The organic food market in the UK grew 4% in 2014 but remains sensitive to economic conditions. Organic food sales declined from 2008-2011 due to recession but have since rebounded with help from innovation and improved economy. However, the UK organic market needs more stability and could benefit from increased government support and public perception of organic food as normal.

1. ECON265Economics for business Loïc Baltyde
THE ORGANIC FOOD MARKET
IN UK

2. DEFINITION
Different fields: Food, Farming, Animals, Textiles, Beauty
products.
For foods to be labelled as organic:
 At least 95% of the ingredients must come from organically
produced plants and animals.
 Any food product sold as 'organic' falls under the EU
regulations 834/2007 and 889/2008.
 This means that the product must have been produced to these
regulations and inspected and certified by a registered
certification body, such as Soil Association Certification.

3.  Up to 5% ingredients from a list of approved non-organic
food ingredients are allowed.
 There are also a limited number of non-food ingredients
such as salt, water, and a restricted number of additives and
processing aids which are allowed, some of which are
legally required (such as iron and thiamine in flour).
 All artificial colourings and sweeteners are banned in
organic food.
Source: Soil Association

4. CONSUMERS
Key clusters:
 Occasionalists are infrequent purchasers of a narrow range
of organic products.
 Purists are driven more by personal and family
health/well-being motives.
 Localists are strong supporters of box schemes and
farmers’ markets (strong environmental motivations and
desire to support British and/or local farmers).
 Cautionists have strong expectations and motivations
regarding the environment and significantly, knowledge of
the source of their organic food.

5. The Market up to 2014
 At their height in 2008, before the start
of the recession, sales of organic products totalled £2.1bn
 Sales of organic products fell from £1.73bn in 2010 to
£1.67bn in 2011 (fell by 3.7% from 2008)
 Sales of organic products fell from £1.67bn in 2011 to
£1.64bn in 2012 (fell by 1.5%)
 The organic market in the UK was worth £1.79bn in 2013
Source: theguardian, Soil Association

6. The Market in 2014
Source: naturalproductsonline

7. Source: Foodnavigator.com

8. Factors which drive the market
 the impact of the horsemeat scandal, revealing
that in February 2013 total supermarket organic sales
increased (source: Kantar Worldpanel’figures)
 Supermarkets cutting back their ranges and shelf space,
leading to a 2.4% slump in organic sales (main source: Soil
Association)
 a high level of innovation was helping to drive growth in
2014 (ex: organic recipe boxes for busy occasion shoppers)
 an improving economy and the fact that retailers and
manufacturers who continued to invest in organic lines have
continued to thrive.
Source: theguardian

9. The Soil Association’s policy director,
Peter Melchett, said there was still “a staggering
difference in attitude” towards organic among policy
makers in other parts of Europe.
Helen Browning, the Soil Association’s chief
executive, said that a common feature of the highest
performing organic markets in Europe was that organic
was better embedded culturally and politically. “It’s
seen as something normal and uncontroversial. That’s
why ‘normalising’ organic is a big priority for us.”
Source: naturalproductsonline

10. Source: Statista.com

11. Price sensitivity
 Organic food supply is limited as compared
to demand
 Production costs for organic foods are typically
higher because of greater labour inputs per unit of
output and because greater diversity of enterprises
means economies of scale cannot be achieved;
 Post-harvest handling of relatively small quantities
of organic foods results in higher costs (especially
for processing and transportation)
 Marketing and the distribution chain for organic
products is relatively inefficient and costs are
higher because of relatively small volumes.

12. Others factors
 Environmental enhancement and protection (and
avoidance of future expenses to mitigate pollution
 Higher standards for animal welfare
 Avoidance of health risks to farmers due to
inappropriate handling of pesticides (and
avoidance of future medical expenses)
 Rural development by generating additional farm
employment and assuring a fair and sufficient
income to producers.
Source: fao.org

13. The recent global recession, and the associated financial crisis
in many countries, had a significant adverse effect on global
economic activity.

