Held for the first time as part of Fruit Attraction, the event featured top organic experts, analysts and retailers
MADRID, October 24, 2018: Within the context of double digit market growth and the new European organic laws, leading experts and retail buyers came together to discuss the future of the organic produce market under the banner of the inaugural BioFruit Congress. Jointly organised by Eurofresh Distribution magazine and Fruit Attraction in collaboration with Proexport, the event was held Wednesday October 24, within the Organic Hub at Fruit Attraction, Madrid, and drew an attendance of about 400 people.
The line-up of speakers – including the top organic fresh produce experts and leading European retailers of organic food (Carrefour, Coop Switzerland) – shared analysis of the current state of the organic fruit and vegetable sector and the outlook for its future. Opening the session, Fruit Attraction director Raúl Calleja said it was fitting the event made its debut as Fruit Attraction celebrated its 10th anniversary.
Outlining the session ahead, Eurofresh Distribution editor and consultant Pierre Escodo, the congress moderator, said he was just back from the PMA Fresh Summit event in the United States, where there’s been a resurge in organic consumption, with spending on organic fruit up 20% YoY to $1.8 billion and that on vegetables up 6% to $3.1 billion in 2017. He also cited AMI data showing organic food sales in Germany were up 5.9% to just over €10 billion last year, of which supermarkets accounted for €5.93 billion (+8.8%). Escodo said the congress would canvass the future of organic fruit and vegetable markets, in particular addressing matters such as the likely impact of the new EU organic regulation, prospects for increased consumption of organic fruit and vegetables, and whether other added-value products, such as zero residue, might attract more consumer interest.
- GLOBAL TRENDS & THE IMPACT OF THE NEW EU ORGANIC REGULATION
The new EU organic regulation
Elena Panichi, Deputy Head of the Organics Unit, Agriculture & Rural Development, at the European Commission, spoke about the new EU laws on organic farming and the labelling of organic products. She said that by 2016, the area of organic farmland in the EU had reached 11.9 million hectares (+63% since 2007). The EU has become the world’s next biggest organic market after the United States, with organic sales at retail totalling €30.7 billion in 2016. The EU organic legislative framework needed reform because it was set up when the organic market was just a niche while today it is an important and really mature market, she said.
Following various years of negotiation, the regulation for a new system was published in the Official Journal of the European Union in June 2018 and will apply from January 2021. Panichi said the new system provides clear and uniform rules for everybody. “We consider that this reform brings substantial added value to the sector in terms of simplification but in particular harmonisation. Indeed it’s in the harmonisation that we see the higher level of democracy because it means that all producers will be subject to the same set of rules and we will create a level playing field not only for operators in Europe but between operators in Europe and other countries.”
Panichi said said secondary legislation is now being prepared. Work is first taking place on rules covering on organic production, development of control rules will start at the end of this year, to be followed by trade rules later in 2019. She said the Commission is continuing to consult the sector and open to input from stakeholders.
FIBL & IFOAM: EU & global demand for organics
Julia Lernoud, Data and Information Manager at the Research Institute of Organic Agriculture (FiBL), Switzerland, and a joint editor of “The World of Organic Agriculture. Statistics and Emerging Trends 2018”, shared highlights from the latest global survey on organic agriculture. On demand, the results show the consumer appetite for organic food is growing globally, with global sales worth more than 80 billion in 2016. The top three markets are the U.S. (€38.9m), Germany (€9.5m) and France (€6.7m), while the highest growth was in Ireland (+21.8%), Denmark leads as the country where organics have the highest share of the overall food market (9.7%) and the highest per capita spending on organics is in Switzerland (€274pa).
The amount of organic farmland was up 15% yoy to 57.8 million ha in 2016 and the number of organic farmers up 12.8% to 2.7 million. But Lernoud said demand for organic produce is growing at a faster pace than production. “We need to work on getting more people into production if we want to supply this market,” she said. Lernoud also stressed the need to promote the “healthy” growth of both the market and production, to ensure good practices prevail.
