market potential for organic food & irish consumer ... · growing the success of irish food...

Growing the success of Irish food & horticultureAIDAN COTTER

CHIEF EXECUTIVE

BORD BIA

28 JANUARY 2009

Growing the success of Irish food & horticulture

Lorcan Bourke

14th September 2011

Market Potential for Organic Food &Irish Consumer Expectations


Organic GroceryPerformance RoI


THE ROI ORGANIC FOOD MARKET ANNUAL DEVELOPMENT € BillionOrganic food value in slight decline vs the same time last year

€ 0.125

€ 0.104 € 0.103

52 w/e 09 Aug 09 52 w/e 08 Aug 10 52 w/e 07 Aug 11

-1.1% Value-16.6% Value

Data to 52w/e 07 Aug 11


-2.6

4.64.0

8.3

3.42.4

-0.7

-4.1

-6.3-7.5

-2.4 -2.6

-9.6

-4.6

-7.3

-1.3

1.8

-0.4

-8.9

-14.5 -14.5 -14.7

-5.6

-0.4

-5.3

-0.2-1.6

-12.8

-20

-15

-10

-5

0

5

10

12 w/e 08Aug 10

12 w/e 05Sep 10

12 w/e 03Oct 10

12 w/e 31Oct 10

12 w/e 28Nov 10

12 w/e 26Dec 10

12 w/e 23Jan 11

12 w/e 20Feb 11

12 w/e 20Mar 11

12 w/e 17Apr 11

12 w/e 15May 11

12 w/e 12Jun 11

12 w/e 10Jul 11

12 w/e 07Aug 11

Value

Packs

THE ROI ORGANIC FOOD MARKET QUARTERLY DEVELOPMENTOrganic Market value dropping back



Total Organic Food - Total Outlets Value down 1.1% worth €1193k

52 w/e 08

Aug 10

52 w/e 07

Aug 11

Actual

Change% Change

Expenditure (€000s) 104419 103226 -1193 -1.1

Volume (000s Pks) 73611 68703 -4907 -6.7

Penetration % 92.30 92.10 -0.20 -0.2

Purchase Frequency 20.90 20.40 -0.50 -2.4

AW P (Spend per Buyer) 70.10 68.60 -1.50 -2.1

AW P (Pks per Buyer) 49.45 45.68 -3.77 -7.6Trip Spend 3.40 3.40 0.00 0.0

Trip Volume (Pks) 2.36 2.24 -0.12 -5.1

Price per Pk 1.42 1.50 0.08 5.6

* Penetration contribution

includes Population growth of 1.2%

Contribution = €5740k

Contribution = -€7997k Contribution = €1064k

68.7m Pks -6.7%Contribution = -€6933k

Penetration % *

€1.5 +5.6%

92.1% -0.2%

AWP (Pks per Buyer)

45.7 Pks -7.6%

Price per Pk

Expenditure (€000s)

€103.2m -1.1%

Decrease of €1193k

Volume (000s Pks)

20.4 trips -2.4%

Trip Volume (Pks)

2.2 Pks -5.1%Contribution = -€2559k

Purchase Frequency

Contribution = -€5438k

-10000 -5000 0 5000 10000

Penetration % Purchase Frequency

Trip Volume (Pks) Price per Pk

Total Organic Food – Key Performance Measures

• Price increases however shoppers put less organic food into their baskets

Market Data to 52w/e 07 Aug 11


% VALUE SHARE OF THE ORGANIC FOOD MARKET- Organic Vegetables, Meat and Yoghurt gain market share importance- ‘The Rest’; are static or in small decline

