The Organic Market. Market Analysis Of The EU organic sector. Biofach. IPD BSO Market Intelligence Training July, 2022

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2 The Organic Market Market Analysis Of The EU organic sector IPD BSO Market Intelligence Training Biofach July, 2022

3 Introduction The Egyptian Agricultural Export Council developed a questionnaire to understand the needs and what are the main gaps for the exporters in order to support them and to help businesses develop, promote and sell their products abroad. Additionally, providing the exporters with all needed information, capacity building and advisory services. The organic market analysis PAGE 2

4 ORGANIC SECTOR IN THE EUROPEAN UNION Bulk foods and zero waste, plant-based and vegan: products on display reflect food trends in EU Now several EU companies use biodegradable bags made from cellulose, corn starch and kraft paper. Sustainable packaging is important to these companies as a matter of principle. It also allows them to accommodate the preference of many consumers for sustainable packaging. The younger generation in particular looks at the packaging first and then the contents. Starting off as a niche ecological issue, the unpackaged/bulk foods concept has now gone mainstream. For example, 70 new bulk food stores opened in Germany last year despite the pandemic. European Organic Market at a glance The European Organic Action Plan has set a target of 25% organic farmland by The plan is part of the European Union s (EU) farm to fork strategy. This development highlights the importance of the organic food market in Europe. The demand for health products is also increasing. This provides an opportunity for suppliers of certified ingredients for health products. It makes targeting European buyers easier and more profitable. It makes targeting European buyers easier and more profitable. The EU wants to increase the demand for organic products and strengthen consumer trust. Governments in Denmark, France and Sweden, are already promoting organic foods. For example, in schools, government organizations and catering establishments. The 2020 COVID-19 pandemic has boosted organic food sales in many countries. For example, the sales of organic products in the United Kingdom increased by 12.6% in This is the highest increase in the last 15 years. The organic market analysis PAGE 3

5 BIOFACH - World s Leading Trade Fair for Organic Food. The organic market analysis PAGE 4

6 Headline 1: Overview about the organic market in Egypt Key results from the AEC survey on organic exports in Egypt: 1- The survey on organic agricultural exports was carried out by the Agricultural Export Council in cooperation with all AEC members. 2- The survey was carried out between March and April The following data was received from 40 exporters. 1) What organic products are in your current offer? MAP Garlic Leaves Onion Penauts Beans Sweet potato Grapes Dates Potatoes Oranges Sesame Strawberry Cucumber Tomato Carrot Egg plant Zucchini Grapes Raisins herpes Medicinal and Aromatic plants comes in the first place when it comes to the exports of Egypt that we offer, so that s why in the following chart, we will focus on which popular varieties of MAPs that Egypt exports: The organic market analysis PAGE 5

7 Basil Fennel seeds Peppermint Marjoram Thyme Spearmint Lemongrass Chamomile Anise Caraway Coriander Hibiscus Calendula Rosemary Nigella Moringa Oregano Fenugreek Sage Liquorice Asparagus Capsicum Dried Lemon Flax Mange tout Dehydrated Dehydrated Verbscum Lemon balm Lemon verbena Senna Red rose Nettle 2) What organic MAPs varieties that Egypt exports? Basil Fennel seeds Peppermint Marjoram Thyme Spearmint Lemongrass Chamomile Anise Caraway Coriander Hibiscus Calendula Rosemary Nigella Moringa Oregano Fenugreek Sage Liquorice Asparagus Capsicum Dried Lemon Flax Mange tout Dehydrated Onion Dehydrated Garlic Verbscum Lemon balm Lemon verbena Senna Red rose Nettle 3) What organic, quality and sanitary certificates does your operation currently have in effect? 30 Organic Certificates EU ISO HACCP NOP HALAL BRC Kosher Global Gap Fair trade FSSC COR GMP FDA CAAE Demeter ETI Naturland JAS The organic market analysis PAGE 6

8 4) Where are you currently exporting? ) Markets they are intend on expanding exports to? No. of Responds The organic market analysis PAGE 7

