Supermarkets blamed for organic market slump

The organic food sector have hit out at the large retailers for a lack of in-store support and poor marketing of products, which they feel has resulted in a slump in the market.

Jeremy Jaffé​ co-founder and sales director of organic food firm What on Earth, told FoodManufacture.co.uk: “As is so often the case with supermarkets, everything is dictated by profit. If you don’t make the profit, you’re out. That is the simple formula.​

“Supermarkets tend to fill the stores with what they feel will sell. They do not view organic food as a big seller as people who want them tend to go elsewhere. Organic food is a mind-set and quite an earthy industry​.”

Price cuts​

This lack of support had lead to a “general mood​” that the organic market is suffering as a result, according to Jaffé.​

His thoughts were echoed by the Soil Association, which said that huge price cuts at the multiples had drawn customers to cheaper, “less ethical products".​

A spokeswoman told FoodManufacture.co.uk: “Supermarkets cutting shelf-space for organic products has certainly been a factor and has negatively impacted the market​.

“Huge price cuts in non-organic products, which tempted consumers away from more ethical alternatives was also a factor. The actions of supermarkets have not always been helpful​.”

The Soil Association is currently working with multiple retailers who account for around 72% of the organic market. It also holds a twice yearly Retailer Organic Group where independent retailers come together to discuss issues in the market.

The spokesmwoman said the issue was "complex" and that the current economic climate had also hit the industry, as consumers become "more concerned with price​".

Under pressure​

The criticism was dismissed by the British Retail Consortium (BRC), however, which described the accusations as “entirely wrong​”.

Richard Dodd, spokesman for the BRC told FoodManufacture.co.uk: “I accept that organic producers are under pressure but it is entirely wrong to blame supermarkets.​

“Tough economic conditions have had an impact on organic producers certainly, and there is no question that many customers are now more concerned with price.”​

UK supermarkets were currently the biggest sellers of organic produce and responsible for more sales than any other retailers, according to Dodd.

“Ultimately the overwhelming influence on shelf-space is driven by customer demand.”​

Jaffé ​believed that What on Earth’s loyal customer base of smaller, independent stores is the reason for the firm posting positive results for 2011, despite the general downturn in the market.

The firm claimed to have “generated high revenue​” and delivered over half a million products to its customers last year.

Jaffe added: “We work with small, high end suppliers and I think this is why we have managed to buck the trend. It has offered some protection against the rising food prices that are affecting supermarkets across the country.​

“Our customers have very loyal audiences so don’t need to worry about constantly keeping their prices low to attract cash-strapped consumers. Our products sell in the stores we supply because they aren’t available cheaper in any supermarkets​.”

What on Earth is an organic food manufacturer, based in Battersea, South London. The firm claims to produce a range of food products, which are high in vitamins and mineral but that contain no gentically modified organisms, additives or pesticides.