a quick summary of some of the important trends that will affect the branch. Following then there is a description of what the market looks like today. After that, we take a close look at a target group that will play an important roll in reaching the goal, especially among consumers. It is a consumer sector called LOHAS - Lifestyles of Health and Sustainability. They are consumers who attach great importance to many of the values the KRAV label represents, and as well have both buying power and a willingness to change. To understand how they can be reached and thus bring more consumers along on the journey towards 20%, it is important to know who is in this sector, how they consume and what they think is important. More expensive food now! was a slogan some years ago which has actually received increasing support from consumers. Perhaps it wasn t the Swedish organisation with the same name or the literal demand that received the increased support, but several consumer surveys show a reaction against anonymous food and the recurring scandals. According to a study by The Swedish Food Federation (Livsmedelsföretagen), six of 0 Swedes are willing to pay more for food in order to guarantee quality and sustainable production. The top-quality segment is growing, as well as the low-price segment. There is somewhat of a polarization between low price and quality. A greater demand for openness and transparency is a recurring theme in several trend analyses for 204. The message that everything is perfect does not work. Customers want to know where and how products are produced. The continued strong interest in cooking and health also points in the same direction. Swedes buy the most cookbooks per capita in the world. When prioritizing added value, after country of origin, health is the area that is most important for consumers.. At the same time, our ambitions as consumers often conflict with the amount of time we have. The trends of consumers buying prepared food and semi-finished products has thus continued to be strong. At the same time it is increasingly popular to eat out. The trend to indulge in experiences instead of material things has intensified and the restaurant sector is a winner. 8 KRAV MARKET REPORT 204 KRAV MARKET REPORT

6 WHO BUYS KRAV-LABELLED PRODUCTS TODAY? Shops Have a Role to Play Many people want food that matches their values. The connection between food experiences and environmental added value is important and consumers usually want animals to be treated well and nature to flourish. For a long time, however, it has been the case that we say one thing and do another. There is much to indicate that a change is taking place. Coop used its members panel to compare what members thought with how they shopped. The result was clear: those who say they are most committed to sustainable consumption, about 30% of Coop s members, also buy the greatest amount of sustainably produced food. In other words, conscious consumers do what they say, but still not to a great enough degree. Factors such as selection, availability and information about added value have a strong influence. Two-thirds of buying decisions take place in the shop, and they are very rarely rational. The power of habit is great. Consumption of food, just like all consumption, is a function of who we are and want to be. Food creates identity and status. To overcome the power of habit, a raise in both the levels of knowledge and consciousness of consumers is necessary. From this perspective, shops have a clear roll to play by making conscious choices easier. We of course want to do the right thing! What then does all this mean? Much indicates that the large trends are very positive for KRAV. One of the results of the trends mentioned here is that sales of organic food are increasing. With a 3% rate of increase in the organic market, was a record year. This is however just the start. The goal of a market share of 20% for KRAV-labelled food by 2020 requires a long-term and strong rate of increase. Now we take the next step. With a 3% rate of increase in the organic market, was a record year. Before we look at future consumers, it is interesting to take a look at the situation here and now. Who buys KRAV-labelled goods today? Why? How does development look? What tendencies are there? KRAV has for a number of years commissioned TNS Sifo to examine the awareness and attitudes of Swedish consumers. The most recent survey was done in November December and shows positive development in several ways. Awareness is one of the strengths of KRAV-certification, and it continues to be very high: 98% of Swedes are well aware or quite well aware of the label. The portion that is positive increased 7% compared to the year before and today is at 65%. Thus, a large majority of consumers are well aware of and have a positive attitude towards the label. These are good conditions for increased sales. The most positive attitudes are that the KRAV label represents products without pesticides, good for animals and good for the climate, in that order. The values that have increased the most in significance compared to earlier years are social responsibility, high status and good health. Also positive is that more people recommend KRAV to their friends. Health Comes Before Price For the actual purchase decision in shops, there were the same top three reasons for making a choice as in previous years. Most important is that it tastes good. Second is that it is healthy and third that it doesn t cost too much. New however is that the health concern became more important than price, something that is totally consistent with the trends we showed earlier. It is also clear that consumers that buy KRAVlabelled products today are less price sensitive than average. A very positive development for both KRAV and our customers is that the number of consumers that think it is worth paying more for KRAV-labelled products increased strikingly last year. Every third person willingly pays more if a product is KRAV-labelled. What then is it that people think is worth paying for? When asked an open question, in other words without given alternative answers, most answers are about the gains for nature, but also positive health aspects or other positive factors for the person doing the eating. Examples of this are that products are inspected and do not contain pesticides. The quality and that it is nutritious is mentioned by a little fewer number. Why do those that don t think it is worth paying more for KRAV-labelled products think the way they do? Half the answers are that it is considered too expensive and that it isn t worth it in relation to gains. A quarter of the people that don t see the value in paying more for KRAVlabelled products don t believe that the label really delivers what it promises. It is also clear that the consumers that buy KRAVlabelled products today are less price sensitive than average. PAYING MORE FOR KRAV-LABELLED PRODUCTS IS WORTH IT. Level of agreement with the statement. Agree (6 7) 0 KRAV MARKET REPORT 204 TNS Sifo AB. The survey included,000 people. KRAV MARKET REPORT % Neutral (3 5) Do not agree ( 2) Doubtful

