Market developments

The market for sustainable consumer products continues to grow in most of the Western industrialised countries. An ever larger range of organic products, new sales channels and strong customer loyalty lead to a sustainable growth in sales. Nevertheless, reliable market data that illustrate the development of the entire market remains scarce. Data for 2015 are not yet available. 2014 data on organic food sales, which is the largest segment in this market, confirm significant growth across Europe. The latest annual European growth numbers from the FiBL Research Institute for Organic Agriculture show a growth of 7.6% in 2014, bringing the size of the European organic food market to EUR 26.2 billion (2013: EUR 24.3 billion). Per capita spending in Europe amounted to EUR 34 in 2014.

All countries, for which new data were available, reported growth. With a spectacular 45% Sweden reported the highest growth. The growth rates of the organic food markets in the different European countries vary. Organic food sales are highest in northern European countries. Southern European countries, such as Spain, Portugal and Greece, are large producers and exporters, but still have relatively small internal markets for organic products. Growth in these countries remained sluggish in 2014. Central and Eastern European countries are becoming important exporters of organic foods, while some of them are developing an internal market, for example the Czech Republic, Poland and Hungary. During the portfolio build-up phase, Triodos Organic Growth Fund focuses on northwest Europe because of the relative size and attractiveness of these markets. Moreover, the fund can benefit from the expertise and contacts from Triodos Bank in this region.

Germany is the largest market for organic products, although growth rates for 2014 were lower than in 2013. In 2014, the organic food market grew by 4.8% (2013: 7.2%) to EUR 7.9 billion. The highest organic sales of EUR 4.2 billion were again achieved by the conventional retail sector (2013: EUR 4.1 billion). Preliminary figures for the first half of 2015 show signals of a recovery, given that household spending on fresh organic products and selected organically processed products (selection criteria not known) increased by 8.4%, compared to the same period in 2014. These figures strengthen the expectation that total organic sales will exceed EUR 8 billion in 2015.

France strengthened its position as the second-largest organic market in Europe; the organic food market continued to grow at a rate of 10.2% in 2014 (2013: 8.8%). Since 2007, market volume has more than doubled, from EUR 2.1 billion to EUR 5.0 billion in 2014. France is catching up on Germany with a growth rate that is twice as high. Per capita spending in 2014 amounted to EUR 75 in France, compared to EUR 95 in Germany. Following the growing demand, an increasing number of French farmers are switching to organic production. The number of processors and retailers increased in 2014 to around 13,000 organic companies, 3% more than in the previous year. Preliminary figures for the first five months of 2015 show a 16% growth in the number of organic companies.

Sales of organic products in the United Kingdom, a market worth EUR 2.3 billion, grew by 4.0% in 2014 (2013: 2.8%), showing that it has fully recovered after four years of contraction, from 2009 to 2012. Per capita spending in 2014 was only EUR 36 in the United Kingdom, which shows significant market potential compared to countries like Germany and France.

The Swiss market grew by 7.5% to EUR 1.8 billion sales in 2014. Switzerland still has the highest organic per capita consumption in Europe with EUR 221 (2013: EUR 210). The share of organic farming land also increased slightly in 2014 and now stands at 12.3%; in the mountain regions one in every five hectares is organically farmed. The majority of organic products in Switzerland are sold through two major chains. Market leader Coop has a 46.5 % share of the entire organic food market in Switzerland, followed by Migros (27.5 %). Natural food specialist retailers account for just about 13.0%.

Of the north western European countries Sweden recorded the strongest growth with an exceptional 45.0% growth to EUR 1.4 billion sales in 2014 (2013: EUR 0.8 billion) and per capita spending of EUR 145. The penetration rate of organic products on the entire food market is now at 5.6%. Products made in Sweden, such as dairy products, eggs, pork, beef and chicken, have a relatively high market share. Eighty percent of Swedish customers claim to buy organic products at least occasionally. For 2015, sales are forecasted to increase by about 20.0% and to have doubled by 2025. Higher growth seems to be unrealistic, given that the biggest challenge for the continued growth will be the availability of Swedish organic products, as the Swedes prefer local produce.

In the Netherlands sales of organic food products grew by approximately 6.0% in 2014 (2013: 9.0%), reaching EUR 1.1 billion according to the Sustainable Food Monitor 2014, which was commissioned by the Ministry of Economic Affairs. Organic eggs (+40%) and tea and coffee (+50%) recorded the highest increase. These two product groups now have a market share of 35% and 25%, respectively. Organic dairy products and beverages also recorded an increase of more than 30%. Meat and fish were the only products to show no growth. In 2014, per capita spending amounted to EUR 57. In 2015, growth is expected to have continued, as the two largest supermarket chains in the country, Albert Heijn and Jumbo, have introduced their own organic private label.

The Danish organic market, relatively small in size (EUR 830 million) yet important due to its high per capita spending (EUR 162 in 2014) and high share in the overall food market (7.6%), grew by 6.3% in 2014 (2013: 6.0%). The markets for meat, fruit and vegetables grew the most. Dairy remains the largest organic product group in Denmark, representing 35.0% of the total turnover, as well as fruit and vegetables with a total of 23.0%. Price declines in 2014 had a favourable effect on sales volumes, which increased by 8.0% in the first four months of 2015.

With EUR 0.4 billion and a growth rate of 3.8% in 2014 the Belgian organic market is small. Compared to other European markets per capita spending was also quite low in 2014 with EUR 39. In Belgium, the market share for organic retail sales is 1.8%, which shows a great market potential compared to neighbour countries like France (2.5%) and the Netherlands (3.0%).

These growth rates reflect an increasing preference of consumers for more sustainable products, in line with high environmental and ethical values.

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