London, 2005 — The growth in the European organic food industry is not being matched by organic farmland. Research by Organic Monitor (www.organicmonitor.com) found that although organic fruit & vegetable sales increased by 26% between 2001 and 2004, the rise in organic farmland in Western Europe was just 14%.
Organic fruit & vegetables comprise the largest sector of the EUR 11.5 billion European organic food industry (2005). They are grown in all European countries and are highly popular because of their fresh nature. The market has enjoyed high growth since the late 1990s due to organic fresh produce like potatoes, carrots and apples being the entry point for many first-time buyers of organic products.
The German market was, in 2004, showing the highest growth with organic fruit & vegetable volume increasing by 14%. Market growth is driven by widening availability of organic products in mainstream retailers and the expanding number of organic food shops. Germany and the UK have the largest markets for organic fruit & vegetables, representing over a half of European revenues. The British organic fruit market, valued at EUR 330 million, is the largest in Europe.
The study on The European Market for Organic Fruit & Vegetables found the largest organic food markets were in Germany, the UK, France and Italy, however Scandinavian and Alpine countries were the largest consumers. The highest market shares were in Switzerland, Denmark and Sweden where organic vegetable sales comprised over 6% of all vegetable sales. Southern European countries had the lowest market share with less than 1% percent of vegetables sold as organic in Spain. There is relatively low consumer demand in Spain, Greece and Portugal with most organic food production in these countries going to export markets.
The organic vegetables market represents most revenues. Organic potatoes is the leading product with an estimated 355,000 tonnes sold in 2004. Organic Monitor projects the organic fruit market to show the highest growth as retailers broaden their organic fresh produce ranges. The organic tropical & exotic fruit market is expanding rapidly, especially the organic bananas segment which has benefited from consumer demand for organic and fair-trade products. The organic bananas market is valued at 80,000 tonnes with a half of all sales occurring in the UK.
The study finds supermarkets comprise most organic fruit & vegetable sales with 48% share. The market share is in decline in many countries as sales channels for organic foods broaden. Increasing volume is going to professional box scheme operators, organic food supermarkets and catering & foodservice companies. The growing importance of food quality is leading to many institutional kitchens in the UK to serve organic foods.
A major development at the supply-side has been the entry of large conventional fresh produce companies, which are showing a large rise in market share. Encouraged to come into the market by supermarkets, these companies are posing a threat to many organic fruit & vegetable suppliers because of their strong retailer relationships and distribution networks. Organic fresh produce companies are advised to limit the threat of new entrants by entering strategic alliances and spreading business risk.