Industry Insights · 8min read

#FoodInsights Webinar: Episode 1 - Key Insights

We have compiled the key insights from our first webinar on organic food supply chain challenges and solutions for you below.

In this first episode, industry experts from different areas of the organic food supply chain shared their insights and experiences with us. Daniel Becker (Founder, Linnolat), Pernille Bundgård (International Market Director, Organic Denmark), Lucas Ibañez Isasmendi (Business Development Manager, CARTAGO) and Alessandro Petrucciani (Managing Director, foodcircle) discussed some of the most pressing challenges and potential solutions, with a strong focus on Danish, French and Spanish markets.

Watch the full webinar or zoom in on the key insights from the webinar below.

 

Organic Markets in Europe 

• In 2019 the global organic market grew by approximately 9%.

• Denmark: currently the world’s leading organic nation. The country does not have speciality stores for organic; organics are placed next to conventional products in regular stores and supermarkets. The Danish government has played a substantial role in devising programmes to support the organic industry and propel it forward; the government hopes to double the share of organics in the 2019 market by 2030.

• France: organics is taking up more space on shelves and growing significantly. You cannot currently have the same brand selling both at the conventional supermarket and the organic supermarket. As a result, many foods are double-branded.

• Spain/Southern Europe: the organic market in Spain (and Southern Europe) is generally one step behind that of Northern Europe. Six to seven years ago, organics was a small niche market, but it’s now growing quite rapidly.

 

 

Consumer Types & Motivations

• Consumers need to step up to the plate and demand more organic and fairtrade foods.

• Two particularly exciting organic consumer types are:

  • Super Heavy Users: People whose share of organic consumption makes up a minimum of 25% of their household purchases. In Denmark, these consumers make up only 11% of total consumers but account for as much as 44.5% of organic food sold.

  • Next Organic Consumers: People who expect to buy more organic in the future. Their primary drivers are to avoid pesticides, protect nature and groundwater, improve animal welfare, and make more climate-friendly choices. In Denmark, this category encompasses 39% of the population.

 

Price

• Price remains the main barrier in the acquisition of new consumers. The consensus is that organic must become accessible and affordable for everybody. One solution could be that companies wishing to propel the industry forward take the responsibility of earning less by accepting lower margins. This would allow the industry overall to achieve higher volumes and therefore impact more consumers.

• Organic products should become available in all stores and in different price categories to make organics more affordable. This ensures that it is not a luxury product and allows prices to become more competitive. People are generally not willing or ready to buy organic if prices are +30% higher than their conventional counterparts.

• One of the biggest challenges is that many organic products' high margins are not put in place by the farmers but by the retailers. This results in organics being sold and perceived as high-end products. A solution is to continue to work to ensure that more organic products are on the shelves to create wider price portfolios.

 

 

Certification & Regulation

• Denmark: the Danish organic label is the country’s only organic label. The label is state-controlled, 100% organic (the EU’s is ‘only’ 95% organic) and recognised by 89% of Danes.

• EU: the EU’s maximum pesticide residue limits are the strictest in the world. Regulations in the EU are generally much more stringent than those in the US. Farmers outside of the EU thus work hard to ensure that they export only their best batches to Europe. It can be challenging for businesses to navigate the EU’s certification landscape because there are so many certification bodies with different services, standards and prices.

 

Most Recent Supply Chain Struggles: Sesame Seeds

• There is an international alert in Europe because they found a particular pesticide, ethylene oxide, in sesame coming from India, which resulted in the ban of several cargos in the EU. The result is that it has become complicated to import sesame from India, which is currently the world’s leading producer of sesame. This will have devastating outcomes for Indian farmers and exporters. Most buyers in Europe are thus switching to sourcing sesame from other continents, primarily Africa or South America, but they are not equipped to meet global demand. As a result, experts expect a global sesame shortage well into 2021, and the prices will continue to rise.

Sign up for upcoming #FoodInsights webinars here.

Imagery: Alexandre Brondino, Kate Trysh and Mehrad Vosoughi via unsplash.com