CAAE: Certification and regulatory diversities in a global market
Juan Manuel Sánchez Adame, Director of Certification at the CAAE, a Seville-based certification body specialising in organic produce, outlined steps the European Commission could take to promote uniformity in audit criteria, reduce unfair competition and promote business opportunities in organics. He also provided a snapshot of the pros and cons of the world’s two biggest organic markets – those of the United States and the European Union. The organic food market accounted for retail sales worth the equivalent of nearly €39 billion in the U.S. in 2016, followed by Germany with almost €9.5 billion, France with €6.7 billion and China with €5.9 billion (source FiBL/AMI). Sánchez said the U.S. has the advantage of being the world’s largest organic market, where demand far outstrips supply, and covered by a single, well-defined organic standard. However, it is also a market influenced by political issues and with some transport challenges.
He said that for European producers, the EU has the advantage of proximity. It is a mature market with stable demand in Central Europe but also with emerging markets in countries such as Spain. Its challenges include a diversity of criteria. Sánchez said the Spanish organic market represents opportunity and now ranks tenth worldwide for consumption. He presented data showing spending on organic products totalled €1.68 billion in Spain in 2016, representing YoY growth of 12.5% and 144% over the previous decade. “Oranic consumption is increasing at 18 times the rate of non-organic,” he said.
2/ RETAIL PANEL: CONSUMERS TRENDS & OUTLOOK FOR DEMAND
Kantar Worldpanel UK: Snapshot of the organic market in Britain
In his presentation, London-based Ed Griffiths, Strategic Insight Director at Kantar Worldpanel, shared insights into the organic market in Britain, where sales of organic fruit and vegetables reached £250 million in the latest year, representing a 40% increase over the last five years. “So a real appetite from UK consumers, and retailers to have organics in their range,” he said. Nearly two-thirds (63%) of the population bought organic fruit or vegetables in Britain last year and organic purchases tend to be made by Britain’s smaller, more affluent households without children. Griffiths said there are a few areas that organic could do better in, “and this is more a reflection of the fact that there isn’t necessarily the same range to buy into in organics as there is in other parts of produce.” The average consumer only buys organics 7 times in an average year, compared to 109 times for produce in general, and buys an average of 1kg per trip, compared to 2.2 kg. Furthermore, at an average price of £2.43 per kilo, organics are being sold at about a 40% premium over standard fruit and vegetables, Griffiths highlighted.
The latter helps explain why after 40% growth in the last 5 years, there’s been a decline in sales of organic fruit and vegetables in the last 6 months. Average prices for organic have gone up so people are buying less and switching to conventional produce, he said. However Lidl has achieved growth of 50% in organics, an increase worth £6.3 million. It did this by having organic products on its shelves for the first time and offering them for very low prices, something that has resonated with consumers. Griffiths said talking about health benefits offers another way to “claw back some growth.” “We know consumers will pay more for health…and produce is probably one of the best things to eat if you feel the need to dial up your health a bit,” he said.
Carrefour: good taste, a wide range and origin are key
Eugenio Morales, Director of Fruit and Vegetables for Socomo (the Carrefour Group’s central buying office for horticultural products) & Carrefour Spain, said organics is not just a trend for Carrefour – the French multinational retailer has been offering organic products for a long time and has learned that, “the bigger the range, the more you sell. Consumers want a wide range,” he said. Carrefour has over 200 organic items as part of its fresh produce offerings in France and Spain. This year, its sales of organic fruit and vegetables are up 14% in France and 23% in Spain, and its respective market shares up 11% and 3% respectively, he said.
Morales said origin and proximity are key for consumers of organic products and taste is also crucial – consumption has to be enjoyable. “If consumers buy organic fruit and it’s not good, they won’t buy it again.” “The three main factors limiting the growth of organic consumption in Spain are price, lack of access to a wide range, and a lack of information,” he said. Carrefour Spain thus has a strategic plan it calls the Democratisation of Organic Produce, a concept which includes a wide range of actions designed to promote organic consumption, including increasing access to and offering a wide range of organic products, and clear in-store signage, he said.