14. Impact on Global Climate
Organic Agriculture could contribute significantly to reduce
GHG releases and to sequester carbon in soils and biomass.
Secondly, there is sufficient evidence that Organic Agriculture is
superior to mainstream agriculture.
This is even more important as the capacity of Organic
Agriculture to contribute to the mitigation of climate change can
be considered as an ancillary benefit to its primary goal of
sustainable land use.
This primary goal is achieved by gains in soil productivity,
consecutive food security, biodiversity conservation and many
other benefits.

15. Conclusion
The Organic Food Market is closely linked to the
Economy in UK. Even though, it is growing it still
needs a stability, as retailers could engage
themselves more importantly. However, it seems
that to obtain it, the market should have a more
accurate normalisation and stronger support of
the Government.

16. Bibliography
‘Analysis of Socio-Economic Aspects of Local and National Organic Farming Markets - Analysis Socio-Eco.pdf’. Accessed 10 December
2015. file:///G:/Org%20food%20mark/Analysis%20socio-eco.pdf.
‘Analysis: Optimism in UK Organic Industry’. Accessed 9 December 2015. http://www.just-food.com/analysis/optimism-in-uk-organic-
industry_id129309.aspx.
Daneshkhu, Scheherazade, and Consumer Industries Editor. ‘Healthy Organic Food Sales Buck Industry Trend - FT.com’. Financial
Times. Accessed 9 December 2015. http://www.ft.com/cms/s/0/c9cd66a2-bb9f-11e4-aa71-00144feab7de.html.
‘EU: Organic Sector Faces Regulatory Uncertainty’. Oxford, United Kingdom: Oxford Analytica Ltd, 2015.
http://search.proquest.com/docview/1702864736/abstract/783A2499A3914270PQ/1.
‘LinkClick.aspx’. Accessed 9 December 2015. http://www.soilassociation.org/LinkClick.aspx?fileticket=whbpEnZUd7A=.
‘Microsoft PowerPoint - Padel Market-2012-Biofach UK Market - Padel_Market-2012-biofach_UK_market.pdf’. Accessed 10 December
2015. http://www.organic-world.net/fileadmin/documents/yearbook/2012/2012-02-16/Padel_Market-2012-biofach_UK_market.pdf.
‘Organic Agriculture: Why Is Organic Food More Expensive than Conventional Food?’Accessed 10 December 2015.
http://www.fao.org/organicag/oa-faq/oa-faq5/en/.
‘Organic Sales up 4% as Growth Trend Gains Momentum | Www.naturalproductsonline.co.uk’. Accessed 10 December 2015.
http://www.naturalproductsonline.co.uk/organic-sales-up-4-as-growth-trend-gains-momentum/.
‘Real GDP’. Accessed 10 December 2015. http://www.rbnz.govt.nz/statistics/key_graphs/real_gdp/.
‘Research and Markets: Organic Food Is Going To Be Around 30% Share in the Total Food Market in UK by 2010 - European Organic
Food Market’. M2 Presswire. 13 March 2007.

17. Smithers, Rebecca. ‘Organic Sales Slip Again amid Economic Gloom’. The Guardian. Accessed 10 December 2015.
http://www.theguardian.com/environment/2013/mar/20/organic-sales-slip-again-economic-gloom.
Smithers, Rebecca, and Consumer Affairs Correspondent. ‘Organic Food and Drink Sale Rises after Years of Decline’. The
Guardian. Accessed 10 December 2015. http://www.theguardian.com/environment/2014/mar/13/organic-food-drink-sale.
‘Organic Product Sales in UK Fall by 3.7% in 2011’. The Guardian. Accessed 10 December 2015.
http://www.theguardian.com/environment/2012/mar/02/organic-products-sales-uk-fall.
‘Soil Association Organic Market Report 2015’. Soil Association. Accessed 9 December 2015.
http://www.soilassociation.org/marketreport.
‘UK Organic Market up 4% Last Year’. Accessed 10 December 2015. http://www.foodnavigator.com/Market-Trends/UK-organic-
market-up-4-last-year.