7 CONSUMERS WHO BUY KRAV-LABELLED PRODUCTS The amount of organic food that people really buy is one thing, and how much they think they buy is another. If the question, How often do you buy KRAV-labelled products? is asked, every fourth person answers that they buy organic as often as they can. Seven of 0 say that they buy KRAVlabelled products regularly. This means that very many people have the ambition to purchase KRAV-labelled products when they go into a shop but in reality don t do it as much as they want. This clearly indicates that a great potential exists for chain stores to facilitate this desire. Many of the trends and consumer surveys presented last year point in the same direction. Many people want to buy organic products. Fewer do it in reality. The year 204 is going to be about letting more customers have what they want. Who then buys KRAV-labelled products? There s no big change compared to earlier years. More women than men buy organic products. Three of four women compared to two of three men say they buy KRAV-labelled products regularly. Younger people are the ones who most frequently say that they buy KRAVlabelled products as often as they can. Amongst older people we find those who most often buy KRAV-labelled products regularly. Middle-aged people buy most seldom. It is not difficult to think that this has to do with their experience of being pressed for time and that it is not always easy for them to find simple favourites that are KRAVlabelled. This is also reflected in the growing interest of consumers in a wide selection of organic products, including prepared foods. they can. At the same time, those with less education are underrepresented. Place of residence however does not make a big difference. Families with children are about average, but it is interesting that singles without children are among those who most often purchase KRAV products. % By way of conclusion, to look ahead, it is notable that amongst those who say today that they buy KRAV-labelled products occasionally, about almost half think they will buy more in the future. It s a good sign! HOW OFTEN DO YOU BUY KRAV-LABELLED PRODUCTS? As often as I can Occasionally Seldom Have bought but no longer do Never purchased Don't know A CLOSE-UP VIEW OF LOHAS - LIFESTYLES OF HEALTH AND SUSTAINABILITY One of the consumer segments that has the greatest potential to buy more KRAV-certified products is called LOHAS. Lifestyles of Health and Sustainability (LOHAS) is a consumer segment interested, amongst other things, in sustainability, health, sustainable living, pleasure and justice. LOHAS is defined by both values and behaviour. Together with Futerra Sustainability Communications, KRAV has taken a closer look at LOHAS in Sweden. The LOHAS concept originated in the United States, where it has long been established, but as a response to the increased awareness by many consumers about health and sustainable development, interest has also grown in Sweden. There is a potential in the LOHAS lifestyle pattern for companies and organisations that want to promote products and services in the area of sustainability. In Sweden, the consumer segment makes up about 34% of the population. For KRAV, the target group is in many ways right on the mark. A LOHAS consumer rates the added value of KRAV products highly. They care more than the average about ecology and the environment. They re interested in the community that surrounds them and have a strong sense of fairness and justice. Enjoying life and having it good is important for this group, but not at the cost of someone else. It is therefore natural that LOHAS consumers are KRAV s primary target group. It is amongst these consumers that the threshold for buying more KRAV-labelled products is the lowest. Most of them already purchase KRAV products. It is a question of increasing the frequency and number of products. LOHAS consumers are relatively quick to accept offers related to sustainability. The trends and behaviours that find a footing in this group often spread to other consumer groups. LOHAS consumers can in this way be a bridge to a wider public. Education is a Determining Factor People with a university education are clearly in the majority among those who purchase KRAV products as often as KRAV MARKET REPORT 204 TNS Sifo AB. The survey included,000 people. KRAV MARKET REPORT

8 WHO IS A LOHAS CONSUMER? The typical LOHAS consumer is an urban female with post-secondary education and an above average income. She is interested in cooking, has a focus on health and often chooses organic and environmentally friendly products that she is willing to pay extra for. When choosing a car, it is important that it is environmentally friendly. An organisation that she gladly supports is the Swedish Society for Nature Conservation, whose activities go hand in hand with her values. She regards herself as having a spiritual side. At the same time, LOHAS consumers are found in all groups of society. An older man in a rural area can also be a LOHAS consumer, although this is less common. A look at employment shows that both mothers and fathers on parental leave are overrepresented, together with pensioners and people who are self-employed. Furthermore, part-time employees are somewhat overrepresented. Based on this, it can be assumed that parental leave can be a triggering factor for the activation and deepening of an interest and involvement in a sustainable and healthy lifestyle. WHAT DISTINGUISHES LOHAS CONSUMERS FIVE THINGS THAT LOHAS CONSUMERS DO MORE THAN OTHERS Choose organic and environmentally friendly alternatives LOHAS consumers choose organic and environmentally friendly products twice as often as the rest of the Swedish population, which is an indication of their interest in a more sustainable lifestyle. Of course there can nevertheless be a gap between what LOHAS consumers say that they do and their actual purchasing behaviour. Pay more for green products Regarding the price of environmentally friendly products, LOHAS consumers willingly pay extra for environmentally friendly alternatives. They are more than twice as willing than the average Swedish consumer to pay extra for environmentally friendly products. All Swedes LOHAS consumers All Swedes LOHAS consumers 2.0% 24.3% Agree completely..4% 25.3% Agree completely. Go out more often to eat LOHAS consumers eat at restaurants more frequently than most Swedes. Frequenting coffee and tea shops is also very popular. However, LOHAS consumers eat at fast food restaurants less often than Swedes on average. Interested in re-using materials It is clear that LOHAS consumers like to visit secondhand shops. Many do it from time to time during a month and some three to four times a week. This shows that their opinions reflect their actual behavior, that they actually act according to their values. Interested in healthy food and curious about new items A main aspect that defines LOHAS consumers is their interest in health. Healthy food is important for the group, but they don t want any weight loss tips. LOHAS consumers are also more interested in trying new products and in advanced cooking and baking than most Swedes. All Swedes LOHAS consumers Interested in... TRYING NEW DISHES 64.8% 73.7% EATING TRYING NEW HEALTHY FOOD COOKING PRODUCTS BAKING 56% 7.5% 57.8% 65% 33% 37.5% 39.4% 46% love for nature pay extra for sustainable and healthy products relationships are important interested in sustainable development interested in feminism and workplace equality want meaningful work and to contribute to society interested in self-fulfillment dislike exaggerated luxury consumption want new political visions have an optimistic view of the future, are against pessimism and cynicism spirituality is a central part of life, dislike religious fundamentalism worried about violence in society concerned about the focus of large multinational corporations on profit and cost-cutting campaigns, with their environmental impacts and exploitation of poor countries like exotic and foreign places, interested in other lifestyles KRAV MARKET REPORT 204 KRAV MARKET REPORT

