The organic (or bio) market is gaining traction across Europe, and leading retailers and suppliers are upping their investment in order to take advantage of this growing sector. This article first appeared in Issue 5, 2019.
While the organic market is not new to European retail – in Germany, retailer Denn’s Biomarkt dates back to 1973, while Alnatura commenced operations in 1984 – the past few years have seen increased investment by both retailers and suppliers in the organic segment, indicating a growing competitiveness among major operators, not to mention a flurry of mergers and acquisitions.
Major Acquisitions
Last year, for example, Carrefour announced the acquisition of SO'BiO, an organic chain located in the south-west of France, as well as Spanish online organic distributor Planeta Huerto, through its Greenweez business.
The retailer sees add-ons in the organic field as key to positioning itself as the ‘leader in food transition’, according to its Carrefour 2022 business plan.
Carrefour isn’t alone in its aspirations, either. In the Netherlands, organic food store chain EkoPlaza recently acquired a competitor, Natuurwinkel, while in Belgium, Colruyt recently announced the opening of its 30th Bio-Planet store.
In Germany, Aldi Süd has unveiled a partnership with organic food specialist Schneekoppe, fronted by World Cup-winning German football star Philipp Lahm. In Italy, organic food retailer Natplus recently acquired rival MelaVerdeBio.
Elsewhere, in the past month, investment fund PAI Partners announced the acquisition of organic food business Wessanen, which produces the Clipper, Kallø and Bjorg brands, for a cool €885 million, in a deal that will buttress the Dutch business’s aim to make “food healthier and more sustainable for the benefit of both consumers and the planet,” according to CEO Christophe Barnouin.
Organic is now big business.
Growth Agenda
This level of investment isn’t surprising if you look at the macro figures. According to FIBL, the European Research Institute of Organic Agriculture, organic retail sales stood at €37.3 billion in 2017 – a 10% increase on the previous year (€33.7 billion) and a 24% increase on 2015 (€30.1 billion).
Sales are highest in countries with a long-standing tradition of appreciation for organic products. In Germany, organic retail is a €10 billion industry (€10.04 billion), while in France, it is worth €7.9 billion, and in Italy, €3.1 billion, but growth is also particularly evident in countries relatively new to the appeal of organic.
In Ukraine, organic retail sales grew by 38.7% year on year in 2017, while in Bulgaria, organic retail sales went up by 6.5%.
This also ties in with growth in the number of organic producers, with FIBL reporting a considerable increase in the number of organic food processors (66,000 in 2016) and importers (4,700), as well as increased consumer demand for more transparent, sustainable food supply chains.
“We need coherent policies to achieve sustainable food systems,” FIBL’s Adrian Muller explained earlier this year. “We can no longer afford seemingly cheap food, resulting in high environmental costs.”
Consumer Expectations
After all, the next generation of consumers won’t expect anything less. As Solitaire Townsend, co-founder of Futerra, explained at the recent Consumer Goods Forum Summit, in Vancouver, the majority (79%) of Generation Z shoppers, as they are called, believe that brands are never honest, or not honest enough, about environmental issues, while only 42% believe that brands care about providing honest information.
“This generation [was] raised to question fake news, be suspicious of secrecy and hold sincerity as sacred,” Townsend explained. “They are the Honest Generation, and their appetite for radical transparency on social and environmental issues is growing. They don’t expect brands to be perfect, but they do expect them to be truthful.”
Embracing organic may soon no longer be a ‘nice to have’ – it could be an imperative.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
