Lemon-Bergamot Bionade, Chiemgau risotto made using local Bavarian fish, Davert Chia Toppings, Riedenburger Dolden Dark Porter beer, ALB GOLD’s spelt ravioli with lentils and Voelkel’s vegan green smoothies were among the products chosen by specialist juries and German consumers as “Organic Products of 2016”. They are examples of the organic market’s innovation, internationalization and focus on food trends. This appealing selection of products is one obvious reason as to over the last ten years, German consumers have been spending increasing amounts of their grocery budgets on ecologically produced or organically cultivated food and drink. Organic produce has become cool, albeit with sales remaining on a quite modest level.
In 2015, the proportion of total expenditure attributable to organic produce (including drinks) was 4.7%. Although this value is low, this proportion does reflect a two-and-a-half-fold increase in the past 11 years. These are the findings of the GfK Household Panel, for which 30,000 household heads provide regular feedback on their purchases of various daily consumer goods. Rapid growth was recorded between 2004 and 2008, with the proportion of grocery expenditure for organic produce more than doubling (1.4% in 2004; 3.2% in 2008). In the following years, the effects of the economic crisis were felt. Major growth only returned in 2011. More recently, from 2014 to 2015, growth of 0.4 percentage points was recorded in sales of organic produce as a proportion of overall grocery expenditure. This equates to a 10% increase within the organic grocery segment and reflects the potential for further growth. This is especially true given that the rise is largely attributable to an increase in unit sales as opposed to increased prices or changing to higher-value products.
It has been a long time since organic groceries and drinks could only be purchased in health food stores or from organic farmers. Product ranges have diversified, and traditional grocery retailers are also well-positioned, having spent years targeting consumer awareness through their own organic product ranges and targeted advertising campaigns. The effect of this can be seen when looking at the locations where consumers make their organic grocery purchases these days. A total of 21% do so in supermarkets and discount stores respectively. Specialist health food stores and organic grocers still retain a market share of 18%. This could be attributable to the specialist advice and detailed information offered by these retailers on production and producers. Particularly organic-conscious consumers may place more trust in these suppliers than traditional retailers for whom organic groceries constitute just one product among their standard range and promotional products.
Drugstores offering their own organic produce range have managed to conquer a not inconsiderable market share of 12% for organic products. However, others such as organic farmers who sell directly and traders at weekly markets, as well as bakers and butchers, only take home a relatively small piece of the pie. They attained market shares of just 7% respectively.
Looking at the respective proportions of organic products in different food categories reveals some stark differences. A diverse range of factors comes into play here: dietary preferences of organic-conscious consumers, extent of availability, the perceived risk of conventional products and the price gap between organic and conventional goods all have an influence on purchase decisions.
One product group where organic products have a particularly high share is soya drinks. Of all soya drinks sold, 69% are of organic origin. On the one hand, this could be down to the majority of producers selling predominantly or exclusively organic soya drinks. Yet, on the other, it could also be ascribed to consumers preferring to avoid genetically modified soya by choosing organic products. With baby food, too, a considerable 60% of products sold are organically cultivated and produced. A clear factor at play here is parents’ special concern for their baby, ensuring that their diet is as wholesome and nutritious as possible. For this reason, producers in this product segment are increasingly turning to organic products. In many product groups, the market share is only in single figures. For example, organic meat accounts for just 2%.
Yet the share for organic products is not the only factor that comes into play when deciding on the potential of a product group for organic producers. It is also dependent upon the market size for the entire category, which is in turn affected by demand and price level. For example, although just 6% of thick yogurt is of organic origin, the overall sales for this product group are far higher than for baby food or soya drinks. Carrots, fresh milk, bananas and citrus fruits also come in behind soured milk products, although their organic market shares are in the double digit range (20%, 15%, 14% and 12% respectively). Aside from yogurt, organic eggs and fresh organic bread also register strong sales – despite accounting for just 6% and 4% of their product group respectively.
Nearly every household in Germany has bought organic produce on one occasion. Yet of all consumers, just under a third (29%) do so regularly, that is to say at least twice a month. This important group accounts for 80% of total sales of organic products. One quarter of consumers only occasionally turn to organic produce – but at least once per quarter. They contribute 13% of overall sales of organic products. The remaining 7% is attributable to casual purchases which, in turn, can be linked to the 46% of households to only purchase organic food a maximum of three times per year. Even then, this is likely to be inadvertent rather than a conscious decision.
It is predominantly older, better-off households which tend to make organic purchases. While the proportion of household heads above the age of 65 is 28% in total, 34% of this age group can be described as being organic-conscious in their purchases. The reverse is true among under-35s: despite 18% of all household heads belonging to this age group, they account for just 11% of regular purchasers of organic products. This figure is well below average. A similar principle applies to income level: higher-earning households are more likely to purchase organic products. However, the decision to purchase organic groceries is not strictly limited to certain age groups, or consumers with a big budget. The increasing supply is making it easier for all consumers to include organic products in their diets.
While it was still common to visit organic food stores to buy basic foodstuffs such as vegetables, eggs and grains for homemade muesli in the early 1980s, today their product ranges are far more comprehensive. Numerous associations and seals act as a quality guarantees. The shelves in organic supermarkets have had a global flavour for a long time now, stocking everything from amaranth grains to citrus fruits. Consumers can find naturally sourced and highly refined products and grains as well as the finest of delicacies from a confectioner. Even fast food fans are kept happy at home thanks to frozen vegetable pizzas and refrigerated chicken wings. Organic produce is becoming increasingly ubiquitous. On account of these offerings, the growth prospects for sales in the organic grocery market are set to slowly but surely continue to rise.
Data source: GfK Consumer Panels Germany
If you have any queries concerning this article, please contact Helmut Hübsch, GfK SE.
Contact person for queries about Compact: Claudia Gaspar (e-mail to firstname.lastname@example.org).