9 COMMUNICATING WITH LOHAS CONSUMERS Media Habits LOHAS CONSUMERS It is gratifying in many ways to communicate with LOHAS consumers, as they are interested and curious. It is however also challenging, as they have a critical approach and need to feel confidence in order to accept information. A distinguishing characteristic of LOHAS consumers is just that - they seek knowledge. They look for serious media and programs that provide indepth information about connections in society. They read almost all kinds of daily newspapers more than the average, especially morning newspapers. The kind of magazines that they often read are membership and trade magazines with a focus on interior decorating, gardening, food and drink, animals and nature, health, culture and popular science. Furthermore, LOHAS consumers place a high value on objective TV and radio programs with a focus on news and documentaries. Advertising? No Thanks! There is an advertising fatigue among consumers in general, especially direct mail advertising. This is even more clear within the LOHAS consumer segment. About 26% of all Swedes say no to direct mail advertising. For LOHAS consumers, the percentage is about 34%. One explanation as to why LOHAS consumers say no to direct mail advertising more than most Swedes is that they are sceptical towards simplistic advertising. The search for authenticity is a cornerstone for the LOHAS consumer segment. Active on the Internet LOHAS consumers are quite average Internet users, as more than 80% use the Internet daily. They are also relatively average regarding the services they use on the Internet. LOHAS consumers use social media to the same degree as Swedes in general. They do, however, more often than the average Swede visit food and drink sites (recipe sites, food blogs, food box sites, etc.) as well as wikis (websites edited by users). LOHAS consumers use the Internet to a large degree to evaluate a product or service before purchasing it. They use a mobile device slightly less often than the average to visit Aftonbladet, Expressen and Blocket and slightly more than the average to visit Dagens Nyheter. Advertising? Yes Please! The advertising channels that LOHAS consumers are most positive to, in descending order, are advertising in morning newspapers and the trade press, advertising on the street, movie theatre advertising and advertising in shops. WHAT LOHAS CONSUMERS ARE MOST INTERESTED IN SEEING, READING AND LISTENING TO Objective media and programs News and documentaries Morning newspapers, SR and SVT Magazines Member magazines WHAT LOHAS CONSUMERS ARE LEAST INTERESTED IN SEEING, READING AND LISTENING TO Tabloids Commercial TV and radio Aftonbladet and Expressen on the Internet 2 Blocket 3 ABOUT THE STUDY The statistics and facts about LOHAS comes from Futerra Sustainability Communications. They defined the segment by using the Orvesto database, which is made up of the results of consumer surveys by TNS Sifo. TNS Sifo carries out consumer surveys three times per year, each with 6,000 to 7,000 interviews. A total of 45,000-50,000 interviews are done per year. The population for the study is made up of a representative sample of all Swedes between the ages of 6 and KRAV MARKET REPORT 204 Aftonbladet and Expressen are Sweden s leading tabloids. Dagens Nyheter (DN) is Sweden s leading national morning newspaper. Blocket is a popular website for the sale of used goods. Radio Sweden (SR) and the Swedish public service television company (SVT) are advertising-free, public service media. 2 Aftonbladet and Expressen are Sweden s leading tabloids. 3 Blocket is a popular website for the sale of used goods.

10 #2 DEMAND in various sales channels - THE YEAR WHEN A LOT WENT WELL The market for organic food started with a slow increase in the beginning of the year and ended surprisingly strong. There was a very positive development of both sales of everyday commodities and food services during. There are several underlying factors. Marketing from both corporations and organizations increased, and there were several warnings about pesticide residues in conventional products. Another reason for the development was accessibility for consumers on shop shelves. The total increase in value compared to was 3%. The growth was a result of increases in both price and volume. By the end of the year,.6 billion SEK worth of organic food had been sold. The retail sector reported that some product groups, for example bananas, were sold out during parts of the year. More about developments in the retail sector is on page 23. Municipalities Set High Targets The public sector continued to invest in organic food and increased by 8%. was the year when municipalities showed that they could take a distinct leadership by setting goals to increase the portion of organic food. The two largest wholesalers, Menigo and Martin & Servera, reported sales increases to both the public sector and to private restaurants. Hotels and restaurants increased their portion of organic food by 5% in. 2 The calculations were done by the news service Ekoweb and cover the retail sector, Systembolaget (The Swedish Alcohol Retailing Monopoly), as well as the restaurant and mass catering market. Ekoweb derived the data from interviews with actors within these segments. 3% THE TOTAL SALES INCREASE of organic products between and 8 KRAV MARKET REPORT 204 Ekoweb. Total sales including VAT for the retail sector, Systembolaget, and food KRAV MARKET REPORT services (restaurants and the public sector). Ekoweb. 9

11 NEW INDEPENDENT SHOPS SHOPS THAT CREATE SALES SUCCESS There is a market for small, independent shops with a focus on organic products. During several small actors made new investments. The food retail sector in Sweden is dominated by three large multiple retailers. ICA, Coop and Axfood together account for more than 85% of the market. Despite the dominance of the large chains, there appears to be room for small, independent actors with a focus on organic products. Several new shops opened during the year. In the KRAV-certified shop FRAM, in Gothenburg, it was often cramped from the many shoppers. It was so cramped that after 25 years at the same location, they opened a second, larger shop in the Haga part of the city. Barbro Söderberg, who works at FRAM Haga, describes their main success factor like this: A fresh produce section gives life to the shop. Customers are met by the sight of fruit and vegetables when they come in. Our wide selection of organic products and good prices result in fruit and vegetables attracting many customers and they sell well. The shop opened in August and customers seem to find us. By November the turnover was already as big as it was at the old location and without any big loss overall. Committed Customers In Stockholm there is also room for more independent shops. Ekodirekt, run as a web shop since 2008, in August took the step of opening a physical shop in a former food retail premises in the Enskededalen part of the city. Conscious food engages people, says Maria Bjurling Yperidis, who runs Ekodirekt together with eight employees. The advantage we have is that we can build relationships with customers. It s clear to us that an increasing number of people want to have a relationship with their shopkeeper. A physical shop makes this easier. Maria, who has a degree in business administration, believes it is quite possible for independent shops to achieve profitability. This despite, for example, their exclusion from the chain stores dominating central purchasing organizations. A relevant business plan and control of all costs is important for success. Combining a web shop with a physical shop optimizes staff costs and results in maximum profit, according to Maria. Despite the dominance of the large chains, there appears to be room for small, independent actors with a focus on organic products. During the year we have seen many good examples showing that promoting organic products really can speed up sales. During the first months of the year, ICA Maxi in Östersund increased sales of its organic selection by 5%. Taking a chance and placing organic products on aisle-end displays and setting good prices for buying several at a time results in increased sales. As well, we have to give organic products good placement on the shelves, we can t wait for the shoppers but have to take responsibility ourselves, says Andreas Söderström, the Environmental Officer, and who arranges displays with KRAV s shop materials. At ICA Maxi in Östersund, sales are guided by three p s: placement, price and prepared, wellinformed staff. For Coop, with their 700 KRAV-certified shops, having knowledgeable staff also goes without saying. A big training initiative for store staff was carried out, but it is the Organic Product of the Week campaign which has resulted in the greatest increase in sales at Coop. Each week during the year, the price was dropped by 30% to 50% on selected organic fruit and vegetables. During one week we sold as many KRAV-labelled carrots as we normally do in 5 weeks. Both customers and shop staff are positive, says Louise König, Sustainability Director at KF/Coop. At Coop Konsum Kristinedal in Jönköping, Annalena Håkansson is responsible for fruit and vegetables. She is entirely positive towards Organic Product of the Week. The campaign has resulted in a clear place for the organic selection of fruit Shop interior, Coop Torsvik, Lidingö. and vegetables and increased the visibility of the products. Bananas, mangos and pineapples have done really well during the year. We have already removed conventional bananas and have only organic mangos as often as possible, says Annalena Håkansson. Coop s total increase in sales of organic products in ended up at 3%. That s positive, but the goal is to make organic food available to many more people. The challenge is to get consumers to discover the products, understand the added value and feel they are worth their price, states Louise König. The price reductions at Coop are therefore complemented with posters outside and inside the store as well as via digital channels. The message deals with a taste for something good and that organic production is good for the planet. Get consumers to discover the products, understand the added value and feel they are worth their price. 20 KRAV MARKET REPORT 204 KRAV MARKET REPORT

