MARKET REPORT 2014. The recipe for better food

MARKET REPORT 204 The recipe for better food

CONTENTS THE ORGANIC MARKET A NEW START OUR JOURNEY TOWARDS 2020 4 6 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 9 2 3 4 4 5 6 7 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 9 20 2 22 23 24 24 25 25 26 26 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 27 27 28 28 29 29 30 3 32 33 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 35 35 36 37 38 39 40 40 4 4 42 42 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) 43 44 46 47 48 49 49 50 5 2 STATISTICS KRAV IN NUMBERS - on KRAV-labelled products 53

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 204 5 3 ICA is the largest multiple retailer in Sweden.

THE RECIPE FOR BETTER FOOD Our Journey Towards 2020 3 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 2020. 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!

# 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 204 9 9

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 204 0 % 00 80 60 40 20 20 Neutral (3 5) Do not agree ( 2) Doubtful

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. % 00 90 80 70 60 50 40 30 9 20 22 53 47 48 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 20 0 2 26 23 2 KRAV MARKET REPORT 204 TNS Sifo AB. The survey included,000 people. KRAV MARKET REPORT 204 3 2 3

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 204 4 5

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 80. 6 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.

#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 204 9 2 services (restaurants and the public sector). Ekoweb. 9

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 204 2 20 2

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 204 22 2 Information from the respective multiple retailer. 23

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 34,776 230,733 223,370 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% 2 3 4 24 KRAV MARKET REPORT 204 Calculated by KRAV. Calculated by KRAV. Ekoweb. Retail. Catering wholesale. KRAV MARKET REPORT 204 25 2 AC Nielsen, including hard discounter sales statistics. 24 25

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 2009 200 20 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 0,000 204, we are going to introduce new supplier of bread for this year s Cook KRAV-labelled products. 2009 200 20 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 204 27 3 2 3 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 700,000 600,000 500,000 400,000 300,000 200,000 00,000 Organic milk +8%* Organic soured milk -8%* +2%* Organic yoghurt 2009 200 20 +7%* 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 2009 200 20 +2%* Organic breakfast cereals +2%* Organic flakes and grain +20%* Total of organic rice and couscous Total of organic pasta +2%* 27

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 250,000 200,000 50,000 00,000 50,000 SALES OF THE LARGEST SINGLE PRODUCT GROUPS 3,000 SEK 40,000 30,000 20,000 0,000 +23%* Organic centrally packaged meat Organic sausage Frozen fish +6%* +5%* Organic processed meats 2009 200 20 +%* Organic fresh chicken +63%* Organic frozen meat products +0%* +23%* +362%* Organic paté Organic smoked and cured pork loin 2009 200 20-33 %* 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. 28 2 3 Included in this category is frozen fish, frozen shellfish and cephalopods and total fish and shellfish (new). www.systembolaget.se KRAV MARKET REPORT 204 29 3 4 AC Nielsen, including hard discounter sales statistics. Calculated by KRAV.,000 SEK 300,000 250,000 200,000 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%* +%* 2009 200 20 Beer -7%* -%* Total organic juice/nectar Spirits Total organic tea +3%* -23%* Cider -6%* 2009 200 20

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 204 3 30 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 2023. 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

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.,067 960 32 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

#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 204 35 34 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.

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 204 37 36 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 2007-204 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 500,000 400,000 300,000 200,000 00,000 ha 400,000 300,000 200,000 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

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%* # 300,000 250,000 200,000 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 -%* 2009 200 20 2009 200 20 2009 200 20 2009 200 20 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%* # 2,000,500,000 500 # 30,000 25,000 20,000 5,000 0,000 5,000 -%* # 200,000 50,000 00,000 50,000-5%* 2009 200 20 2009 200 20 2009 200 20 2009 200 20 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 204 39 38 39

