The German organic market An overview

Transcription

1 The German organic market An overview Prof. Dr. Ulrich Hamm, University of Kassel, Germany 1 Analysis of the previous organic market developments 1.1 Demand 1.2 Supply 1.3 Marketing 2 Trends for the further development of demand and supply 3 Potential opportunities for Irish exporters of organic food

2 1 Analysis of the previous organic market developments 1.1 Demand Annual turnover for organic food in Germany 1) billion Euros billion Euros ) On retail level, excluding out-of-home consumption Source: Hamm and Rippin 2008

3 1.1 Demand Germany is by far the biggest organic food market in Europe, however, there is still more room for further growth. Organic food purchases of the top 5 countries in Europe 1) (2007, in Euro per capita) Switzerland 103 Denmark 92 Lichte nste in 91 Austria 74 Germany 65 1) Excluding out-of-home consumption Source: Hamm

4 1.1 Demand The level of organic food consumption was still low in Germany in 2007: organic share on total expenditures on food was 3.4% with huge differences between the different food categories: 63.8% baby food in jars 7.7% bread 28.8% lemons 7.1% potatoes 28.2% vegetable drinks 6.9% oranges 27.4% carrots 5.2% apples 24.3% beetroot 3.3% jogurt 16.6% muesli 2.4% butter 15.3% zucchini 2.2% beef 13.9% bananas 0.7% poultry 11.5% fresh milk 0.6% pork 10.4% eggs 0.1% fish Source: ZMP (2008) based on GfK panel data

5 1.1 Demand Buying frequency of German organic food consumers (2007, different sources): 84 to 92% bought at least one organic product 9 to 27% often bought organic products 3 to 8% bought organic products predominantly

6 1.1 Demand Socio-demographic characteristics of German organic food consumers (2007, different sources): higher educational level slightly higher per capita income higher share of young families with small children higher share of middle aged couples ( empty nests ) low share of single households

7 1.1 Demand Top 5 buying motives of German consumers for organic food (2007, different sources): 1. Health, fewer chemical residues 2. Taste 3. Animal husbandry 4. Environment 5. Naturalness Trend towards Lifestyle of Health and Sustainability (LOHAS)

8 1.2 Supply Certified organic area in Germany at the end of the respective year (1000 ha) 1.000,00 900,00 800,00 700, , ,00 400,00 300,00 200,00 100,00 0, Source: BLE 2008

9 1.2 Supply Indices of the development of supply (organic area) and demand (turnover) in Germany (2000 = 100) Turnover Organic area growing supply gap Source: Hamm 2008

10 1.2 Supply Development of supply (organic area) and demand (turnover) in the Top 10 European countries for organic food (2006 against 2001 in %) Turnover Organic area UK FR DE DK AT BE NL SE IT CH Source: Hamm 2008 based on national data

11 1.2 Supply Supply deficits for organic products in Germany since 2006: - poultry - different vegetables and fruit - potatoes - compound feed (especially protein feed) Additional supply deficits for organic products in Germany since 2007: - milk (especially butter in winter) - spelt, wheat, oats

12 1.2 Supply Farmer prices of organic products sold to processors or wholesalers in Germany (in /100 kg without VAT) ) Wheat Rye Oats Field peas Potatoes Carrots Milk (4.2% fat) bulls 2) cows 2) pigs 2) lambs 2) Eggs (100 pieces) ) January to June 2) Carcass weight Source: ZMP, different years

13 1.3 Marketing Sales channels for organic products in Germany (in %) Farmers/gardeners Bakeries/butchers 7 5 Health food shops 10 4 Natural food shops Conventional retailers Others (e.g. drugstores) 5 6 Source: Hamm and Rippin 2008

14 1.3 Marketing Recent trends in sales channel developments for organic food in Germany Main winners Main loosers 1. Conventional discounters (Aldi, Lidl, Plus, Penny, Norma etc.) direct sales of farmers conventional supermarkets with small organic range 2. Conventional supermarkets with broad organic range > 2000 organic articles (tegut, Feneberg, some Edeka or Rewe supermarkets) conventional supermarkets with small organic range natural food shops direct sales of farmers 3. Organic supermarkets (Alnatura, Basic and many small chains) small natural food shops direct sales of farmers bakeries, butchers Source: Hamm 2008

15 2 Trends for the further development of demand and supply Further strong growth of demand because of: (1) Growing interest of consumers in buying organic products LOHAS organics are seen as the main possibility of lowering health risks (chemical residues, in future GMOs) organics are seen as a possibility to have a good taste without a bad conscience towards one s own health, natural environment, farm animals etc. increasing amounts and competition on processors and retailers level lead to lower consumer prices

16 2 Trends for the further development of demand and supply However, consumers become more demanding with respect to organic food: appearance (especially fruit and vegetables, packaging) taste convenience degree (frozen pizza, pre-cooked pasta, chilled food etc.) traceability of origin and transport media (carbon footprint, food miles) regional origin ( fresh food we can trust ) ethical values with regard to production and trade ( fair trade, good working conditions for employees )

17 2 Trends for the further development of demand and supply Consumers demand for organic products increasingly differentiates in premium segment (e.g. regional specialities, perfect taste) mainly sold via organic supermarkets, conventional supermarkets with a broad range of organic products and farm shops discount segment (organic is seen as a food category) mainly sold via conventional discounters, drugstores and conventional supermarket chains, but also via organic supermarkets in between segment with no distinctive profile (organics of the past) problematic in future

18 2 Trends for the further development of demand and supply (2) Growing interest of conventional discounters and supermarket chains because of: consumers demand organics are seen as possibility to minimise risks with regard to food security (residues of pesticides or antibiotics) organics help to improve the company s image (CSR concepts)

19 2 Trends for the further development of demand and supply (3) Growing importance of organic products in out-of-home consumption top end restaurants ( LOHAS) canteens of companies (following CSR concepts) canteens of governmental organisations canteens for schools and kindergartens

20 2 Trends for the further development of demand and supply Further development of supply:?

21 2 Trends for the further development of demand and supply Further development of supply: German farmers are risk-averse and traditionally not very market-oriented (waiting for governmental incentives) like to act independently or in small organisations only many organic farmer organisations with own standards (more than 10) many small organic marketing organisations (ca. 60) which cannot fulfill the quantitative (and qualitative) demand of big discount or supermarket chains

22 2 Trends for the further development of demand and supply Further development of supply: There is no question that the German organic market needs more imports to overcome the existing supply shortages and to serve the further strongly increasing demand.

23 3 Potential opportunities for Irish exporters of organic food It is not possible to give well-founded advice to Irish food exporters without knowing the specific strengths and weaknesses of the organic sector in Ireland. As a foreigner, I can only share a few ideas with you.

24 3 Potential opportunities for Irish exporters of organic food All in all export opportunities for organic food (growing market) are much better than for conventional food (shrinking market).

25 3 Potential opportunities for Irish exporters of organic food Ireland may have better premises to serve the premium organic food market as several conventional Irish food products (e.g. beef, butter) have a very good image in Germany and are sold for premium prices the German market for organic beef is not scarce in supply and Danish and Austrian farmers fill the gap for discount organic milk products the premium organic food market does not need big quantities in homogeneous quality (Irish organic market is still small).

26 3 Potential opportunities for Irish exporters of organic food There are also good opportunities to serve the small but strongly growing German market for organic fish. Conventional production methods (especially for salmon) are often critisized in German media reports so that organic fish will have good sales opportunities. Organic fish as a possibility to improve the overall Irish image for organic premium products.