9 Headline 2: the organic market in the EU The European Organic Action Plan has set a target of 25% organic farmland by The plan is part of the European Union s (EU) farm to fork strategy. This development highlights the importance of the organic food market in Europe. The demand for health products is also increasing. This provides an opportunity for suppliers of certified ingredients for health products. It makes targeting European buyers easier and more profitable. The EU wants to increase the demand for organic products and strengthen consumer trust. Governments in Denmark, France and Sweden, are already promoting organic foods. For example, in schools, government organisations and catering establishments. The 2020 COVID-19 pandemic has boosted organic food sales in many countries. For example, the sales of organic products in the United Kingdom increased by 12.6% in This is the highest increase in the last 15 years. Consumer demand for organic products will most likely increase even more in the coming years. Such developments present opportunities for growers and suppliers in developing countries. They generate a strong demand for imported organic ingredients. Many food and health product companies need certified organic MAPs, and related ingredients. A European consultant of organic agriculture trade says, organic has become an industry standard in the EU, and now there is more beyond organic which is The European Green Deal. The main driver of organic food and drink sales in Europe is rising consumer awareness. European consumers want to avoid synthetic chemicals and pesticides in the food they eat. Many are also concerned about the environmental impact of conventional farming and want to support organic production methods. Furthermore, organic food and beverage products avoid the use of synthetic food additives. This creates an opportunity for organic suppliers in developing countries. As the organic food market continues to expand, there is higher The organic market analysis PAGE 8

10 demand for natural food additives as well as Ethical consumers are also generating demand for vegan and vegetarian products. Its recognizable that the European plant-based market has been growing at a healthy rate. This trend is expected to continue over the upcoming period. Europe has a significant organic industry. Suppliers of organic products from developing countries should target countries with a strong organic consumption, such as Germany, France, the Netherlands, Italy, the UK and Spain. Germany The German organic food market is the largest in Europe, worth roughly EUR 12 billion in Organic foods are widely accessible to consumers in Germany, with approximately 60% sold via mainstream retailers. Plant-based products are also popular among German consumers. Germany has the largest plant-based products market in Europe, worth EUR 817 million. France France is also one of the largest organic food and drink markets in Europe. The demand for organic products has been increasing over the last decade. In terms of plant-based foods, France ranks fifth in the European table. The French organic food market was worth EUR 11.3 billion in French consumers spend around EUR 174 on organic products per annum. Demand for organic foods in France is expected to continue. Mainstream retailers are highly active in marketing organic foods and improving accessibility to consumers. The Netherlands The Netherlands is a significant entry point for food exports. This is partly because most raw materials are re-exported to other European countries. The Dutch organic food market was valued at EUR 1.2 billion in According to the Food Economic Report of the Netherlands, total spending on sustainable foods reached EUR 4.5 billion in 2017, a 19% increase compared to The UK The UK has one of the largest consumer markets in Europe. According to the Food and Drink Federation, the market generated about EUR billion in The organic market analysis PAGE 9

11 revenue in There is rising consumer awareness and growing demand for natural and healthier food and drink products. The UK market for organic food and drink is increasing. The UK market is the fourth in Europe, worth EUR 2.68 billion in Supermarkets are the most important sales channels, followed by specialist retailers. Dairy products, fruit and vegetables and packaged foods are popular product categories. The UK is the second largest plant-based products market in Europe. Italy Italy has one of the largest markets for organic products, which is growing at a healthy pace. Italian consumers tend to seek out high-quality natural products. In 2019, the Italian organic food market was worth EUR 3.6 billion in Italy has the third largest plant-based food market in Europe. Specialist retailers and farmers markets are the most important sales channels for organic foods in Italy. However, mainstream retailers are gaining market share, especially in packaged foods. Spain The Spanish food industry generated EUR billion in There is a growing trend of organic and sustainable foods in Spain. According to FiBL, the Spanish organic food market was worth EUR 2.13 billion in Figures and Statistics about the EU organic sector: 1- Data below show that the European organic sector is well-developed. Relatively high shares of agricultural land, continual growth in the area, number of operators, and a fast-growing market show the exceptional dynamics of the European organic market and sector (until 2022). 2- To reach an organic farmland share of 25% by 2030, comprehensive policy support is needed to increase the supply and demand for organic products. The European action plan is expected to support this development. 3- In past years, the organic market in many countries was growing faster than the area/production; driven by the pandemic, the organic market has grown faster than before, even though it slowed down again in The organic market analysis PAGE 10

