UK organic market resilient despite Royal bail out
The upmarket UK retailer has signed a licensing and distribution agreement with Duchy, giving it exclusive rights to the manufacture and sale of Duchy’s range of organic food products.
Duchy has seen profits tumble in the past two years as consumers have traded down from its super premium brands. But experts say Duchy’s problems are not indicative of a decline in the UK organic sector. “You can’t blame the Duchy deal on the state of the organic market,” said one analyst. “Other branded players like YeoValley and Rachel’s continue to do fine. Duchy is a special case. Internally they made some bad decisions. They tried to grow too quickly and didn’t have a clear strategy in place.”
Mixed picture
A Soil Association spokeswoman added that the UK organic market continued to paint a mixed picture.
“How the recession is affecting you depends on your business model and what sectors you’re selling in,” she said. According to the Soil Association’s Organic Market Report 2009, value sales of fruit and veg were down 13.5 per cent and 4.9 per cent in 2008 compared with 2007 but overall organic sales were up 1.7 per cent.
Waitrose said it aims to increase the Duchy range from around 200 products to around 500. It added that increased investment in the development of Duchy would achieve sufficient sales growth over the next 10 years to generate a substantial increase in the royalties going to charity.
All profits from the Duchy business are meant to go to The Prince's Charities Foundation, but no contributions have been made by Duchy since 2007. Accounts for the year to 31 March 2008 showed Duchy made a profit of just £151,717, down from £793,432 the year before. During the same period operational costs rose from £3.3m to £4m.