EGGS POTATOES An increase in sales of KRAV-labelled eggs has led to demand now being greater than supply. We have seen a positive development in sales in particular during the latter part of. A few years ago there was a surplus of KRAV-labelled eggs that was dealt with by exporting them. Continued export of organic eggs combined with rapidly increasing domestic demand has meant that we currently have an insufficient supply of KRAV-labelled eggs in Sweden, says Håkan Burlin, CEO for Stjärnäggsgruppen. Kronägg has also experienced very positive development for KRAV-labelled eggs. Part of the rise in demand comes from a new customer segment. We get more requests from caterers and McDonald s started a successful breakfast concept with KRAV-labelled eggs. We welcome conventional egg producers converting to KRAV, since in Sweden the supply of conventional eggs is significantly greater than demand, says Claes Björklund, Producer and Logistics Manager at Kronägg. KRAV-CERTIFIED LAYING HENS # 800,000 600,000 400,000 200,000 2009 200 20 +2%* Only 2% of the Swedish potato harvest is organically grown. There is a big difference between growing KRAV-certified potatoes and conventional potatoes, mainly because KRAV-certified growers do not combat leaf fungus with chemical pesticides. On average, the harvest yield is about half that of the conventional harvest, but growing techniques are developing with amongst other things potato varieties that ripen earlier. The year was a good potato year with low leaf fungus attacks and harvests were in general good and of good quality. The market for KRAV-certified potatoes has been rather weak over the years, with prices that don t completely reflect the reduction in harvests. Not more than 2% of the Swedish potato harvest is organically grown. During however, growers noticed a certain increased interest from retailers. In the coming years, the goals in the public sector for organic food can also be of significance for development of the market for KRAV-labelled potatoes. Subsidisation of organic production of potatoes is important for the economics of growing. If the compensation is worse in the new rural development programme, there is a risk that growing in Sweden will be hampered if prices don t increase. KRAV-CERTIFIED POTATO CROPS ha 800 600 400 200 +4%* VEGETABLES FRUIT & BERRIES 40 There were record sales of KRAV-labelled vegetables in both shops and the public sector. Both the public and retail sectors want to work with large volumes. Growers either have to be very large, or alternatively, form a sales organization together with other growers in order to meet that demand. Hasse Ek at Svenska Odlarlaget is pleased with the past year. market before they are willing to take a chance, says Hasse Ek. An alternative to working with large volumes can be to put an effort into local sales. For the local market, you have to work with quality. When we sell in the town square we receive a lot of input into which varieties we should choose. We also sell to a local restaurant wholesaler and like to invite the restaurants out to the farm, says Marcus Söderlind, vegetable grower in Habo. KRAV-CERTIFIED VEGETABLE CROPS ha,000 +8%* 800 600 Sales have reached a level where demand is greater than what the Swedish crops can deliver. Fruit Apples account for most of the KRAVlabelled fruit grown in Sweden. The largest player in the Swedish KRAVlabelled apple market is Äppelriket. It is a sales organisation primarily for apple growers in Skåne (a part of southern Sweden) within which nine of 94 growers are KRAV-certified. future, says Lars-Olof Börjesson, CEO at Äppelriket. Berries Black currants occupy the largest area of the total of KRAV-certified berry crops. Next comes strawberries. KRAV-certified berry growing is more expensive than conventional growing. Harvests are smaller and vary more from year to year. The largest KRAV-certified crops of both black currants and strawberries are grown by Tord and Thomas Tillman in Grangärde in Dalarna (a central part of Sweden). KRAV-CERTIFIED FRUIT & BERRY CROPS It s been a great year and we ve 400 Retailers are interested in Swedish 200 Sales of fresh strawberries go well and increased sales of most crops. The KRAV-labelled fruit and we sell it s a big job getting all the juicing done. growing season has also been good in 200 everything we get in. In recent years We re growing out of our production 00 most places. There is a desire among we have increased the volume of spaces, says Tord Tillman. growers to cultivate larger areas, but organic products by 25-40% per year they really need to know that there is a and there is potential to increase in the 40 KRAV MARKET REPORT 204 Calculated by KRAV. Calculated by KRAV. KRAV MARKET REPORT 204 4 ha 400 300 Berries +9%* Fruit 4