Coop Switzerland on the Swiss market for organic and sustainable fruit & vegetables
Katja Bahrdt, Sustainability & Brand Manager in the area of fruit and vegetables and cut flowers at the Swiss supermarket chain Coop, presented figures showing that Switzerland’s organic market has risen from a value of 2.05 billion CHF in 2013 to 2.7 billion francs in 2017. Despite being a very mature market, there was over 8% growth in the latest year. In 2017, 22.3% of fruit and vegetable sales at retail were organic, up from 16.5% in 2013. The respective shares for organic among total produce sales in 2017 were potatoes 13.2%, fruit 13.9%, lettuce 18.7% and vegetables 23.1% (source: Nielsen).
Bahrdt said Coop was a pioneer in the Swiss organic market and one of the keys to its success with organic sales has been to have its own organic brand. “It’s a big help to have a very strong brand that is really well known among customers,” she said. That brand, Naturaplan, celebrated 25 years this year and now spans 2,500 products with turnover in 2017 of about 1.1 billion francs, covering the whole food and beverage range and with a focus on fresh produce and a high percentage of Swiss production. On the latter, Bahrdt said there is also strong demand among Swiss consumers for regional products, which led to the introduction of Coop’s regional food line “Mini Region”. Swiss consumers also want to see less food waste, which led to the introduction of its Ünique brand. Reducing plastic packaging in fruits and vegetable will be one of Coop’s big focuses in the future, she said.
3/ DEBATE ON THE DEMAND FOR MORE “VALUE-ADDING” BEYOND ORGANIC
Eosta adds value via “true cost accounting”
A “Sustainability Flower” is an evaluation and communication tool used to add value at Eosta, a Netherlands-based organic fresh produce importer and distributor. Eosta sales manager Jeroen Plesman said the flower’s 7 petals represent the impact a product has on society, economy, individual workers, biodiversity, soil, water and climate. While being organic is a good start, Eosta believes in the need to look at growers in a holistic way. The flower is part of its “trace & tell” Nature & More system and is a way to communicate with consumers about the true costs and benefits of organic produce. It has based communication campaigns around this, such as supermarket-based ones designed to convey the message that “Organic isn’t too expensive.” when considering factors such as its reduced environmental impact and healthier produce. “This is something that is not calculated in the end price, so that’s why organic is still expensive, because conventional products are too cheap,” Plesman said.
Kernel Export chairman predicts consolidation of supply
José Antonio Cánovas, chairman of Murcia-based Kernel Export and a Proexport board member, stressed the importance of trust between producers and retailers, or other clients, and said maintaining a good image and communication in the organic sector is essential. “We have to have the right image. If we lose that, we will lose everything,” he said. Looking ahead, Cánovas foresees ongoing increases in organic production costs and decreasing margins while “prices fall but never go up anymore.” There will be less producers as consolidation and increased specialisation occur and “only very professional growers with optimum conditions will survive,” he predicts. The big challenge will be to retain existing organic consumers and attract new ones, he said.
Naturland urges communication & transparency
Steffen Reese, CEO of Naturland, a Munich-based farmer association that promotes organic agriculture worldwide, also stressed the importance of communicating with consumers about the many reasons that make organic production worth paying more for. “We need to explain that a higher price is better to keep the farmers because we are losing farmers continuously and that’s a catastrophe.” Naturland’s commitment to farming that is both organic and fair encompasses the pillars of sustainability. “These are known to be ecological, the social pillar and the economic pillar but we also consider the cultural pillar to be very important, Reese said. Displaying a German newspaper article suggesting the reality for workers on a Spanish organic farm is a harsh contradiction to the image portrayed by the German organic supermarket chain it supplies, he also called for the organic sector to ensure it is ready for increasingly close scrutiny by the media and consumers, and transparent about its practices. “We should worry about those issues before the media does,” he said. If anything goes wrong, everyone along the line will be also be tarnished. Similarly, sooner or later the media will ask what producers are doing about implementation of the 169 UN Sustainable Development Goals (SDGs), for example.
Chile has scope to boost its organic blueberry exports
Andrés Armstrong, Executive Director of the Chilean Blueberry Committee, said Chile is now the world’s 2nd largest blueberry grower and about 25% of its surface is under organic cultivation but only 10% of its fresh blueberry exports are organic. Its biggest market is the U.S., the destination for 64% of its fresh blueberry exports, but only 12% of what it ships to the U.S. is organic, while for Europe the respective figures are 24% and 5%. Less than 1% of its organic blueberries are sent to Asia, mainly to China.