12 THE RETAIL SECTOR MEASURING SALES SUCCESS SALES IN THE RETAIL SECTOR It is very positive that an increasing number of multiple retailers have invested in promoting their KRAV-certified selection. The result has been a positive and much-needed increase in sales. Bergendahls, a new actor in KRAV s sales analysis, have started a systematic effort to increase their organic selection and now have more than,000 products. QUESTION: How can you contribute to increasing the share of sales of KRAV-certified food to 20% by the year 2020? BERGENDAHLS Annika Hansson Borg Environment and Quality Director We can do it by, amongst other things, communicating more clearly about organic products in our shops and by presenting them more often and more clearly in our marketing. KF/Coop ICA Louise König Sustainability Director We are going to continue to focus on our KRAV-labelled products in shops, make the organic selection evident, educate our staff and continue with the Organic Product of the Week campaign. We are also going to continue to talk with our suppliers about taking more mutual initiatives to increase sales of organic products. Maria Smith Environmental and Social Responsibility Director We have ambitious goals for increasing organic sales. A strategic priority is to support the customer s sustainable choices which includes improving the selection of organic products and communication initiatives with the purpose of increasing knowledge about what organic food stands for. The retail sector, which is the most important market for KRAV-labelled food, showed an impressive development during compared to. The three largest multiple retailers report an increase in sales of KRAVlabelled food. Coop increased its sale of organic products by 3%, ICA by 6% and Axfood by 0 to 5%. There is also a strong belief that the positive development will continue. Worth noting is that the sales increase was both a price and a volume increase. This is because food prices went up more for organic food than for food in general. Especially important was that the dairy sector succeeded in turning the previous year s negative trend into a sales increase. The number of KRAV-labelled products introduced during was the same as the year before, about 600. KRAVlabelled products maintained their share of their organic market - about 80%. 2 Not included in this number is store-packaged meat, fish sold over-thecounter or fruit and vegetables sold in bulk. Included however are fresh herbs, lettuce and leafy vegetables. Exciting Products Private label brands are still of great importance for development of the organic segment, but in several new companies and brands succeeded in becoming established. As well, a number of exciting products were introduced, for example hen meat and fresh bouillon from Scandinavian Organics. The following sections present sales of organic food in the retail sector divided into different categories and product groups. Unless otherwise given, the diagrams show sales of organic products, that is to say both products that are KRAV-certified and those that are only labelled with the EU label for organic production. VALUE OF SALES FOR 2 Sales of organic food +6.2% +3.0% +6.0% Organic product s share of sales.4% 6.3% 3.0% KRAV-labelled share of sales 0.8% 4.8% no information NUMBER OF FOOD ITEMS IN Organic,072 st 2,270 st,00 st Organic, private label 4 st 438 st 220 st KRAV-labelled 68 st,859 st Newly introduced organic 56 st 200 st 35 st no information 2 KRAV MARKET REPORT 204 Excluding purchases from local vendors. Information from the respective chain. Calculated by KRAV. KRAV MARKET REPORT Information from the respective multiple retailer. 23

13 KRAV-LABELLED WINNERS During several large product categories showed considerable growth. The dairy sector turned around last year s negative trend and consumers continued to buy a lot more KRAVlabelled eggs. Fresh herbs continued to develop well, which is natural considering that most shops do not offer any conventional alternative. Organic baby food also developed positively. Coffee, which is strongly influenced by international market prices, decreased somewhat. Centrally packaged meat continued to increase during, by a total of 27%. Note that organic fruit and vegetables sold in bulk are not included in the sales statistics. It is a product group that also sold very well in. THE ORGANIC TOP TEN The organic top ten ranks product groups according to their increase in value in. In general, sales of fruit and vegetables increased significantly in, but because bulk sales are not included in Nielsen s data, those product groups are not shown, with the exception of packaged lettuce. Besides showing the largest absolute increase in value, sales of fruit and vegetables also increased by 2% compared to. Eggs are a large group that increase at about the same pace as the organic market in general. The increase in sales of meat is especially welcome because there is a large surplus of beef and lamb. The cooking cheese group includes for example grated cheese and feta. PRODUCT GROUPS THAT INCREASED THE MOST IN VALUE IN,000 SEK 0,000 20,000 30,000 40,000 50,000 60,000 70,000 LETTUCE AND LEAFY VEGETABLES MILK EGGS CENTRALLY PACKAGED MEAT +23% EDIBLE FAT +25% BABY FOOD +7% DRIED FRUIT +46% COOKING CHEESE +5% YOGHURT +2% FRESH HERBS +8% +8% +0% +2% Sales Results PRODUCT GROUP RANK () ALL OF (,000 SEK) 2 Drinking milk Eggs Soured milk Fresh herbs Coffee Meat, centrally packaged Yoghurt Edible fat Baby food Cream products () 2 (2) 3 (3) 4 (5) 5 (4) 6 (7) 7 (6) 8 (8) 9 (9) 0 () 582,87 34, , ,370 22,92 90,95 82,920 60,427 40,574 07,70 SALES CHANNELS 2 Distribution of the total organic food sales in by channel. 2% 9% % 6% 3% 8% 22% 30% ICA 3 30% SYSTEM- BOLAGET 3 % COOP 3 22% MARTIN & SERVERA 4 9% AXFOOD 3 8% MENIGO 4 2% BERGENDAHLS 3 3% OTHER 6% KRAV MARKET REPORT 204 Calculated by KRAV. Calculated by KRAV. Ekoweb. Retail. Catering wholesale. KRAV MARKET REPORT AC Nielsen, including hard discounter sales statistics