DAIRY After a hard year for the organic dairy market in, the sales trend has turned upward. During 20 and, there was a strong increase in the volume of organic milk. That in combination with receding sales in resulted in a surplus. During the volume remained unchanged for the most part and now sales are on the rise again. Arla Foods, the market leader of organic dairy products, increased their sales of organic products by 2.5% compared to. The sales increases are expected to continue during 204 resulting in a better balance between supply and demand. IMPROVED PROFITABILITY FOR DAIRY FARMERS The number of KRAVcertified milk cows was almost unchanged in compared to. A surplus of milk in put a stop to dairies recruitment of new producers of KRAVlabelled milk. In general, profitability for Sweden s dairy farmers improved during the year concurrently with an increase in milk prices, but many are still behind with regard to maintenance and investments. The average price for KRAV-labelled milk in December was 4.28 SEK/kg, compared to 3.60 SEK/ kg for conventional milk. That is 0.64 SEK more than a year earlier. The government subsidy for organic milk did not change during the year. The price of concentrated feed fell slightly during the latter part of the year, but remains high. The net total for milk sales minus feed is still higher for organic than for conventional milk. 2 42 KRAV MARKET REPORT 204 LRF Mjölk. KRAV MARKET REPORT 204 43 2 LRF Mjölk, Mjölkekonomirapport nr 4. An annual awards gala held by the Swedish organic food industry. Calculated by KRAV. 42 ORGANIC MILK BY WEIGHT AND SHARE ORGANIC MILK BY WEIGHT OF TOTAL MILK tonnes Organic milk by weight Share organic milk by weight of total milk 400,000 300,000 200,000 00,000 999 KRAV-CERTIFIED DAIRY CATTLE 3 # 50,000 40,000 30,000 20,000 0,000 2009 200 20 +2%* % 6 2 8 4 ARLA DRIVES THE MARKET 0042 0052 0062 20092 200 20 0 32 0 82 0 0 22 0 72 0 0 2 0 the farmers behind the product through both advertising and a strong presence in shops. Arla recognized the advantages of organic production at an early stage and has been producing KRAV-labelled milk for more than 20 years. Arla is the world s largest producer of organic dairy products: 430 Swedish dairy farms produce milk for more than 80 products in the organic portfolio. At the end of, sales of organic products made up % of the company s sales volume. The outcome is a very positive organic trend where Arla in fact drives development in the dairy sector. We hope that this snowball will continue to roll so that more and more people choose KRAV-labelled, says Ann Freudenthal, Marketing Manager at Arla. The year was a tough year for the entire dairy sector, but during Arla reversed the trend. Consumers now choose more organic products from store shelves and the surplus of KRAV-labelled milk is decreasing. An aggressive communication effort has had a positive effect on sales of organic milk and it has been possible for consumers to become acquainted with We are one of several actors who have fought hard to get things moving with organic products. During -, Arla carried out price changes, started a new organic concept that includes climate compensation, launched the new slogan Taking care of nature is taking care of yourself, worked a lot in shops, and not least, added mini-milk and a natural yogurt to the organic selection, explains Ann Freudenthal. On the Winners Stand At Ekogalan 204, Arla received the honorary award From the shelf to the soil ( Från hylla till mylla ) for its hard work on turning the trend in by making KRAV-labelled products more accessible on store shelves. We are standing by our goal of doubling the share of organic consumption so it makes up 20% of our volume in the future. We re consciously setting a difficult goal that is tough to reach but we want to work hard and make organic food more than a niche product, ended Ann Freudenthal. Doubling the share of organic products is an exciting challenge for Arla. During 204 we can all watch Arla put a strong focus on this segment, on it s trade mark, on new environmentally friendly packaging and on projects in shops together with KRAV. Ann Freudenthal Marketing Manager, Arla. At the end of, sales of organic products made up % of the company s sales volume. 43