12 The organic market analysis PAGE 11

13 The organic market analysis PAGE 12

14 Headline 3: The Product Module Herbs & Spices Europe is one of the world s leading importing regions for herbs and spices. It accounts for about one quarter of the world s total imports of herbs and spices. To illustrate, imports by the United States totalled only 55% of the European import value. In 2020 Asia was the leading importer of spices and herbs with 47% of the market share, followed by Europe (26%), North America (17%), Africa (4.5%), Latin America, the Caribbean (3%) and Australia and Oceania (2.5%). Herbs and spices are consumed and thus imported in larger quantities in Asia, as most of the world s spices are produced and processed in tropical regions of Asia. Although Europe is not the largest importing region, it is an interesting one. This is because more than 95% of imports from outside Europe come from developing countries. Also, the average import prices in Europe are significantly higher than in most other regions. For example, the average price of imported spices in The organic market analysis PAGE 13

15 Europe is almost twice as high as prices in Asia. This makes Europe an interesting target market for exporters from developing countries, regardless of downward developments for certain products occurring from time to time. The strong dependence on spice imports from developing countries also means that almost all the trade within Europe consists of re-exports of spices and herbs that originally came from developing countries. Herbs are a different story, however, as most herbs consumed in Europe are also produced in Europe. While the market clearly grew in the period, this changed in 2018 and However, the positive trend seen in the period, when import values of herbs and spices increased every year, was caused by just a few spices. Most notably, vanilla had a considerable impact on the growth. The year 2020 was marked by another slight increase (4.2%) in imports from developing countries. In an analysis of quarterly imports in 2020 and the preceding years, it was shown that lockdowns did not have a significant impact on total spices and herbs imports into Europe. According to the first set of 2021 data for the first and second quarters, European imports of herbs and spices remained stable or grew slightly. While European imports are likely to increase between 0 and 2% over the next few years, growth in Europe is forecast to remain lower than in other regions worldwide, such as South and Southeast Asia, where economic and market growth have been much higher on average in the past decade. European imports of herbs & spices by origin (in euros million) The organic market analysis PAGE 14

16 Limited competition from local production The production of herbs and spices in Europe is limited. That means that for most products, exporters from developing countries do not need to worry too much about local competitors. There are, however, a few exceptions that should be noted. Dried herb production mostly takes place in France, Italy and Greece. Parsley is the most popular dried herb, but European production also includes basil, bay leaves, celery leaves, chives, coriander, dill tips, chervil, fennel, juniper, marjoram, oregano, rosemary, sage, savoury, tarragon and thyme. Bulgaria, Poland, Romania, Spain and Hungary boast the largest outputs in Europe. The production of certain spices (and few herbs) is substantial in these countries. The key herbs and spices produced in these countries are anise/badian/fennel, thyme (Poland), coriander seeds, chilies (Spain and Hungary) and capsicum/paprika. Domestic production in these countries appears to have declined in recent years. If this trend continues and the lower domestic or regional supply is supplemented with imports, this could offer opportunities for developing-country suppliers. At the same time, it should be noted that some spices, such as coriander seeds, are mostly exported to Asia. So, declining production will not open up opportunities in Europe, but rather, in the product s destination market in Asia. Growing demand for sustainable herbs and spices Sustainability is a broad term with many aspects and there is still no recognised sustainability certification covering all of them. Until recently, sustainability certification was aimed at special niche buyers on the market but it is now becoming more mainstream, similar to organic certification. One practice that is becoming increasingly commonplace is to publish CO2 emissions rates on products. However, it is difficult to confirm the reliability of the measurements on which those claims are based. However, some private certification schemes are being developed for this purpose. Currently, the most frequently-used certification schemes focus on environmental impact (such as organic or Rainforest Alliance certification) and ethical aspects (such as Fairtrade certification or SEDEX/SMETA audit). In practical terms, the sustainable production of herbs and spices means that producers obtain organic certification for their operations. Sustainably produced herbs and spices may also be certified under the Fairtrade scheme. The organic market analysis PAGE 15