14 DAIRY Sales of organic alternatives increased by 7.3%. Arla, which is the biggest actor, succeeded together with other dairy companies in turning around the negative trend from. Sales in the dairy sector increased a total of 7.3%, 2 which due to the size of the sector affects the entire organic market. The turnaround of the trend was primarily due to new introductions of products, conversion of previously conventional products, as well as marketing and increased activity in shops. There is still however some surplus. Sju Gårdar is a group of seven dairy farms. It s chairman Henrik Johansson says, We believe the positive trend will continue. We think that the increase is due to a general increase in demand for organic goods and KRAV-labelled products. We are part of a segment which is often the one that consumers switch within first, when they go from a conventional to an organic product. In the future we re going to focus on marketing our new mild and aged cheeses. The products are already listed with Axfood and Coop and sold in a number of ICA shops. EGGS Sales of organic eggs has been increasing for a number of years: in the increase in sales was 0%. 2 Conscious consumers continue to an increasingly greater extent choose eggs from chickens that have been able to live a more natural life. Now, more producers of KRAV-labelled eggs are needed to meet the demand. Green Bakery makes KRAV-labelled *Change in per cent between and.,000 bread for in-store baking. Tomas Svenska Lantägg is one of three large SEK Färnefalk is the company s owner and Swedish egg distributors. Sales Manager,000 SEK 600,000 says, Here at Green Bakery we are Åke Häljestig says, We saw a very good +6%* +0%* 70,000 increase in sales of KRAV-labelled eggs 500,000 excited about 204, especially because of our new agreement with Martin & 60,000 during. I think the increase has a 400,000 Servera. Hopefully there will be even 50,000 lot to do with the general debate about +3%* treatment of animals, health, quality 300,000 more new products introduced through 40,000 that channel. Additional exciting -%* and ecology. We think that sales in this 200,000 30,000 partnerships may be considered during segment will continue to increase at all 20,000 00,000 the year. It was also very nice and an points in the distribution chain. During honour that Green Bakery was the main 0, , we are going to introduce new supplier of bread for this year s Cook KRAV-labelled products of the Year competition. Organic bread Organic hardbread Organic crackers and biscuits 2 26 KRAV MARKET REPORT 204 Dairy excluding eggs. Calculated by KRAV. The category is made up of grain mill products, flour, breakfast flakes, flakes and grain, pasta, rice KRAV MARKET REPORT AC Nielsen, including hard discounter sales statistics. and couscous. Calculated by KRAV. AC Nielsen, including hard discounter sales statistics. 26 SALES OF THE LARGEST SINGLE PRODUCT GROUPS 3 *Change in per cent between and.,000 SEK 700, , , , , ,000 00,000 Organic milk +8%* Organic soured milk -8%* +2%* Organic yoghurt %* Organic cream products +25%* Organic edible fat -0%* +2%* Organic Organic cream hard cheese and cheese dessert cheese CEREALS Organic cereals are a product category that showed a strong increase of 42% 2 in. Flakes and grain drove the positive development together with rice and couscous. Sales of flakes and grain increased by 2% while rice and couscous increased by 20% compared to. Flour and pasta also showed a positive development during. The organic grain mill products segment declined however by 7% while KRAVlabelled grain mill products showed a strong increase. 2 Kung Markatta distributes mostly dry goods. All its products are certified organic. Marketing manager Sara Termén says: Sales of Kung Markatta s KRAV-labelled parboiled rice in a large package increased by a total of 205% in volume in. It is one of Kung Markatta s best selling catering products sold to schools and restaurants. BREAD Organic bread is still one of the smaller product categories and showed an increase of barely 2% in. 2 Bread and hard bread are still the largest products in the category but there are some exciting newcomers. For example, sales of rusks and pretzels increased by 28% during the year. One of the challenges ahead is to get the products listed with muiltiple retailers and wholesalers. SALES OF THE LARGEST SINGLE PRODUCT GROUPS 3 *Change in per cent between and.,000 SEK SALES OF ORGANIC EGGS 3 *Change in per cent between and. SALES OF THE LARGEST SINGLE PRODUCT GROUPS 3 70,000 60,000 50,000 40,000 30,000 20,000 0,000 Organic grain mill products -7%* +8%* Organic flour %* Organic breakfast cereals +2%* Organic flakes and grain +20%* Total of organic rice and couscous Total of organic pasta +2%* 27