GRAIN, OIL PLANTS & LEGUMES The land area planted with grain, oil plants and legumes continues to increase, which is fortunate considering the shortage of KRAV-approved feed in recent years in Sweden. The financial situation for KRAV-certified grain crops was tougher during, with reduced prices for grain and substantial increases in the price of organic fertiliser. The price of KRAV-certified grain is now somewhat lower than the five-year average, but still compares favourably with the price of conventional crops. The prices for oil plants and field beans are good. Our big worry is that we have no idea what subsidies will look like after 204, which will be critical for development of organic farming, says Henrik Nätterlund, Plant Cultivation Advisor at HIR Malmöhus. A GROWING DEMAND FOR GRAIN Sweden still has to import KRAV-certified grain for feed, but to a lesser degree than previously Demand in Europe for organic grain has decreased. In the USA however it is increasing faster than production, especially for oat groats. In April, Lantmännen 2 exported 7,800 tonnes KRAV-certified oats to Grain Millers, the world s largest purchaser of organic grain. That s more than Sweden has ever exported. We appreciate the good quality of Swedish KRAV-labelled oat groats and we see Sweden as a long-term business partner, says Sam Raser, Grain Millers. The transaction can amount to 5-20% of the total current production of Swedish KRAV-certified oats. In the long-term, I think and believe that the market for KRAV-certified grain will grow. Not least, signals from the USA point towards continued growth. In addition to the export of oat groats, the USA is interested in KRAV-labelled wheat, says Göran Karlsson, Product Marketing Manager at Lantmännen. The GMO debate, which has now begun in earnest in the USA, is good for organic grain. Even the public opinion building activity taking place in social media websites benefits organic production, ends Göran Karlsson. 44 KRAV MARKET REPORT 204 Calculated by KRAV. KRAV MARKET REPORT 204 45 2 Lantmännen is one of the largest actors in the Calculated by KRAV. Nordic region within the food, energy, machinery and agricultural sectors. 44 KRAV-CERTIFIED GRAIN, OIL PLANTS AND LEGUMES ha 20,000 00,000 80,000 60,000 40,000 20,000 +0%* Oil plants Legumes Grain GRAIN The fall of was wet and much of the planned autumn sowing did not take place. That led to yet another year with a higher than normal proportion of spring sowing. The consequence was that the proportion of oats grown increased. This, combined with an over production in the rest of Europe, led to low prices for KRAV-labelled oats. Compared to, in the autumn of almost twice as much land area was sown with organic grain. This will hopefully result in a better balance between supply and demand of oats. The majority of all KRAV-certified grain is used as animal feed. The increase in sales of milk and eggs therefore gives hope for continued positive development for grain growing. LEGUMES The high prices of concentrated feed for, e.g. dairy cows and laying hens, has led to an increased interest in Swedish grown protein crops and good compensation for those wanting to grow and sell. The majority of the field bean and pea harvests stays on the farm or is sold directly between farms. Since legumes themselves fix nitrogen from the air, the crops have become more interesting parallel with the rise in cost of allowable fertiliser. OIL PLANTS The land area planted with KRAVcertified oil plants is dominated by autumn oilseed rape. The price of oilseed rape is very high, which makes it an attractive crop to grow for those who can. To a large extent, it is the need for oilseed rape for feed that has driven the prices up. For organic farmers, oilseed rape is a high-risk crop as infestations of pollen beetles and slugs can result in large losses. However, cultivation techniques are developing strongly with early sowing, fertilising techniques and hoeing, and those years when there are no problems with pests, good farmers get very good harvests. Oilseed rape can not be grown again in the same field more often than every six years in a crop rotation due to the risk of disease. KRAV-CERTIFIED GRAIN ha 00,000 80,000 60,000 40,000 20,000 ha 0,000 8,000 6,000 4,000 2,000 KRAV-CERTIFIED OIL PLANTS ha 4,000 3,000 2,000,000 KRAV-CERTIFIED LEGUMES +22%* +0%* +6%* Other Other Spring wheat Spring barley Winter wheat Oats Other Peas Field beans Spring oilseed colza Spring oilseed rape Autumn oilseed colza Autumn oilseed rape 45