4.5 3.6 3.3

4.9 5.6 5.2

3.8 5.3 53 3.5 3.7

2.42.8 2.4

6.36.4 6.1

12.7

17.1 18.5

7

5.9 6.511.9

9.3 9.6

24.224.2

26

19.3 16.3 13.7

52 w/e 09 Aug 09 52 w/e 08 Aug 10 52 w/e 07 Aug 11

Others

Vegetable

Fruit

Fresh Meat

Yoghurt

Total Milk

Hens Eggs

Savoury Home Cooking

Savoury Carbohydrts&Snacks

Packet Breakfast

Biscuits

Kantar Data to 52w/e 07 Aug 11


-6.5-10.7

2.6 1.9

-12.7

-2.0-5.9

14.9

-11.0

-1.3

Bis

cuit

s

Packet

Bre

akfa

st

Savo

ury

Carb

ohydrt

s

&S

nacks

Savoury

Hom

e

Cookin

g

Hens

Eggs

Tota

lM

ilk

Yog

hurt

Fre

sh

Meat

Fru

it

Vegeta

ble

-7.9 -7.0 -7.7

4.4

-16.4

-6.2

6.7 9.92.7

6.2

Bis

cu

its

Packet

Bre

akfa

st

Savo

ury

Carb

oh

yd

rts

&S

nacks

Savo

ury

Ho

me

Co

okin

g

Hen

sE

gg

s

To

talM

ilk

Yo

gh

urt

Fre

sh

Meat

Fru

it

Veg

eta

ble

Volume (Pack) Growth

Value Growth

% ANNUAL GROWTH OF THE ORGANIC FOOD MARKET.Yoghurt, Meat and Savoury home cooking performing well in value sales


Story of the Irish organic foodmarket is one of mixed

performance across marketsegments


Other Routes to Market - Ireland

Supermarkets c.85%

Direct c.15%

• Farm shops•Box delivery•Farmers Markets


National Organic Week & National OrganicAwards are the focus for National Promotion oforganic Food for Bord Bia in the home market

OBJECTIVE

Increase awareness of benefits of organic food

Increase frequency of consumption of locallyproduced organic food


National Organic Week

2010 20092011

National Organic Week & National Organic Awards are the focus forNational Promotion for Bord Bia


National Organic Awards

2010 Winners2011 Winner


National Organic Conference – June 2011


Market Potential for Organic Food- in the main European Export Markets


German Market Performance

•Germany is Europe’s leading organic market and organic food is holding its own well•Sales of organic baby food are strongest in Germany than elsewhere


•France is Europe’s 2nd most important organic market and organic food is selling well•Sales of organic processed foods and flour account for one third of market, whilemeat/poultry/seafood are equal in share to dairy (c.17%)


• Italy is Europe’s 3rd most important organic market and organic food is holding its own• They have well developed produce, dairy & cereals market segments


Spanish Market Performance

•While existing as one of the smaller organic food markets in size terms, it appears to be growing well• Opportunities may exist in the dairy, and in lesser market segment size categories such as meat & seafood


UK Market Performance

•UK is Europe’s 4th most important organic market but organic sales are dropping (exceptbaby food) – which is attributed to the UK recession & a poorly understand ‘organic message’


• Loss of $300 between pre-& post recession

• Sectors varying in their success

• Shoppers more questioning of organic USP

• Organics emerging as a ‘supporting’ proposition

• Clarity of ‘message’ communication

• Increase linkage of Organic to the Environment appears to be the more successfulapproach (e.g. Europe)

Source: Kantar Worldpanel


Pan-European Summary: There is a large export marketpotential for suitable Irish organic food ranges across

Europeand Grassland AdvantageGrassland Area

Ireland Europe

80% 40%

Mild Temperate ClimateAnnual rainfall 800 – 1200mm

Grass BasedFarm Enterprises

Ireland’s Organic Provenance & ‘image’ is right - we are acredible source of organic food

Seafood


• German Market: €5.9 billion• French Market €3 billion•UK Market: €1.3 billion• Irish Market : €104 million *( different source & no drink)


Summary: There is enormous export market potential forsuitable Irish organic food ranges across Europe

and Grassland Advantage

Grassland Area

Ireland Europe

80% 40%

Mild Temperate ClimateAnnual rainfall 800 – 1200mm

Grass Based FarmEnterprises

Ireland’s Organic Provenance& ‘image’ is right

Seafood

Biofach is the focus for BordBia as an international

showcase for the promotion ofIrish Organic Food ranges to

the World

BioFach is the WorldOrganic Trade Fair, &takes place eachFebruary in Nurnberg,Germany

In 2011, the event wasattended by 2,346exhibitors and 44,591trade visitors from 128countries

2010 -14 Irish co.s2011 -18 companies

Organic Market Potential – Supplier Market Opportunities

Product Consumer Interest Import SubstitutionFuture Potential for

GrowthSupply Opportunities

Fruit Limited Substitution Possibilities

VegetablesHuge Import Substitution

Possibilities

Red MeatGrowing Market Domestically

HIGH EXPORT MARKETPOTENTIAL

White MeatDemand high but PRICE differential

the most significant barrier

Processed MeatPotential use of lower value

meat cuts - convenience products

DairyProven high GROWTH domestic &

EXPORT e.g. Yogurt.