17 Until now, the market shares of sustainably produced herbs and spices in Europe were very low (less than 1%), but they are now increasing. According to Flocert in 2021 there were 146 Fairtrade-certified companies in the sector of herbs, herbal teas and spices. According to Fairtrade International, global sales of Fairtrade certified products are increasing. Official data specifically related to spices and herbs are not publicly available, but more than 2.5 thousand companies licenced more than 37 thousand products in The highest sales per capita was registered in Switzerland, Ireland and Sweden. India has the largest number of Fairtrade certified companies in the spices segment, while Egypt has the largest number of certified companies in the herbs segment. The next decade is expected to be marked by impressive growth in organic herbs and spices, in line with the fast-growing organic food trend. In Germany, for example, the organic food market grew by more than 20% in Another important driver is the growing attention for the medicinal properties of spices, especially those with organic certification. Western and northern European countries, led by Germany and Switzerland, are expected to see the most growth. Meanwhile, conventional products already produced under increasingly strict requirements, such as Europe s maximum residue levels legislation, are expected to continue to be subject to even lower maximum levels of contamination for the sake of mitigating food safety risks. Slight growth in European import value expected European import values of herbs and spices are expected to grow slightly in the coming years. Import volumes often fluctuate not because of varying demand but due to non-stable production levels in the countries of origin. Overall, demand for herbs and spices in Europe can be forecasted to increase by an average rate of roughly 0 to 3% per year in the coming years. The most important European ports for spices and herbs are Rotterdam (the Netherlands), Hamburg (Germany), Antwerp (Belgium), Felixstowe (the United Kingdom), Algeciras (Spain) and Marseille (France). After products arrive in those ports, they are unloaded and transported by lorry to other parts of Europe. The Port of Rotterdam is the largest port in Europe. The main destinations of spice imports are forecast to remain the same in the years to come. This means that the Netherlands will keep its position as the The organic market analysis PAGE 16

18 largest hub for spice imports into Europe. Germany serves a similar function and that will stay the same as well, while France (for vanilla from Madagascar) and Spain (for dried chillies and particular herbs used in processing) will also remain important hubs. Germany is a particularly strong re exporter of black pepper imported from Brazil. The expected increases as mentioned above, are based on the ongoing growing demand for natural ingredients over artificial flavours. This trend has been the major driver of growing import values since at least The forecasted demand is also based on the trend that a growing number of consumers are interested in home cooking and experimenting with different world cuisines. At the same time, the average growth of the total market can be harmed by negative market developments related to single spices. In the past few years, vanilla had such a negative impact on the growth of import values. In the past few years, the European market has faced huge uncertainties because of the Pandemic. However, the Covid pandemic has not had a clear negative impact on the total consumption of most categories of imported herbs and spices. On the positive side, spices that are thought to support immune function grew much faster in The spice that was promoted the most and was in highest demand was ginger, followed at some distance by curcuma and garlic. At the same time, it should be noted that the ginger was already experiencing a strong upward trend and that trend has only continued since March Sometimes, reference is also made to people staying at home more, which has increased the popularity of home baking and experimental holiday mood cooking. Such trends will definitely have an impact on the type on consumption, but they will also replace other modes of consumption, especially the ones that take place outside of the home. European Green Deal will have an impact beyond European borders Another development is the launch of the European Green Deal. In 2020, the European Union implemented a set of policies and actions called the European Green Deal with the aim of making the European economy more sustainable and climate neutral by The EU Green deal includes the Farm to Fork Strategy and the Biodiversity Strategy. Both policies affect food production and trade. Aspects of the European Green Deal relevant to the The organic market analysis PAGE 17