DEVELOPMENT WITH SUSTAINABILITY IN MIND JR MEAT CHOSE A NEW DIRECTION Swedes eat on average somewhat more than 200 eggs per year according to the trade association Svenska Ägg, and for many years the sales of KRAV-labelled eggs have increased. But what happens with the hen when no longer a laying hen? Even though chicken has become increasingly popular in Sweden, hen meat has been conspicuous by its absence. Perhaps a turning point was reached when the company Scandinavian Organics started up in Enskede outside of Stockholm. The idea came to Nils Wetterlind when he returned to Sweden after having lived many years in Asia. He missed aspects of Asian food culture, not least fresh organic bouillon. Nils found a building, got carcasses from chickens and hens and became KRAV certified. The first product launched was a double-boiled hen bouillon. There was another motive behind his effort: to make use of a prime raw material that had previously just been burnt up. The result was a nutritious bouillon, completely without additives. New Uses After launching several bouillons, such as meat and vegetable bouillons, Scandinavian Organics was also first to launch KRAV-labelled hen meat on the market in the form of shredded hen meat, minced hen meat and hen fillet. Scandinavian Organics is hoping very much for municipal and county council customers. Among the first large customers are Södertälje, Växjö and Västerås. The company s products are also available in the retail sector. I m sure that when people in the public sector start to find out that there is fantastic, good hen meat at a reasonable price, that is both KRAV-labelled and Swedish, many will take further steps to live up to their environmental goals and nutrition principles, says Nils Wetterlind. During 204, at least 500,000 tonnes hen meat and,000,000 litres bouillon will be available. Minced and shredded meat will go primarily to the retail and public sectors, while fillets will go primarily to restaurants and food box companies. Ecological Cycles Scandinavian Organics thinks in terms of ecological cycles with regard to everything - from dealing with the ox bones from KRAV-labelled cattle used in the company s bouillon, to using the entire hen for both bouillon and meat. Scandinavian Organics already produces 0,000 litres beef stock per month, which means that 20 tonnes Swedish KRAV-labelled ox bones are now used that was previously thrown away. The company also uses 20 tonnes class B and C Swedish KRAV-certified carrots per month, as well as onions and parsnips that cannot be sold in the retail sector. The company is going to need a lot of raw materials in the future. The plan is to pay egg producers and make use of the animals instead of it costing the farmers, which is the current situation. The farmers get paid, Scandinavian Organics get raw materials in the required quantity and the animals are made use of. The company chose to KRAV-certify the operation and all the products right from the start. In just over a year that has gone by since then, the operation has developed fantastically. It was obvious, I didn t have to think about it. The KRAV label is synonymous with quality and KRAV has stricter rules than EU-organic for amongst other things, protection of animals, which is an important aspect for me, says Nils Wetterlind. JR Meat delivers meat, fish and shellfish to taverns and restaurants in the public sector. The company was started by Jan Anttila in 996 and has 50 employees. JR Meat was KRAV certified in. It was an important step in the company s development. Continually increasing its selection of raw materials from certified and sustainable fishing is now a prioritised part of the company strategy. This year, JR Meat will also be able to deliver organic and KRAV-labelled meat. The idea for change came about when the founder himself became a parent and realized that it doesn t help to close your eyes if you want to build a good future for your children. It s possible for all decision makers to have an influence on sustainable development, so if there is anyone who should take responsibility, we should. Making decisions that support sustainable development is also very motivating, as is knowing that it s possible to bring about environmental benefits through good business, says CEO Jan Anttila. Sales of KRAV-certified fish such as salmon, cod and haddock have gone well. This has a lot to do with JR Meat informing customers about new products in both advertisements, newsletters, and in conjunction with customer meetings. Furthermore, the abundance of raw materials often means that prices are not much different compared to conventional fish. During 204 the company will focus on increasing sales of salmon in the different sales channels. The raw materials, which come from KRAVcertified fish farms in Norway, are of very high quality, which makes them attractive to sell to restaurants. There is definitely an interest from customers and we are very optimistic about future development in this area, says Carl-Gustav Wennberg, the person responsible for this development within the company. JR Meat clearly sees that the environment is an increasingly important aspect to think about and work for, not just occasionally but every day. A committed wholesaler with an ambition to develop their selection and be responsive to customers, but also to be proactive with sales, can make a difference and combine good business with great environmental benefit. Making decisions that support sustainable development is also very motivating, as is knowing that it s possible to bring about environmental benefits through good business. 46 KRAV MARKET REPORT 204 KRAV MARKET REPORT 204 47 46 47

