Released today, Soil Association Certification’s Organic Market Report 2023 reveals the UK’s organic market is now worth a record £3.1bn driven by 1.6% growth in sales in 2022, with shoppers spending almost £8.5m on organic products every day in the UK.
The organic market has enjoyed its 11th year of positive growth despite the cost of living crisis, record inflation, heightened levels of uncertainty arising from the Russian invasion of Ukraine together with its impact on world food markets and energy prices, and the on-going challenges thrown up by Brexit.
Commercial Director, Alex Cullen said, “With sales exceeding £3.1 billion we have seen a transformation in the organic food and drink market since the pandemic with a phenomenal 25.4% growth in just three years.
'Despite the economic turmoil and significant challenges everyone faced in 2022 the organic market delivered a strong and resilient performance growing a respectable 1.6%.'
Alex went on, “In these challenging conditions organic foodservice delivered a stellar performance growing 152% and helping to drive this uplift while organic food and drink sales in supermarkets, independent retailers and home delivery had mixed fortunes with shoppers forced to make hard decisions on their weekly shop as they faced the cost of living crisis.
“Today eight out of ten supermarket shoppers buy organic and many are cutting their spend or switching to conventional products because of price pressures. But crises don’t last forever. Inflation will come down and shopper confidence will return.
'In organic there is an amazing momentum building with the potential for strong future growth captalising on the high levels of consumer trust and confidence it holds by meeting their needs for sustainable and healthy food.
'The more economies of scale we can build across the organic sector the more we can bring down prices and make high quality, healthy organic food accessible for all,' Alex concluded.
Supermarkets
In a year where the discounters won market share as consumers increasingly looked for value as the cost of living crisis took hold, 2022 saw consumers looking hard at their shopping bills and making tough choices. Organic sales in supermarkets fell 2.7% with share of category dropping from 1.8% to 1.7% - but the market remains sizeable – worth £1.92bn.
In the final four weeks of the year organic sales in the supermarkets rallied and returned to growth of 0.5% - although lagging behind non-organic. This follows eight years in which organic food and drink has grown faster than non-organic and over the long term, the organic sector’s positive potential in supermarkets is clear and reflected in the compound annual growth rate (CAGR) for organic at 5.39%, compared to 1.83% for non-organic.
Eating out of home
Despite facing multiple pressures and another challenging year foodservice saw organic sales grew by an incredible 152% as sales leaped to £195.5m (from £78.2m in 2021) largely driven by sales of organic hot drinks and milk in a number of leading café chains – highlighting the public’s appetite for quality sustainable ingredients.
But the cost of living crisis has continued to impact the number of people eating out, while wage pressure (and Brexit) made it hard for operators to attract and retain staff. Nevertheless, the hospitality sector has shown great resilience and willingness to embrace consumer trends pointing to future growth.
Online & box schemes
In home delivery, despite a mixed performance across companies, sales were flat at £558.6m following phenomenal growth during lockdown where sales grew from pre-pandemic levels of £362.9m.
There were winners and losers as consumers spent less time at home and faced inflationary pressures but this in turn has driven innovation, new technology solutions and broader organic product ranges.
Independent retailers
Independent retailers faced a challenging year with sales dropping 3.3% to £432.1m following a buoyant period during the pandemic when some retailers were classed as ‘essential businesses’.
Over the last year they faced the challenge of trying to retain these new customers but also saw shoppers spend less and shop less often. Over 60% of retailers saw inflation as the number one challenge but two thirds believe that sales will increase in 2023.
Organic farming
All UK farmers faced huge challenges in 2022 and organic farmers were not immune from those pressures. Inflation and supply chain disruption meant the cost of doing business for farmers rose as heating bills and feed costs rocketed.
As the focus switched to value at supermarket checkouts, the price farmers received for their products was under intense pressure. This inevitably impacted on organic farmers as people increasingly sought cheaper products.
But there was some relief for organic farmers as they don’t use chemical fertilisers, so they weren’t impacted by escalating fertiliser prices sparked by the war in Ukraine. This also presents an opportunity for the organic farming movement to grow as conventional farmers look for cut costs by adopting more natural ways to fertiliser their crops.
The data for 2022 has not yet been released, but it was encouraging to see the amount of organically farmed land rise by 3.6% to 507 thousand hectares in 2021. This includes a big jump in the land going through conversion to organic, which was up 34%.
Soil Association Organic Farming Advisor Adrian Steele, who runs a mixed organic farm with cattle and both arable and horticultural crops in Worcestershire, said, “Now more than ever there is a more important role for nature-friendly farming like organic and governments around the world are recognising that.
'For too long our broken food chain has prioritised industrially produced, cheap food – and this does put organic at a disadvantage during times of hardship for shoppers. But demand for fairer supply chains is rising alongside the need to deliver resilience for UK food production in the face of the escalating climate and nature crises.
“Both the EU and Scottish governments have pledged to grow organic land significantly by the end of the decade, and although Westminster is dragging its heels on a similar policy they are backing organic through the doubling of support payment rates last year.
'The new Environmental Land Management Scheme also incentivises many organic farming practices like eliminating insecticides and using legumes for soil fertility instead of chemicals.'
This year’s Organic Market Report includes a new Sustainability Report which highlights how fixing our broken food system demands a holistic approach from the roots up.
As sustainable choices become more important to consumers and retailers, together with government’s legally binding commitments on the environment, it is vital that we have greater clarity and consistency in decision making. And organic with its established standards has the potential to provide this clarity and proven credentials in delivering these healthy and sustainable choices.