19 sourcing of spices and herbs from developing countries are reducing the use of pesticides, increasing organic production, and switching to sustainable packaging materials. European markets offer the most opportunities for Spices and Herbs The markets in Europe that provide the most opportunities for exporters from developing countries are Germany, the Netherlands, the United Kingdom, France, Spain and Poland. As Europe s largest importer of herbs and spices, Germany is an interesting market to focus on. France and the Netherlands are other promising leading markets with relatively large shares of imports from developing countries. The UK and Spain are other important markets with substantial shares of imports from developing countries. Imports values and origins of herbs and spices in selected European countries 2020 (in Euros million) The most important varieties of spices for Egypt exports in the EU market Thyme Demand for dried thyme in Europe is driven by the popularity of Mediterranean cuisine and interest in thyme s health benefits. Dried thyme is a traditional culinary aromatic herb. It is also used in herbal teas and as a raw material for The organic market analysis PAGE 18

20 the production of essential oils and other health care and cosmetics products. Opportunities for new developing country suppliers can be found markets with high consumption, such as Germany, Spain, Belgium, the United Kingdom, France, and the Netherlands. Offering high-quality, safe and sustainable products will give you a competitive advantage. Europe is the largest dried thyme importer in the world, accounting for 50% of the world s total imports. European imports of dried thyme have increased at an annual growth rate of 2% in volume since 2016, reaching 10 thousand tonnes by Around one-third of European dried thyme imports come from developing countries. Also, a large share of the intra-european trade consists of re-exports of dried thyme originally from developing countries. New suppliers must be able to compete with players from Poland, Morocco, and other emerging markets, such as Egypt, Turkey, and Israel. Headline 4: The Product Module for other fresh fruits and vegetables More money spent on organic fruit and vegetables Health, flavour and convenience are all factors that drive the consumption of organic fresh fruit and vegetables in Europe. At the same time, social standards and certifications are needed for better information sharing and transparency. Consumer behaviour has grown complex, while professional buyers are becoming more demanding due to the concentration of buyer power. The organic fresh sector requires you to be an expert in your field and integrate into a well-organised supply chain. Latest trends for the consumption of organic fresh F&V 1) Sustainable sourcing is becoming mainstream Consumer awareness is growing due to increased transparency. People at all levels in the value chain are gaining interest in fruits and vegetables produced and traded under more sustainable and responsible practices. This trend relates to many aspects along the supply chain, including working conditions, water use, waste management, among other things. The increasing populatiry of organic products is also part of this trend towards sustainability. Your product is most likely to be accepted by European buyers if it complies with sustainability initiatives. 2) Sustainability Initiative Fruits and Vegetables (SIFAV) The organic market analysis PAGE 19

21 Several leading retailers and traders throughout Europe are joining forces in the Sustainability Initiative Fruits and Vegetables (SIFAV), coordinated by the Sustainable Trade Initiative (IDH). SIFAV addresses cross-cutting supply chain challenges such as smallholder farmer inclusion, health and safety, food safety and the sustainable use of water resources. Counting over 30 members, SIFAV is pioneering a development that you will see more often throughout the European supply chain. Under SIFAV, all private sector partners commit to the common sustainability targets for For example, they agreed to 1- measure and reduce the environmental footprint of priority products by 2025, including a reduction of 25% of the carbon footprint and food loss; 2- implement a social third-party verification for 90% of the volume from high and medium-risk countries; 3- and take a first step in improving Living Income. 3) Attention to the use of water resources Industry sources mention water conservation as one of the principal concerns in the production of fresh fruit and vegetables. This subject has particular importance for water intensive crops such as avocados, asparagus and stone fruit. For example, in the past few years several restaurants in the United Kingdom banned avocado from their menus due to the excessive use of water resources. The effects of these reactions on consumer awareness over water use have the most impact on production regions where water is scarce, such as Morocco, Egypt, Peru and Namibia. The growing attention to water resources will force producers in arid regions to switch to other crops or find sustainability solutions and technology. For pioneering companies such as Eosta, a Dutch importer of organic and fair fruit and vegetables, water use is one of the main aspects factored in the true cost accounting of their products. They recently addressed the issue in March 2021 with a stunt near the Dutch parliament promoting water-saving avocado s. For growers, responsible water use will become part of common standards, such as the SPRING add-on for GLOBALG.A.P. certification, a Sustainable Program for Irrigation and Groundwater Use originally developed by the Swiss retailer COOP. 4) Reducing plastic packaging The organic market analysis PAGE 20