EXPORT OF KRAV-CERTIFIED PRODUCTS THE WORLD S ORGANIC FARMERS AND THEIR LAND 48 Aim higher than what you might think is possible, work with unique products and be prepared to invest a lot of effort and patience before you get a result. That is the advice from companies that are already working in the export market. Fazer bakery has sold organic bread to foreign countries, mainly Germany, for over ten years and has built up an export organization in order to make a big investment. It took some time however before things started to take off. It takes time and you just have to keep on chipping away. We ve been to a lot of exhibitions and hunted for dealers who can sell and who have logistics solutions, says Per Sandberg, CEO of Fazer Brands Sweden. Fazer now has a number of major customers. The export share is less than 0% of sales, but is nevertheless important. Per Sandberg s advice to those who want to sell in the rest of Europe is to choose unique products. There is no point in running around with products that are already on the European market and trying to compete on price. However, Nordic products are still regarded as somewhat healthier and it s important to highlight Nordic qualities and ensure that they deliver what they promise. Fazer has been selling sourdough rye bread, and that bakery line is running at full capacity. If another client is brought in, expansion is required. Once contact with a retailer or wholesaler is established, Per Sandberg s advice is to work through the written contract carefully, even parts that seem obvious, and to carefully check the KRAV MARKET REPORT 204 dealer s financial situation to make sure that they really can pay. To Actually Dare Thomas Berglund, CEO of Almnäs Bruk, has for a few years now worked on the export market to sell the hard cheeses from their own farm dairy. Today, exports account for 40% of sales and customers are primarily in Denmark, Germany and Norway. The goal is to increase exports further. Our dream is to make cheese from all our milk and then Sweden isn t big enough for 300 tonnes of cheese of our calibre. I also think that contact with foreign customers teaches us a lot and forces us to be better, says Thomas Berglund. Just like Per Sandberg, he talks about long-term work that requires patience. He has been to many exhibitions and will attend Biofach this year for the fourth time, an exhibition that he thinks attending has just now begun to show good results. His advice for companies that want to sell out in Europe is to think carefully about the type of business they are, what customers they want to reach, and be ready to put a lot of time into sales activities. He also thinks that a route to success can be to work with other small businesses. For us it has also been a question of aiming higher than we really dare, and just that kind of attitude, to actually dare, I think is important. It s Good To Attend Exhibitions For Jesses Deli, which manufactures sauces, both the export and the organic market are new. Last fall, they launched their first KRAV-labelled products and the goal is to eventually become fully organic in order to compete within that segment. Last fall was also their exhibition premier at the Nordic Organic Food Fair in Malmö. The response and interest was super! We got a lot of contacts with customers from Denmark, Finland, Norway and Sweden. A lot of good has come out of it, says Fredrik Seljemo. Work is now underway to put together a large deal with a Finnish customer, which is a direct result of the exhibition. For the Skogsbärsfröjd company from the Norrland region of Sweden, attending the exhibition was also a new experience. The company and its berry products have only existed for just over a year. Our ambition was to make ourselves visible because most people don t know us. We also wanted to see how things work at an exhibition. We got a lot of feedback from visitors who appreciated our flavours, and we even got some new customers, says a satisfied Lotta Rynbäck Andersson. Although she sees the domestic market as most important, she would like eventually to export in order to have another leg to stand on. At the exhibition she met, amongst others, Business Sweden who are looking for small organic companies to present to a Dutch organic wholesaler. Even if they don t attend Biofach this year, their berry drinks will be presented in the KRAV booth. Our dream is to make cheese from all our milk and then Sweden isn t big enough for 300 tonnes of cheese of our calibre. Organic agricultural continued to grow during and encompassed.9 million organic farmers, 00,000 more than the previous year. About 80% of all organic farmers are found in developing countries and they farm a third of the world s organic land. The area of organic land increased by half a per cent and is now equivalent to 37.5 million hectares. It was mainly in Africa and Europe that land area increased, while there was a decrease in Latin America, Oceania and Asia. The countries that increased their area most were Greece, Mexico, Kazakhstan and Turkey. A large part of the organic land THE USA LEADS GROWTH IN ORGANIC PRODUCTION The world s largest organic market grew by 0% in. There is currently continued growth in organic production and it looks promising for an even stronger development in the future, at least if the United States continues to be a trendsetter. During the past 2 years, the global market for organic food has more than tripled. Globally, the organic market grew by almost 6% in and is now worth 43 billion SEK. The countries with the largest market are the United States, Germany and France. If the United States continues to be a trendsetter in the global market, we can expect strong growth in the future as well since the world s largest organic market increased by over 0% in. The picture is different if one looks at is still pasture or grazing land. However, arable land increased last year and now makes up 20%. Although certified organic farming is found in 64 countries, there is continued imbalance in development. MOST PRODUCED ORGANIC CROPS BY AREA Million hectares 3.5 3.0 2.5 2.0.5.0 0.5 where in the world organic food has the largest share of the overall food market. Then, Denmark is at the top with 7.6%, followed by Switzerland, Austria and Sweden. The Swiss are still the best in the world at buying the most organic food per person. They buy for an average of,683 SEK per year, followed by the Danes and Luxembourgers. Million farmers 2.0.6.2 0.8 0.4 200 2002 The data is from The World of Organic Agriculture Statistics and Emerging Trends, 204, published by FiBL and IFOAM. The figures are based on data from 64 countries. 2 2003 3 2004 4 2005 2006 There are only ten countries where organic farming has a share of at least 0% of the total farmland. Of these, seven countries are in Europe. Sweden (6%) is in third place after Lichtenstein (30%) and Austria (20%). However, most of the countries in the world with organic agriculture have a share that accounts for less than % of the total agriculture. In addition to agricultural land, there are almost 30 million hectares of certified organic land used for gathering of wild plants and beekeeping. DEVELOPMENT IN THE NUMBER OF ORGANIC FARMERS IN THE WORLD 5 6 2007 7 2008 2009. grain, including rice 2. green fodder 3. coffee 4. olives 5. oil plants 6. grapes 7. nuts 8. protein crops 9. cocoa 0. vegetables 8 200 9 20 0 49