15 MEAT & PROCESSED MEATS Demand for organic meat continues to rise, with a 20% increase in sales in. This category includes centrally packed meat, processed meat products and frozen meat products. The public debate in about what meat we should choose had a positive influence on sales. Increased availability also played a role. The challenge now is to meet the demand. Svenskt Butikskött is the leading distributor of organic meat in Sweden. Managing Director Thomas Östlund says: We have recently also noticed a deeper more strategic interest from our retail and wholesale customers. I think we are going to see more exciting activities from them during 204. FISH 2 Sales of frozen fish continue to rise, with a 5% increase during, while sales of frozen shellfish and cephalopods decreased. 4 Improved availability, a greater number of actors and increased awareness by consumers are factors that contributed to an increase in sales of frozen fish during the year. Sales of frozen shellfish and cephalopods however decreased during. One of the explanations for this can be that there are fewer organiclabelled products relative to other sustainability labels. Leröy Nordhav AB is a major wholesaler and distributor of seafood. CEO Mikael Ljundahl says, 204 looks positive for us, since we ve gotten customers that focus on KRAV. Amongst other things, we are going to have a campaign for KRAV-labelled salmon. What can be seen as slightly negative is that some customers only look at MSC and don t pay attention to KRAV to the same degree. It has an effect on activities and campaigns when KRAV isn t promoted to the same degree as MSC. SALES OF THE LARGEST SINGLE PRODUCT GROUPS 3,000 SEK 250, ,000 50,000 00,000 50,000 SALES OF THE LARGEST SINGLE PRODUCT GROUPS 3,000 SEK 40,000 30,000 20,000 0, %* Organic centrally packaged meat Organic sausage Frozen fish +6%* +5%* Organic processed meats %* Organic fresh chicken +63%* Organic frozen meat products +0%* +23%* +362%* Organic paté Organic smoked and cured pork loin %* Frozen shellfish and cephalopods Organic fresh fish and shellfish NON-ALCOHOLIC BEVERAGES Sales of organic cocoa increased by a total of 22%. Cocoa is the product group that had the greatest increase in sales during the year, with a total increase of 22%, followed by class II beer with a 3% increase. Sales of coffee increased by about %, while things continued to be difficult for tea. Juice, fruit drinks, and nectar are still facing a tough challenge ahead. In total, there was a 3% decrease in this category during. There are few products in the category, which means that it is strongly affected if one or more products stop being sold. At Finnerödja, we ve had a slight increase in sales of organic and KRAV-labelled beverages. In our view, the toughest period is behind us, with the recession we ve had for a few years. We think that consumer interest for KRAV and organic products will increase again and we re continuing to work on several KRAVlabelled options. says Frida Engström at Finnerödja Marketing and Sales. SYSTEMBOLAGET There are a total of 889 organic products in Systembolaget s selection. 2 Organic alchoholic beverages increased in number from 20 to 43 from the previous year. Just like, was a poor year. It wasn t until the last quarter that there was an increased demand, primarily because of considerable media attention when pesticide residues were found in conventional wine. At Concha y Toro Sweden it has been a very positive year for our organic wines from Bonterra. Our sales almost doubled in December compared to the year before. I think that KRAV-labelling contributes to consumers really seeing that the product is organic. It s a label people trust, says Hanna Löfgren, Brand Manager at Concha y Toro Sweden. SALES OF THE LARGEST SINGLE PRODUCT GROUPS 2 SALES OF THE LARGEST SINGLE PRODUCT GROUPS 3 2 KRAV MARKET REPORT 204 Calculated by KRAV. Includes both EU-organic and KRAV-certified meat. Calculated by KRAV. AC Nielsen, including hard discounter sales statistics Included in this category is frozen fish, frozen shellfish and cephalopods and total fish and shellfish (new). KRAV MARKET REPORT AC Nielsen, including hard discounter sales statistics. Calculated by KRAV.,000 SEK 300, , ,000 50,000 00,000 50,000,000 litres 2,000 0,000 8,000 6,000 4,000 2,000 Total organic coffee Wine +0%* +%* Beer -7%* -%* Total organic juice/nectar Spirits Total organic tea +3%* -23%* Cider -6%*

16 THE ORGANIC FOOD CLUB IS GROWING These are the municipalities, county councils and regions in Sweden that have reported the highest proportion of organically produced food purchases. The numbers in the table are based on data from Organic Food in Public Institutions ( Ekologiskt i offentliga storhushåll, in Swedish only), prepared by The Centre for Organic Food (Ekomatcentrum). All the data is from. 30 KRAV MARKET REPORT 204 KRAV MARKET REPORT RESTAURANTS AND CATERING SHARE OF PURCHASES OF ORGANICALLY PRODUCED FOODS IN PERCENTAGE OF THE TOTAL FOOD PURCHASE (SEK) 5% 0% 5% 20% 25% 30% 35% 40% 45% 50% BORLÄNGE LUND SÖDERTÄLJE COUNTY COUNCIL OF KRONOBERG MALMÖ CITY UPPSALA COUNTY COUNCIL OCKELBO ÖREBRO COUNTY COUNCIL LERUM MÖNSTERÅS TROSA VÄXJÖ HUDDINGE ÅRE TANUMS VÄSTERÅS CITY MOTALA EMMABODA ÖREBRO SÄTER ÄLMHULT COUNTY COUNCIL OF BLEKINGE ESKILSTUNA COUNTY COUNCIL OF VÄSTMANLAND KALMAR VAGGERYD ESLÖV SIGTUNA SVEDALA MORA LUDVIKA REGION SKÅNE GÄVLE REGION OF VÄSTRA GÖTALAND STOCKHOLMS COUNTY COUNCIL GOAL 25% ORGANIC INCREASED INTEREST FROM THE PUBLIC SECTOR During all of there was a large and growing interest from the public sector in increasing its organic purchases. Many municipalities, county councils and regions have increased their levels of ambition. Two good examples are Malmö s goal of 00% organic food by 2020 and Uppsala s by The future looks bright. The new procurement directives that the EU adopted in January 204 will speed up the development. It will now be easier for contracting authorities to make demands regarding social conditions and environmental impacts. As well, a growing number of public catering kitchens are choosing to KRAVcertify, which facilitates communication about organic food initiatives. Eskilstuna In Eskilstuna, Magnus Johansson, Municipal Commissioner (Green Party), tells how the municipality is KRAV-certifying all of its 80 kitchens to improve the quality of meals and benefit the environment and animals. We see how the staff are involved and strengthened in their professional roles when there is a focus on food quality. The entire meal gets a lift. KRAV s three levels of certification make it possible for all our kitchens to take part. There are also a lot of ways to let the employees themselves take initiative to reach higher levels. Employees enjoy their work more and it makes us an attractive employer. The food from our kitchens is of higher quality and the environmental impact is reduced. The municipality is going to increase from the current level of 30% to 40% in the year 205. We ll probably have kitchens that are almost 00% organic within a few years, says Magnus Johansson. Vellinge Vellinge municipality is the first municipality to certify all its school kitchens at KRAV s second level, with at least 50% KRAV- approved food. How is it possible for a municipality to start at level two? For a long time our food policy has included preparing food from scratch, using only organic dairy products and increasing the proportion of organic food. The environment has been an important area in our pedagogical plan for a long time. At present we haven t discussed our next step, but the municipality already has schools that are almost 85% organic. We think it will take some time to reach the next level, which is 90% KRAV-approved food. But it s not impossible, says Stina Hansson, School Developer, Vellinge municipality. Västmanland Kristina Lönn, Manager of The Food Unit at the Västmanland County Council, tells about their efforts: We ve decided to obtain KRAVcertification for several reasons. The Joint Food Committee for Uppsala and Västmanland has a goal for 204 of 40% organic food and we think that certification can make it easier for us to reach the goal. Furthermore, we are a major player that prepares and distributes a large number of portions and we think it is important to join in and influence the market so that more producers and wholesalers make more KRAV-labelled products available. One of the goals of The Food Unit is also to prepare as much food as possible from scratch, without additives and with as good quality raw materials as possible. The KRAV label guarantees that. Our ambition is to increase the portion of organic food in order to reach level two of the KRAV certification within a few years. We see how the staff are involved and strengthened in their professional roles when there is a focus on food quality. 3

