Key Market Drivers in the Organic Sector

1. Key Market Drivers in the Organic Sector Dr Maeve Henchion Ashtown Food Research Centre, Teagasc

2. Agenda • Market context • Awareness and understanding of “Organic” • Is organic food delivering what consumers want? • Some supply chain issues • Change!

3. Market Context • Total Organic market is valued at more than €100 million • Fresh + Chilled €77.3 • Ambient €26.2 • Frozen € 0.7 • Grown by 82% in the last 2 years • Signs of growth slowing down

4. Who Buys Organic Food? • 2 million grocery shoppers • 52% current organic buyers (purchased organic in the past 3-6 months) • Wide range of demographics

5. What kinds of Organic Products are Irish shoppers buying?

6. Awareness of Food Labels • Consumers aware of organic label

7. What does “Organic” Mean? • What does IOFGA say? • Environmentally friendly farming  • Animal welfare  • Farming without drugs, antibiotics, wormers  • Prohibiting GMOs  • Prohibiting chemicals pesticides  • Healthy soil

8. Consumers – Eurobarometer 2005 • Irish consumers associate food • with taste • As a vital necessity • Health • pleasure • Positive hedonic connotations

9. Factors influencing food choice • Irish shoppers are guided by quality – health less important (10%) • 48% of Irish shoppers state “quality is just as good as non organic” (Nielsen) • 38% are not sure about the benefits of organic (Nielsen) • “25% don’t trust the credentials of organic products” (Nielsen)

10. Is organic food delivering what consumers want?

11. Fear of Food • Most Irish consumers associate few risks with food (spontaneous responses) • BUT when consumers are reminded of possible risks – response changes

12. Worry is an important determinant of consumer’s attitudes to food safety! • Consumers are more likely to worry about factors that are outside of their control. • Worry Scale • Top end – external factors which are clearly identified as dangerous e.g. pesticide residues • Mid-range – environmental pollutants, GMOs, BSE • Low-end – personal factors linked to their own behaviour e.g food hygiene at home

13. Profile of Worriers • EU aggregate research results report that: • 34% consumers can be classified as very worried about food (42% a bit worried, 23% not very worried) • Women more likely to worry more than men • The longer people stay in full-time education the less they tend to worry about potential health risks • 40-54 age group most inclined to worry • Stay-at-home house persons (most often women) are most likely to be classified as very worried.

14. Discounters have entered the Irish organic market! • Germany is the biggest market for organic products in Europe but consumption still low with 3.5% share of total food market. • German discounters (Aldi & Lidl) are offering organic food produce – could have an impact on local organic outlets e.g. farmers markets and independent retailers. • Will change consumers perceptions on “expensive” organic produce.

15. Putting the pieces together • Irish organic market is small but growing. • At least 50% of grocery shoppers buy organic but core group small • Awareness of organic is high. • “Benefits” of organic appeal to the “worriers” • need to broaden appeal to include “less worried” and not worried • by broadening appeal of organic products to include consumers need for quality, taste, pleasure • German discounters could change perception of “expensive” but will it be at expense of commodity image?