THE GLOBAL ORGANIC MARKET Africa Most of the organic farmers in Africa have very small farms. A million hectares of land is shared by over half a million farmers. East Africa leads the development. Uganda is the African country with the most organic farmers and is in third place in the world. There are also many farmers in Tanzania and Ethiopia. Lately, organic agriculture has received greater recognition from politicians as a tool to, amongst other things, combat poverty, hunger and climate change. For the third consecutive year a conference on organic farming was arranged and an African umbrella organization for organic farming has now been formed. Perennial crops, namely coffee, olives, nuts and cocoa, account for almost half of the land use. Most of what is grown is exported. Oilseeds and cotton are also major products. The gathering of wild plants and beekeeping play a big role in Africa. More than 9.5 million hectares are certified organic, with beekeeping accounting for two thirds of the land area. Asia The area of organic farmland in Asia increased tenfold in the past decade. The land area in India went up and down for a few years and it decreased again in, which meant that there was a decrease in the total amount of organic land in Asia. India is the country on the continent with the most organic farmers, while China has the greatest area. Timor has the greatest share of organic land (6.6%) followed by Palestine (.7%). The domestic market in Asia continues to grow cautiously, but a lot of production is still export oriented. Major exporting countries are China, India, Thailand, Indonesia and Sri Lanka. The major crops are oilseeds, grain, coffee, 50 50 KR AV M ARKNADSR APPORT 204 tea and nuts. Kazakhstan has become a major producer of oilseeds and grain. Europe The organic market in Europe grew by 6% and is now worth 203 billion SEK. Germany remains the main driving force in Europe, with an organic market worth 62 billion SEK and thereby comprising almost a third of total sales in Europe. They are followed by France (36 billion SEK) and the UK (7 billion SEK). Germany, France, the Netherlands and Finland were the countries that showed the most growth during the year. Generally, it is the markets in Northern Europe that are growing, while Southern Europe as well as Eastern Europe produce and export. Domestic markets are developing in Hungary, Poland and the Czech Republic. The largest market shares for organic products are in Denmark, Austria, Switzerland and Sweden. Greece, Italy, Romania, France, Poland and Denmark were among the ten countries in the world that increased their land area the most in. Spain, Italy and Germany have the largest areas. Almost half of the land, 44%, is pasture land. Turkey, Italy and Spain have the most farmers. Latin America Almost one fifth (8%) of the world s organic farmland is in Latin America and more than half of the continent s organic farmland area is in Argentina, mainly pasture land. In, Mexico took a big leap forward and increased its area by 00,000 hectares. There are also the most organic farmers in Mexico. Two of the ten countries in the world where more than 0% of the total farmland is organic are in Latin America. The Falkland Islands has the highest portion with 35.3% and French Guiana has 0.6%. Organic Agricultural Land IN (HECTARES) exporters to the United States and Europe. Brazil has the continent s largest domestic market, worth approximately 6.5 billion SEK, and is expected to become a major consumer in the coming years. More countries are now beginning to develop their own markets. Vegetables, sugar cane and cocoa are important products. North America The world s largest organic market, the USA, continued to grow strongly in, despite the strained economy. The American market grew by more than 0% and was valued at 205 billion SEK. Organic food has a 4.3% share of total food sales. The American market is also different from other parts of the world as it has many very large, multi-national, organic businesses. The United States has the largest market, the greatest land area and the most growers. Though Canada seems to stay in the background, it is the fourth largest organic market in the world. As well, Canada has a greater portion of land area in organic farming (.2%), which is twice as much as the US percentage. Although the Canadian market grew by only 5% in, it has tripled since 2006 and is now worth 7 billion SEK. A lot of grain is grown in North America, comprising about 20% of the area. Wheat, corn, oats, fruit and nuts are important products. Oceania One third of the world s organic land is in Australia and consists mainly of pasture land. Samoa has the largest share of agriculture, almost 2%. Most of the production is exported, but the domestic market is also growing, mainly in Australia and New Zealand. Major export products include beef, lamb, wool, kiwifruit and wine. Latin America, particularly Argentina, Peru, Chile and Colombia, are important The data is from The World of Organic Agriculture Statistics and Emerging Trends 204, published by FiBL and IFOAM. The figures are based on data from 64 countries. The prices are based on the following exchange rates: Euro = 8.9 SEK and USD = 6.5 SEK..2 MILLION EUROPE 3.2 MILLION ASIA 3 MILLION NORTH AMERICA 2.2 MILLION OCEANIA 6.8 MILLION LATIN AMERICA ION MAIFLRL ICA