17 MISE EN PLACE Mise en place is a French expression that means roughly the right thing in the right place. For a professional cook it is a selfevident part of preparation. For us, it is self-evident that good raw materials are KRAV-labelled. During we started the project,000 Restaurants with the objective of getting more restaurants and caterers to obtain KRAV certification. We are very happy that we were able to broaden the group of certified restaurants. During the year, the first sushi restaurant became KRAV certified, as well as the first Indian restaurant, the first restaurant at a water park, the first trade fair, the first students association, the first county governor residence, and the first movie theatres. There will soon also be a KRAV-labelled wayside restaurant. There will be more. Interest from the restaurant branch is growing rapidly. It is important that the cooks of the future learn about and gain experience with KRAV-labelled products. KRAV put a lot effort into working with others during the year, for example with The White Guide. It was also the first year for White Guide Junior whose objective is to increase the quality of public gastronomy by publicising good examples of school food. More Cooperation The project,000 Restaurants has amongst other things supported the project Ekoligan, run by Gösta Skoglund at Miljöresurs Linné, which has successfully increased the proportion of organic and KRAV-labelled food within the restaurant sector. Thanks to Ekoligan, in the town of Växjo alone more than 5 restaurants have obtained KRAV certification. KRAV also continues to work with the Young Organic Cooks competition. It is important that the cooks of the future learn about and gain experience with KRAV-labelled products, so that they can bring this knowledge with them into their working life. At the competition s regional and national finals, over 80% of the food was organic. During the year our ambassadors for KRAV have been involved and visited about 80 restaurants to inform about KRAV certification. In total, we ve provided information to about 200 restaurants during. The project is continuing in 204 and the year got off to a great start with about 30 restaurants contacting KRAV about obtaining certification. This happened as a result of supplementary information mailed out with Martin & Servera s customer newsletter. A GROWING SELECTION FROM The Largest Wholesalers Christina Gezelius Public Relations Manager, Martin & Servera. We listen to what our customers want and try to offer it. Therefore KRAV-labelled products are an important part of our selection, says Christina Gezelius. The needs of customers are thus transformed into purchases and demands on suppliers. To make it easy to see and order the organic and KRAV-labelled products, they are in a separate list on their website. As well, all the organic campaign items are promoted in the campaign magazine Smakfullt ( In Good Taste ). Martin & Servera work in several ways to increase the proportion of KRAV-labelled products, amongst other things by presenting good examples. The objective of Martin & Servera s competition Challenge: Increase Organic is to encourage customers to buy more organic food and get suppliers to increase their sales. The competition has had results, for example by making demands on us to continually develop our selection of organic products with regard to both content and price, says Christina Gezelius. Mie Fendert Marketing Director, Menigo. Our goal is to deliver what customers want. Buying organic products from Menigo should be clear and simple, says Mie Fendert, Marketing Director at Menigo. Menigo works towards increasing the proportion of organic and KRAV-labelled products, for example by finding products that are in demand and marketing products already in the selection. In Menigo s web store customers can sort by organic products and organic products are clearly labelled. We make a catalogue of organic products every year so that customers can easily browse our organic selection. When we develop goods with our own label, we always investigate the organic alternative, says Mie Fendert. She adds that in the coming years, she thinks KRAV-labelled, locally grown and organic products are going to become more important. MEASURING SUCCESS OF WHOLESALERS MARTIN & SERVERA MENIGO Increase in sales in. KRAV, EU-organic and MSC. 8% 4% (7.5% KRAV-labelled) Share of turnover in. KRAV, EU-organic and MSC. 8.9% 3% Number of certified products in the selection. KRAV, EU-organic and MSC., KRAV MARKET REPORT 204 The White Guide is a Swedish restaurant guide. Most sold organic items. Dairy products, coffee, eggs, bananas, frozen vegetables and frozen meatballs Dairy products, ground beef, eggs and coffee

18 #3 CONVERSION TO KRAV PRODUCTION of KRAV-labelled raw materials The general decrease in the number of Swedish farmers also affects KRAV-certified production. There are about 3,800 KRAV-certified farmers, which is about 00 less than in. Both the number of new KRAVcertified farmers and KRAV-certified farmers who left certification was less in compared to. During 204, the Swedish rural development programme does not offer subsidization for new organic production. This can impede the pace of conversion even though market signals are clearly positive. 34 KRAV MARKET REPORT 204 KRAV MARKET REPORT A NEW KRAV-CERTIFIED FARMER Sales of KRAV-labelled chicken increased a lot and Bosarpkyckling tried to find new breeders during. Roland Hermansson from Nossebro likes chickens but has a barn that is too small for conventional chicken production. KRAV-labelled chicken was a possibility and in October the first chickens were delivered. How has it gone so far? It is working well. We ve received compliments from the packing plant because the chickens are the same size and in the right weight class. What added value do KRAVlabelled chickens have? The chickens have a larger area to move around in. A conventional chicken practically lies still. Organic chickens don t. They move a lot. The chickens live a less stressful life and have access to the outdoors and grass. Chickens are fantastic grazing animals. When we open the doors, 3,000 out of 4,000 run out right away. The first thing they do is hunt insects. How does the method affect the quality of the meat? Since the chickens move around more, they develop better muscle fibre and tastier meat. The rearing time is also longer for a KRAV-labelled chicken. When the chickens get older they burn more fat which also gives more flavour. In comparison, a conventional chicken is like chewing gum. What are the biggest challenges for production? Wild animals. Foxes are dealt with using electric fences, but goshawks can t be kept out. Work also has to be done to avoid intestinal parasites. Now after the first batch we re going to remove the gravel outside the veranda and whitewash instead. The feed has however worked out well. We haven t had any problems there. ROLAND HERMANSSON Kycklinguppfödare, Nossebro. 3% 35 OF SWEDISH AGRICULTURAL LAND...is KRAV-certified In comparison, a conventional chicken is like chewing gum.

