24 February 2023
New report shows growth rates are slower than conventional products, but experts say market share is still good.
THE UK organic market grew by 1.6% in 2022 to be worth £3.1 billion, according to the newly-published 2023 Soil Association Organic Market Report, prompting denials that the sector is losing popularity with consumers.
The high growth rates seen in the early stages of the pandemic (+12.6% in 2020 and 5.2% in 2021) have slowed, and for the first time in eight years organic sales growth lagged behind conventional.
However, the Soil Association points to the “phenomenal” 25.4% growth in the overall value of market over the last three years (the market was worth £2.45 billion in 2019). The organic charity also predicts a return to stronger growth as the cost of living crisis subsides.
Organic sales in supermarkets fell 2.7% with share of category dropping from 1.8% to 1.7%. In the final four weeks of the year, organic sales in the supermarkets returned to growth of 0.5%, lagging behind non-organic. This follows eight years in which organic food and drink has grown faster than non-organic.
But Soil Association Certification Commercial Director Alex Cullen said that in a year when many consumers were faced with “difficult choices” at the grocery checkout, it wasn’t surprising that mass channel retail organic sales fell slightly in 2022, pointing out that the market remains sizeable, worth £1.92 billion.
“With sales exceeding £3.1 billion we have seen a transformation in the organic food and drink market since the pandemic with a phenomenal 25.4% growth in just three years. Despite the economic turmoil and significant challenges everyone faced in 2022, the organic market delivered a strong and resilient performance, growing a respectable 1.6%.”
In home delivery, despite a mixed performance across companies, sales were flat at £558.6m following exceptional growth during lockdown where sales grew from pre-pandemic levels of £362.9m. There were winners and losers as consumers spent less time at home and faced inflationary pressures but this in turn has driven innovation, new technology solutions and broader organic product ranges, according to the report.
Independent retailers faced a challenging year, with sales dropping 3.3% to £432.1m following a buoyant period during the pandemic when some retailers were classed as ‘essential businesses’. Over the past year they faced the challenge of trying to retain these new customers but also saw shoppers spend less and shop less often. More than 60% of retailers saw inflation as the number one challenge but two thirds believe sales will increase in 2023.
All UK growers faced huge challenges in 2022 and organic growers were not immune from those pressures. Inflation and supply chain disruption meant the cost of doing business rose as heating bills rocketed. As the focus switched to value at supermarket checkouts, the price farmers received for their products was under intense pressure. This inevitably impacted on organic farmers as people increasingly sought cheaper products.
But there was some relief for organic growers as they don’t use chemical fertilisers, so they weren’t impacted by escalating fertiliser prices sparked by the war in Ukraine, says the soil charity. This also presents an opportunity for the organic farming movement to grow as conventional growers look to cut costs by adopting more natural ways to fertilise crops.
Alex said: “Organic is a good choice for governments, business and individuals because it is a ready-made solution for the climate crisis. Increasingly people are recognising the crucial role that organic farming can play in restoring nature, replenishing soils and providing clean air and water as well as nourishing food.”
Organic Farming and Growing organisation, OF&G, also sees the report's findings as promising.
OF&G CEO Roger Kerr said: "It’s been a challenging time for the entire food and farming sector. Yet despite the impact of the cost-of-living-crisis, this year’s Soil Association organic market report evidences several areas of growth. With many external pressures reflected throughout the report, there remains a need to adapt our food systems to the challenges of climate change, the continued degradation of soils and biodiversity loss.
"Organic represents a clear way of delivering greater food system resilience because it is a whole system approach, where practices work simultaneously in synergy with nature and each other to address the current challenges.
"Support for organic is happening around the world with significant increases in both organic land area and market growth. This is in clear recognition of the value organic can deliver for forward-thinking governments, by providing a clear pathway to creating a ‘fair, healthy and environmentally-friendly food system’. OF&G believe the UK must stop ‘treading water’ and asks Government to now lead in publicly supporting organic as part of its broader agenda through clear and unambiguous messaging."