Comparing what consumers say they will do and what they actually do is a mug’s game, especially when it comes to buying ‘green’ products. Indeed, academics often refer to something called the 30:3 phenomenon: 30% of people describe themselves as “ethical purchasers” and yet ethical products rarely achieve more than 3% market share.
That means the likes of organic, Fairtrade and free-range are competing for a small sliver of pie. For the past few years it’s all been about Fairtrade, with sales snowballing thanks to its simple message and well-recognised logo.
Meanwhile, organic food struggled. Shackled by its ‘premium’ tag the sector, most notably in the UK, was shunned by supermarkets. Some brands in the sector even began removing the word organic from their packaging.
But the tables have turned: organic is back in growth whilst Fairtrade has suffered its first sales blip in its 20-year history.
Research in the UK published recently shows that in 2014 Fairtrade sales were down 4% to £1.65bn (€2.2bn) due to a challenging retail market and changes to EU trade policies relating to sugar, according to the Fairtrade Foundation.
But organic sales of £1.7 bn (€2.25bn) helped prop the market up. The increase of 1% compared to 2013 isn’t remarkable until it’s considered in the context of falling sales in four of the previous five years.
What’s happened?
The obvious answer is that the economic clouds have lifted, prompting shoppers and supermarkets to return to these premium products. But that would be doing organic brands a disservice, according to Alex Beckett, global food and drink analyst at Mintel.
Indeed, it’s unclear whether organic is cannablising Fairtrade. In fact, the Fairtrade Foundation welcomed growth in organic given that it’s a “key element of the Fairtrade movement”.
Clever marketing
What organic has done is applied some of the branding tactics that have stood its ethical cousin in such fine stead.
“The organic sector finally seems to have twigged that it needs to explain in simple terms why organic is worth paying more for,” Beckett explained.
“So we’ve seen Waitrose Duchy range rebrand with details of organic benefits on front of pack, and the Organic Trade Board ran its biggest ad campaign to date in 2015, highlighting the differences between organic and non-organic food in a humorous way,” he added.
There have been other factors, too. A favourable study by researchers at Newcastle in 2014 as well as the introduction of 1,000 new lines have been buoying the UK market, in particular.
But the organic sector across Europe will benefit from another shift from which Fairtrade has again already benefitted: the interest of big brands.
Big brands go organic
Fairtrade’s ties with the likes of Mars and Nestle have thrust it into the mainstream – 80% of shoppers have bought or are aware of the certification, according to research by Mintel last year. Recognition of organic is much lower – 29% of UK shoppers have bought it and 29% are aware of it. That means, almost one in two (43%) have never heard of organic.
Whilst organic enjoys relatively good levels of awareness, its higher price point and failure to become adopted as the standard by any of the very large brands – a factor that has boosted fair trade – mean less than a third of consumers purchase organic foods, noted Mintel last summer.
The tide is turning. For a start, discounters like Aldi are now boasting their own organic vegetables range. The launch of McDonald’s first 100% organic hamburger in Germany, as well as the expected debuting of Gatorade’s organic range this year will also help organic “cast off its niche image”, Beckett said.
However, the sector still has work to do to explain to shoppers why they might have to pay more: 54% think that organic is too expensive to buy regularly and 52% want to know where the extra money goes.
Some will be more easily convinced than others. “Millennials [18-35 year olds] represent the biggest growth in organic sales, and most of these shoppers have only come into the market in the last five years,” said Soil Association business development director Clare McDermott. “We expect the organic market to experience steady sustained growth,” she added, as the body prepares to launch its 2016 market report next month.