22 Part of the sustainability movement targets the reduction of plastics in the supply chain, which retailers and policy makers take very seriously. The European Union adopted a Plastics Strategy in 2018, recommitting to work towards the goal of ensuring that all plastic packaging be recyclable by March 2020 was the launch of the European Plastics Pact, a public-private coalition with clear targets up to 2025 to rule out single-use plastic products and packaging. For suppliers of fresh fruit and vegetables it will diminish the use of food and beverage containers made of expanded polystyrene, among other things. Supermarkets in various countries have also started to act towards reducing plastic. The examples are numerous: 1- The Netherlands: Dutch organic retail chain Ekoplaza introduced the first plastic-free supermarket using, for example, biodegradable packaging; 2- The United Kingdom: several supermarkets in the United Kingdom have pledged to take measures to reduce plastic bags and packaging. For example, in December 2020 Tesco announced that it has removed one billion pieces of plastic, including small plastic bags used to pack loose fruit and vegetables. 3- Germany: Germany s market leader REWE Group says it has achieved a saving of 9,000 tonnes of plastic per year by banning plastic bags. Reduction in the use of plastics will continue to affect the packaging of fresh fruit and vegetables. Products such as grapes and soft fruit, for example, which are sold in clamshells, are already being replaced by punnets with top seal and other innovative variations using cardboard. A British packaging producer developed a sugar-cane based packaging option and the Indian company Uflex has started to use special biodegradable liners of Perfotec to extend the shelf life of fresh products. For organic fruit, laser labelling is becoming more common and is replacing plastic packaging. Supermarkets such as ICA in Sweden and Rewe in Germany already use laser labelling for products such as organic avocados, sweet potatoes, squash and melons. The organic market analysis PAGE 21

23 Another anticipated packaging innovation to curb the use of plastics is NanoPack, an EU-funded project that will develop antimicrobial packaging solutions for perishable foods based on natural nanomaterials. This project combines sustainable packaging with the prevention of food-borne illnesses and the reduction of food waste. Less and recyclable plastic is the new standard. In the long term, you can expect plastic being reduced to a minimum or even completely replaced by alternative, biodegradable materials. Headline 5: the shop visits insights in Germany, Headline 6: Recommendations to Egyptian exporters 1- Educate yourself on the European markets; how to deal with EU importers (Do s and Donts ), consumption behavior, new concepts in the wake of the European Green Deal. 2- Work closely with importers to ensure your documentation is up to date and compliant with regulations of the EU that are updating all the time. 3- Demonstrate reliability to European buyers when you are communicating with them. Ensure you are responsive, honest and transparent in relation to what you can deliver, as well as about the quality of your products. Prioritise longterm trade partnerships based on trust. If you can, meet distributors in person at trade shows, as closer contact increases your chances of creating business relationships. 4- Make sure the quality of your supply is high and consistent. 5- Do research before visiting or exhibiting at a trade fair. Start by looking through exhibitor lists and research exhibitors who are suitable for you. 6- Invest in the ecofriendly packaging materials. Headline 7: next steps and follow up 7- Organizing B2B meeting between Egyptian exporters and European importers in cooperating with our partners and Egyptian Commercial Services offices in the target markets. In addition to that, we can propose site visits to the most important food retails chains, supermarkets, wholesale markets, specialty food stores, etc. The organic market analysis PAGE 22

24 8- Developing an awareness campaign including a series of workshops/webinars/seminars tackling all topics including organic products, and sustainability related to raise the awareness of the community of Egyptian Agri-exporters. 9- Encourage people to visit or exhibit in the trade fairs, which are focusing on organic. 10- Share up-to-date market studies or reports focusing on organic food sector as well as latest trends. The organic market analysis PAGE 23