Structure and perspective of main distribution channels for organic products in Europe

Transcription

1 Structure and perspective of main distribution channels for organic products in Europe Dr Toralf Richter bossert & richter AG. Switzerland bossert & richter AG // Facts Marketing agency Seon (Switzerland) Editor journal «oliv» 1

2 Outline Organic market overview The consumer view Main distribution channels for organic food Challenges for the future 2

3 Organic market development Organic market overview Global number of organic farmers Number of organic farms worldwide 1'800'000 1'600'000 1'400'000 1'200'000 1'000' '000 1'798' ' ' ' ' Sources: FiBL, IFOAM 3

4 Organic market overview Global Sales with organic food [in billion $] 70 Organic market size (billion $) Sources: FiBL, IFOAM Organic market overview Per capita consumption of organic food 2011 [in ] Switzerland 177 Denmark 162 Austria 127 Sweden 94 Germany 81 USA 67 France Canada Sources: FiBL, AMI 4

5 Organic market overview Development of retail sales in organic food in Switzerland during the last decade Mio. SFR % Entwicklung des Bioumsatzes in der Schweiz Umsatz Bioprodukte (Mio. SFR) Jährliche Veränderung (%) In the last decade the sales in organic food has increased steadily. In the same period the development of conversion of farms stagnated. Organic market development Switzerland Organic market description Growth of organic market in 2012 by app. 5% Market share organic food: 6% Organic market share fresh products: 8% Organic market share: eggs (20%), bread (18%), vegetables (12%), dairy food (10%), fruits (8%), meat & meat products (4%), 5

6 Organic market development Switzerland General development Coop sells evey second organic food item Mainly Coop and Migros with new organic power Organic grows also in export (cheese, dairy produtcs, chocolades) New player with organic food (Aldi, Lidl, Müller, Alnatura) Organic retailer sector as well as direct selling with slow ut constant growth The consumer view 6

7 (Nearly) each household buys organic (Consumer penetration 2007 by product groups) Nevertheless, there is potential for higher organic buying frequency Criteria for consumers to select places to buy food Areas of competition for retailers in selling organic food in matured markets Competition areas Best distributor to buy organic Assortment Price Quality Convenient shopping Traceability Competence, advising Reliability Personal relations Value trading + Organic supermarkets, few supermarkets + Discounters +Supermarkets, discounters + Supermarkets, online shopping +Supermarkets, discounters + Organic retail shops, health food shops +Org. and health food shops +Org. and health food shops +Org. and health food shops Consumers split buying decisions and use mostly several markets to buy organic food. 7

8 Challenges for retailing organic food in future Consumers with high expectation with regard to organic food production, processing and retailing. Growing concern about the environment/climate Rising demand for chemically-clean products Growing interest for product origins Growing interest for spiritual / esoteric issues Increasing regionalism / buy local Questions about carbon footprint of products Questions about fair market partnerships along supply chain Criteria for consumers to select places to buy food Where is the best place to buy organic food and why? Results of a qualitative consumer study. Case Switzerland To buy organic food is more than just to look for a good product. 8

9 Challenges for retailing organic food in future On the opposite side the conventional food business starts more and more green activities Most recommended Recommended In the last WWF label competition in Switzerland several label from integrated production were higher rated than EU Bio due to measures for the preservation of biodiversity on integrated farms. Main distribution channels for organic food 9

10 Main distribution channels Relevance of conventional retail chains as distribution channel for organic food Percentage of total organic food sales derived by conventional retail chains 2009 Denmark Ireland Retail chains as dominant channel Sweden United Kingdom Switzerland Retail chains as important channel Austria Czech Republic Germany Retail chains as relevant channel France 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% In most countries conventional retail chains sell more than 50% of the total organic food. Main distribution channels >> Conventional Retailers Influence of dominant and important retail chains on organic market development are able to lead the organic market out of the niche. are able to catch broad consumer segments. are able to drive the market. are able to set trends in the market. are able to dominate discussion of standards and regulation. are able to start new projects to develop the organic market. are able to stop or at least slow down the organic market development. 10

11 Main distribution channels >> Conventional Retailers Influence of dominant and important retail chains on organic market development As dominating retail chains also influence the policy of governments and organic farmer associations, you can say: Retail chains are really on the driver seat for the whole sector development of organic farming. Main distribution channels >> Organic Retailers Heterogeneous sector >> The beautiful and the less smart players 11

12 Main distribution channels >> Organic Retailers Heterogeneous sector >> The strong and the weak players Strong players Weak players Organisations which own wholesaler structure and retail chains in one hand Organisations which have a high rate of private equity Organic retail chains Smaller organic wholesalers or single organic retailers Organisations which have a low rate of private equity and restricted access to credits Main distribution channels >> Organic Retailers Strengths and Weaknesses Strengths Weaknesses Attractive organic assortments (Mostly) high, in many cases exclusive products and qualities Personal and trustful relations to customers. Organic food and nutrition competence Strong engagement of owners In many countries extreme high price level compared to organic food in retail chains Partly poor location with low customer frequency High cost structure (e.g. salaries) and less productivity Assortment for many customers less known Often low average sales per customer. Often less space for attractive presentations or product innovation Low investment power of owners Readiness of owner to change and orientate to the consumer needs is limited. 12

13 Summary The international organic market furthermore growth steadily Today: broad organic product penetration (organic is everywhere) Huge organic assortments available at all price and convenience levels Conventional retail chains do profit from change in consumers attitudes Tendencies of conventionalism and anonymity also among the organic business Trends to non-commercial organic trading activities (e.g. CSA community supported agriculture) Convince us, we are your future. 13