#4 KRAV IN NUMBERS STATISTICS on KRAV-labelled products NUMBER OF PRODUCTS In, there were about as many KRAV-labelled products on the market as in. NUMBER OF CUSTOMERS,3 CROP PRODUCTION 3 754 ANIMAL HUSBANDRY 2 424 FISHERIES 28 IMPORT AND BRINGNING IN 250 3% INCREASE IN SALES OF...KRAV-certified products at the wholesale level SALES VALUE The sales value, which has a one year time lag, showed good growth in and ended up at plus 3% compared to the previous year. PR VALUE PR value is an established measure of editorial exposure in the Swedish media, namely television, radio, newspapers, online newspapers and magazines. The PR value in was 73.9 million SEK. During the editorial exposure of KRAV increased and the PR value rose to 87 million SEK. KRAV MARKET REPORT 204 The same company can adhere to several types of production. 52 2 KRAV annually collects sales values of KRAV-certified articles from adhered customers. The KRAV MARKET REPORT 204 53 3 statistics have a one year time lag. Calculation by KRAV.,000 SEK 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000,000,000 2007 2008 FOOD PROCESSING 523 2009 SHOPS 734 SALES VALUE OF KRAV-CERTIFIED COMMODITIES BY WHOLESALERS 2,3 * Change in per cent between 20 and. # 6,500 6,000 5,500 5,000 2008 2009 200 200 NUMBER OF KRAV-CERTIFIED COMMODITIES 3 20 RESTAURANTS & CATERING 739 20 +3%* +3%*

Shop There are numerou s benefits of KR AV -certified cultivation. Increa sed biodiversity, m ore beneficial insects, greater re spect for the anim als that give us ou food and, not least, r fewer toxins in the environment and the food we eat. Ea ch KR AV-labelled product purchase means that a piece d of land is not artifi cially fertilized an treated with chem d ical pesticides. Th e more consumer companies and or s, ganizations that ch oose KR AV-labelle products the grea d ter the benefits to ou r health, animals and nature. Join us on the journey towa rds 2020!

FUTERRA THE RECIPE FOR BETTER FOOD Sales of KRAV-labelled products are increasing fast! KRAV s Market Report provides a good picture of the market for KRAV-labelled and organic products, both in Sweden and internationally. We present fresh statistics and brief analyses from all sectors of the industry. This year we have in addition expanded the description and analyses of those consumers most interested in KRAV-labelled products and services. The market in Sweden for organic products increased by 3% in and in 204 will have a sales value of more than 2 billion SEK. The market for KRAV-labelled products makes up about 80% of the total organic market. The year began with an unstable market for KRAV-labelled products. However, in about the middle of the year the situation stabilised and during the fourth quarter the market grew rapidly. It was the greatest increase in value since the independent actor Ekoweb began measuring sales in 2008. We want to thank everyone who has made this growth possible, both in the market and on farm land. Now it is time for more people to get a taste of good food. We at KRAV have an ambitious goal. By the year 2020, we want 20% of all food being sold to be KRAV-labelled. Follow us on our journey! Tasty reading. 56 This is KRAV KRAV is Sweden s most well-known sustainability label for food. KRAV is based on principles of organic farming with especially rigorous requirements on animal care, health, social responsibility and climate impact. The recipe for better food www.krav.se KRAV Association, Box 037, 75 40 Uppsala, Tel. 08-5 89 00 We are on: The KRAV label is a trademark registered with The Swedish Patent and Registration Office. The registration gives The KRAV Association sole and exclusive rights to the KRAV trademark. KRAV MARKET REPORT 204 Copyright KRAV Association 204 Printing: Grafiska Punkten Svanenmärkt trycksak.