Organic overdrive

As consumers become ever more health and environment-conscious, organic egg and poultry suppliers are seizing on the opportunity to boost sales

By Michael Barker

This feels like a transformative moment for the UK organics industry. Despite the sector having grown steadily as it completes its recovery from the post-2008 crash, when consumers switched to cheaper foods after the global financial crisis, the feeling persists that the UK has failed to maximise the opportunity before it. While the organic grocery market in the likes of Germany, Denmark and the USA has soared towards a double-digit share, Britain has lagged behind. But if the latest indications are to be believed, poultry could be one of the categories in the vanguard as organics comes firmly into the mainstream.

There are positive signs that the sector is on an upward trajectory, not least reports of demand outstripping supply for organic poultry and eggs this year. “The demand for organic eggs has been in double-digit growth since the start of 2019, so it may be difficult for producers and packers to keep up with this,” confirms Finn Cottle, trade consultant at Soil Association Certification. Organic eggs have a high penetration in the overall market, at 7.8% [Nielsen], and value sales increased by an impressive 13% in 2018. Organic poultry is growing in line with the market.

Crucially for the long term, for both eggs and poultry organics is becoming more popular with younger shoppers, and recent YouGov polling saw 45% of 18-24 year olds name the environment as the most pressing issue facing the country, pinpointing organic food as a sustainable way to eat.

Organic poultry and eggs’ growth is being attributed to changes in diets and increasing numbers of health-conscious shoppers, where organic is seen as a signpost to better living. “We know that organic shoppers are not only motivated by health, but also the environment and animal welfare and are therefore pre-disposed to making changes to their diet to help,” Cottle explains, adding that this trend is only likely to continue as the next generation of consumers become even more conscious of the impact of their food both on the planet and their own bodies. “People seem to understand that organic eggs and poultry are much higher welfare and are therefore willing to pay a little more to give hens a truly free-range life. Organic systems also provide significant environmental benefits, with wildlife 50% more abundant on organic farms.”

While demand continues to increase, developments at farm level are not necessarily keeping pace, suggesting further supply shortages can be expected. According to newly released Defra statistics, the total land area under organic food production has actually declined, suggesting a shift away from larger farms, though there is better news for the sector in the fact that the number of organic producers has increased. The latest figures show there were just over two million head of organic poultry in the UK in 2018, representing a 1.8% rise on the year before and a more than 30% increase against the 1.5m recorded in 2015. The trend is for an acceleration in production, but that may not be enough to keep up with rapidly increasing demand.

Producers are starting to seize the opportunity. Last year Noble Foods launched its first national organic egg brand, Purely Organic, which is pitched as a small-scale, sustainable model that is good for consumers, hens and the environment. Coming from a group of six family-run farms, Purely Organic hens forage among fruit trees and wildflowers that offer naturally enriched nutrients for the hens and a positive environment for bees and insects. The brand is endorsed by British Lion, Freedom Food and Organic Farmers & Growers, and is available via Nisa, Tesco and Amazon Fresh.

Simon Wilson, innovation manager at Noble Foods, tells Poultry Business that sales of the brand have exceeded expectations and added value to the category. “With consumer awareness of environmental issues such as packaging at an all-time high, Purely Organic is also the first brand in the UK to display the Climate Partner logo,” he points out. “This means the pulp packaging is carbon neutral and that the production of the boxes will offset the emissions generated by production processes and transport.”

Such points of difference are crucial in persuading shoppers to trade up at a time of Brexit-driven economic uncertainty and low consumer confidence, according to AHDB senior retail insight analyst Kim Malley. “Price is the main barrier for purchasing organic for 59% of consumers, highlighting the need to justify its price premium,” she says. “There is general understanding of what organic means, with 89% linking it to goods free from chemicals and 81% linking it to goods free from anitbiotics. However, beyond these overarching themes, perceptions linking to the environment, animal welfare and personal benefits (health and taste) are much lower. As consumers become more demanding in terms of quality, the organic market has an opportunity to educate consumers on what it stands for.”

At a time when supermarkets are price-warring and suppressing returns to suppliers, organics can offer better returns – but nobody should be under any illusions that it’s going to be easy. “Our producers are achieving good economic returns, even in the current economic and political uncertainty facing the agricultural industry,” says Roger Kerr, chief executive of Organic Farmers & Growers. “But with increased regulation of agro-chemicals and potential increases in currency volatility affecting the price of inputs and outputs, many businesses are looking to reduce risk. And with policy signals from government, farmers are looking at their options, including organic.”

OF&G says there is no ‘one size fits all’ approach and stresses that entire farms do not have to all be converted at once. An organic system in one part of a farm can work synergistically with conventional enterprises in other areas.

The Soil Association warns that sourcing cost-effective organic feed has long been a challenge for European poultry producers, who are largely dependent on imported organic soya for high-quality protein feed. The organic body is involved with the OK-Net EcoFeed project, set up in 2018 to help organic farmers explore alternative protein sources and encourage the use of more regional feeds, where available.

Organics could also suffer what will hopefully only be short-term pain when the UK leaves the EU, with British organic exporters effectively facing an international trade embargo for up to nine months in the event of a no-deal exit. The flip side of that is that fears of a US trade deal, which could include the introduction of chlorinated chicken onto British shelves, could actually drive a shift towards organic given the negative publicity it has gained in the press this year.

Overall, the long-term trend is clear, and as those younger consumers get older, the opportunity for organic poultry and eggs looks only set to grow. Given the success of the organic category in comparable markets such as Germany and the US, there’s no reason the UK cannot aspire to spectacular growth in the category in the coming years.

Cracking the organic egg market

For producers looking to convert to organic egg production, the Soil Association advises in the first instance contacting an organic certification body and reviewing their standards. Land usually converts to organic certification in two years, but there is potential for farms to start producing Soil Association-certified eggs in a year or less, providing application inspection requirements have been met. These include the checking of field records for any banned inputs applied in the previous 12 months, feeding, housing and ranging requirements.

 

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