This document analyzes key trends in the global organic food market, with a focus on Europe and the US. It finds that Europe and the US account for over 95% of the total organic market due to health and environmental concerns among consumers in those regions. Organic food for babies is outperforming the overall market. The organic market is led by regulatory environments, perceptions of health and environmental benefits, price premiums, variety and innovation of products, and availability and promotion of organic options. Demand and supply factors vary significantly between countries.

1. Dispositivos para el Manejo de Efectivo en
The Organic Food World
An Outlook of Organic Food for Babies
Establecimientos Comerciales en España
February, 2011
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2. Scope and Methodology of the Study
The aim of this market research is to identify key trends and levers for growth of the
“Organic Food World”
– Is there a single global organic market? Which are the key levers for growth?
– Is Organic a real and serious opportunity for growth for food retailers and other
players within the Food Industry?
– How is the Organic market expected to evolve in the future?
– In the case of Organic Food for Babies, why it is outperforming the market?
The methodology used comprises three activities
– Definition and selection of countries to focus the study on based on economic,
demographic and level of representativeness
– Desktop research on public and private databases, reports and other
resources (Desktop Research)
– Interviews with most representative players in each of the countries selected.
(Primary Research)
Based on the research, we draw main conclusions and formulated strategic
recommendations
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3. US and Europe leading Global Organic market growth
Overall, the Organic Food market has proven to be more Organic Food Market by Region,
CAGR
resilient to economic recession over the last years 2006-09 (US$ Mn)
2006-09
38,600 46,100 50,900 53,180 11.3%
Europe and USA account for more than 95% of total
Organic demand. Key drivers are:
– Health and environmental concerns
– Consolidation and professionalization among organic
producers and distributors
– Improved product variety and innovation 2006 2007 2008 2009
– Increased emphasis on organic products by Europe USA Other Regions
mainstream retail
Strong supply/demand geographical imbalances represent the greatest challenge to the future
– Almost 70% of the organic certified areas are located outside the main consumption regions
– Relevant operational obstacles are emerging to assure product quality and compliance
– Long transportation distances are not aligned with the organic principles (environmental,…)
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4. Unbalanced development of organic among countries
Organic Development by Country 2009 Size, growth and penetration of the organic food market in
(CAGR 2006-09; % of total Retail Food Sales)
RU
each European country varies depending on:
40%
SW – Consumers attitude and sensibility towards organic
Organic Retail Sales Growth – 2006-09
FR
values
20%
PO
– An inflection point is reached when organic products
(CAGR 06-09)
IT
SP
compete directly with conventional products
GE
UK
0% – Organic Expenditure does not seem driven by
Household Consumption
-20%
0,0% 1,0% 2,0% 3,0% 4,0%
Organic Share of Value - 2009
(Organic Retail Sales / Food Retail Sales; %)
Therefore, local supply and demand factors have been analyzed in order to get better understand organic
market performance and estimate future trends
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5. Key Organic Drivers. Local demand and supply factors
Driver Description Demand for organic products is originated by the consumer
awareness
Regulatory Existence & level of
DEMAND FACTORS
environment compliance
– The existence of a well-defined regulation on organic is
Perception and awareness
“Good for me” of the organic benefits
necessary
related to health
Perception and awareness
“Good for the earth” of the organic benefits Supply factors are related to the commercial strategies
related to environment
Price Premium
General premium over – Price premium strategies are key to launch new organic
conventional food products
SUPPLY FACTORS
Range of organic products
Variety & Innovation
and new launches – Product variety and innovation are necessary to generate and
support interest
Availability & Presence in channels,
Placement placement on the shelves
– The co-existence on the same shelf of organic and
Communication & “Noise” of organic conventional products helps to compare the offer
Promotion manufacturers and retailers
– Communication is a key factor for a continued market growth
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6. Key Organic Drivers. Country analysis
Driver Russia Poland Spain Italy France Sweden UK
DEMAND FACTORS
Regulatory In
environment process
“Good for me”
“Good for the
earth”
Price Premium *
SUPPLY FACTORS
Variety &
Innovation
Availability &
Placement
Communication &
Promotion
Highly important Medium importance Not important
A solid regulatory environment is a pre-requisite Concerns about health and environment are well present
Products are often positioned as “premium” among consumers
Future development will be mainly dependant on how Manufacturers and retailers have identified the market
demand factors evolve opportunities brought by organic
– Increased concerns about health, drive consumer organic More volumes and competition lead to efficiencies
awareness, leading to the development of the market Markets seem to develop on a solid and sustainable basis
– Before demand factors develop, it is unlikely that – Risks may come from markets excesses (e.g. organic
manufacturers and retailers decide to invest in organic food scandals)
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7. Organic market expected growth. Country analysis
Organic Food Markets Future Estimations
Est.
CAGR
Country Future Trends CAGR
2006-09
2009-13E
Introduction of new products and categories (fish, seafood …) will widen the organic market
France Further segmentation of the organic market in more specific attributes (fairtrade, local, 20% 5-10%
traceable …) should lead to further growth
Product innovation led by manufacturers, more shelf space available and increased marketing &
UK communication efforts will devolve growth to the market -2% 2-5%
A larger organic range and the establishment of organic brands should widen the organic
consumer base and support sales growth
Italy More efficiencies in production and distribution should drive costs further down to the benefit of the
10% 5-15%
consumer
The strong position of organic food in retail, increasing consumer awareness and the launch of
Sweden new organic products should continue supporting growth in the future 25% 5-15%
Retailers’ approach to organic food is instrumental in determining the evolution of the organic food
Spain market
10% 2-5%
Increased consumer’s awareness and acceptance of the benefit of organic products will drive
Poland future growth
20% 15-30%
Strong growth rates in Russia are justified by the low impact of the economic downturn among
Russia organic buyers and by the establishment of a regulatory environment related to organic food 40% >30%
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8. Stronger development of Organic Food for Babies vs. Total Organic
Food
In the case of Organic Food for Babies market, the degree of development
and penetration is higher than that of total Organic Food
– Concerns about product safety is very high when coming to customers with
babies; “good for my child, safe and good for the environment” are values
transmitted by Organic manufacturers
– Organic Food for Babies product has entered as a premium product rather
than as “just organic” enabling a better performance
– In more developed countries (UK, Sweden,…) product innovation has been
a key driver for market growth and has enabled the entry of new organic
players
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9. Manufacturers of Organic Food for Babies
Organic Food for Babies markets are driven by major
competitors strategies and positioning which is expected to drive
future development
– Gerber, Hipp, Ella’s Kitchen, Organix, Semper… have
consolidated their presence on the biggest countries (Sweden,
France, UK, US,…)
– Pure organic players have consolidated its presence in certain
countries with a continuous innovation strategy
– Competitive strategy varies according to local market
characteristics
Entry category for Organic Food for Babies has historically
been Meals & Drinks. Future growth is expected to come from
products targeted for kids older than 36 months
– Organic food for babies manufacturers have widened their
product offering to frozen, refrigerated, snacks,…
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10. BCS Contact Details
Broggini Consulting Services S.L. Broggini do Brasil Consultoría Ltda.
Castelló 115, 5º Via San Vittore 45 Rua Dr. Guilherme Bannitz, 126
28006 Madrid 20123 Milano 04532-060 Itaim Bibi, São Paulo
Tel. +34 91 781.2731 Tel. +39 02 469.3730 Tel. +55 11 3845.4501
Fax +34 91 563.5366 Fax +39 02 4801.3867 Fax +55 11 3842.2837
madrid@broggini.net milano@broggini.net saopaulo@broggini.net
www.broggini.net
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