19 PLANNING TO CONVERT TO KRAV 2 3 YEAR IN THE SPRING Crop production begins according to KRAV standards. YEAR 2 IN THE FALL An application to certify the animals is submitted. They can eat own-harvested feed and purchased KRAV-certified feed. YEAR 3 IN THE SPRING After the cows have been looked after according to KRAV standards for six months, the milk can be delivered as KRAV-labelled. 36 KRAV MARKET REPORT 204 Calculated by KRAV. KRAV MARKET REPORT It can take some years for a farmer to convert from conventional to KRAV-approved production, and conversion requires planning. For a dairy farm, the process can look like this. Milk KRAV-CERTIFIED LAND The area of land that was KRAV certified in was about the same size as in. The approved area increased somewhat but the area in conversion decreased substantially. TOTAL AREA The KRAV-certified area in Sweden continues to increase, but at a slower pace than before. During, about 3% of Sweden s agricultural land was KRAV certified. The area in conversion to KRAV certification is the smallest it has been for many years. A reason can be that the conversion that was profitable due to subsidisation from the rural development program has already been done. There have not been adequately clear political signals and the sharp increase in the market came too late in. ARABLE LAND The area of approved arable land increased by 7% in. The area in conversion to KRAV authorization decreased by almost a third. Most KRAVcertified arable land is used for feed production and therefore the area is directly affected by the number of KRAVcertified animals. Pasture crops (grass and clover) are grown on more than half the KRAV-certified arable land. Grain is grown on close to 30%. PASTURELAND Pastureland is agricultural land that isn t plowed. In general, it is grazed on, but sometimes it is cut. KRAV certification of pastureland is controlled by the number of KRAV-certified grazing animals, since they are only allowed to graze on KRAV-certified land. The approved area of pastureland was for the most part unchanged compared to. Since there was no appreciable increase in the number of KRAV-certified lambs and cattle, only small areas of pastureland were in conversion for KRAV certification during. KRAV-CERTIFIED AND IN CONVERSION LAND ha 500, , , ,000 00,000 ha 400, , ,000 00,000 ha 80,000 60,000 40,000 20,000 +2%* +2%* +0%* In conversion KRAV-certified KRAV-CERTIFIED AND IN CONVERSION ARABLE LAND In conversion KRAV-certified KRAV-CERTIFIED AND IN CONVERSION PASTURELAND In conversion KRAV-certified 37

20 ANIMALS IN CONVERSION KRAV-APPROVED ANIMALS When a farm converts to KRAV, before the milk or meat can be sold as KRAV labelled, the animals must be cared for according to KRAV standards during a conversion period. During, the number of animals in conversion was lower than it has been for many years, which means a certain lag time for getting new animals approved if the demand in the market continues to increase. There were no big changes in the number of KRAV-approved animals during. At the end of the year market signals began to point upward, but the future is still uncertain with regard to subsidies for organic production in the coming rural development programme. DAIRY COWS SUCKLER COWS AND OTHER CATTLE DAIRY COWS, SUCKLER COWS AND OTHER CATTLE LAMB # 7,000 6,000 5,000 4,000 3,000 2,000,000-76%* # 30,000 25,000 20,000 5,000 0,000 5,000 Beef, excl. dairy and suckler cows Suckler cows -65%* # 300, , ,000 50,000 00,000 50,000 Dairy cows Suckler cows Beef, excluding dairy and suckler cows +3%* # 60,000 50,000 40,000 30,000 20,000 0,000 -%* The dairies freeze on new contracts for KRAV-certified milk producers resulted in a very low number of milk cows in conversion in. The few additional cows are in most cases on existing farms that increased their production. Overall in the country there is a surplus of KRAV-certified cattle. As well uncertainty about the next rural development programme contributed to few cattle being put in conversion in. Cattle must be cared for according to KRAV standards for at least 2 months before they can be KRAV-approved. During, there was only a slight increase in the number of approved cattle. In the last few years, dairies have had for the most part a freeze on new contracts for dairy farms and production of KRAV-certified cattle is still greater than the market demand for beef. During, there was a slight decrease in KRAV-approved lamb attributed to difficulty in obtaining a contract with a slaughterhouse, especially in the fall. Sales have gone well for the producer organisations Green Lamb (Gröna Lammet) in Skåne and Organic Lamb Gotland (Ekolamm Gotland) and they see room for more producers, especially those that can deliver lambs during the winter and spring.. LAMB PIGS FOR SLAUGHTER SLAUGHTER HOGS BROILERS # 7,000 6,000 5,000 4,000 3,000 2,000,000-48%* # 2,000,500, # 30,000 25,000 20,000 5,000 0,000 5,000 -%* # 200,000 50,000 00,000 50,000-5%* Few lamb producers decided to KRAV-certify their production During, there was a good balance between production The number of slaughter hogs did not change during the year. In, all KRAV-labelled broiler production continued under during. Those who could deliver lambs during the winter and sales regarding slaughter hogs and there was no incentive All KRAV-labelled slaughter hogs are sold via a contract with the Bosarpkyckling trademark. Bosarp noticed an increase in and spring still had a good chance at getting a new contracts to bring more animals into production. In the beginning SCAN and Svenskt Butikskött. In the beginning of 204 there demand in the last half-year, both from the retail and catering prior to 204. of 204 there was an increased demand and more hogs in was a strong surge in demand and there is now a need to sectors. One of Bosarp s breeders discontinued production conversion can be expected in the coming year. increase production of KRAV-labelled slaughter hogs. during the year. New breeders are now required in order to meet the market demand. 38 KRAV MARKET REPORT 204 Calculated by KRAV. Calculated by KRAV. KRAV MARKET REPORT