Deli Niche Products Possible

Ambient GroceryConvenience –yes

Price can be prohibitive

SeafoodHIGH EXPORT MARKET

POTENTIAL

Bakery Some need evident

Cereals (e.g. porridge) Strong demand home & abroad

Baby Food

Key Emotional Hook – kids

Strong demand for ingredients esp.Germany


Irish Consumer Expectations- recent consumer views


Consumer confidence continuing to slide for the 4th

straight month

-60

-50

-40

-30

-20

-10

0

10

20

30

40

50

60

Jan '11 Feb '11 Mar '11 Apr '11 May '11 Jun '11 Jul '11 Aug '11 Sep '11

Index (Get Better Minus Get Worse)

General ElectionThe Queen/Barack Obama

September 2011

-19

Source: Ipsos MRBI Indicator – Consumer Confidence Index


Value &Loyalty

Challenge


How we communicate with each other is changing……Do you social network?

Are you on Facebook?

1.65 Million Irish adults 15+ have a Facebook account

• 35-44 – 52% have an account



• 65+ – 12% have an account

Approx 250,000 Irish adults use Facebook daily

How about Twitter?

• Approx. 420,000 accounts

• 100,000 using the site daily Source: Social Media Quarterly survey


6371 75 74

6065 68 70 67 68 71

78

2008 2009 2010 2011 2008 2009 2010 2011 2008 2009 2010 2011

There is a growth in a determination to buy Irish (where possible)Base: All housekeepers

% Stronglyagree/ agree

Compare prices/ shop around Buy own label Buy Irish where possible

Showing signs of levelling off Still growing but slowing in rateA significant jump in the last 12months

Source: JNLR 2008-2011


The Importance of Irish Companies Highlighting that Products orServices are Irish (Base: All Adults 16+ – 1000)

Not Important ImportantNeither nor6 6 87

Demographics%

Age

16-2425-3435-4445-5455+

8280909094

Gender

MaleFemale

8984

Marital Status

Married/CohabitingSingleWidow/Divorced/Separated

898092

Region

DublinLeinsterMunsterConnaught

81899188

The vast majority of Irish consumersbelieve that it is important for Irishcompanies to highlight the fact thattheir products or services are Irish.This sentiment increases with age,but is less important to singles than itis to couples or those who were partof a couple in the past.This figure rises to 95% amongthose who correctly identify theGuaranteed Irish symbol.

The vast majority of Irish consumersbelieve that it is important for Irishcompanies to highlight the fact thattheir products or services are Irish.This sentiment increases with age,but is less important to singles than itis to couples or those who were partof a couple in the past.This figure rises to 95% amongthose who correctly identify theGuaranteed Irish symbol.

Q. When selling or marketing aproduct or service, howimportance, if at all, do youthink it is for Irish companiesto highlight the fact that theirproducts or services areIrish?


68%

64%

61%

55%

41%

33%

32%

29%

24%

22%

21%

21%

17%

10%

9%

8%

7%

80%

65%

55%

52%

41%

23%

29%

18%

20%

22%

26%

20%

11%

8%

4%

9%

79%

73%**

n/a

2010

2008

What do Irish consumers see as the key benefits of eating Organic Food ?

Q.7a Please have a look at this card and tell me which of these do you think are the benefits of eating organic foods? Anything else?Q.7b Which amongst these benefits that you have highlighted is the most important for you personally? Which second? Which third?

Most Important Benefit

2010%

2008%

34 40

27 27

7 9

9 7

9 n/a

2 5

1 2

1 1

2 3

1 2

1 1

* 1

- 1

1 1

- 1

1 *

* -

- *

Healthier for my body

Free from chemicals/pesticides & therefore healthier

Is more natural

Tastes better

Free from antibiotics and therefore healthier

Is fresher

Is good for the environment/nature

Is good for animal welfare

Supports the local community

Helps me avoid allergies

Better for my physical appearance (skin/hair/nails..)

Uses less energy for production

Offers seasonal variety

Guaranteed to be made in Ireland

Conveys a certain status

Is good value for money

Is more convenient to use/cook

Has a wider range

Base: All Organic Buyers: 442

**Question wording altered in 2010


Encouraging Purchase of Organic FoodBase: All respondents n -1001

%

Q.3 Please tell me how likely ornot you feel each of thefollowing would be toencourage you to buy/buymore (as appropriate) organicproduce?

%

Very Likely FairlyLikely

Price reductions, promoting Irishness and traceability appear the key messagesto promote purchase.


Conclusions:• In overall terms the Irish organic market would appear to be fairly static with

some categories growing and some in decline – some categories have provenmore resilient to recession , those invested in have done well

• Import substitution remains a key challenge for the most important organiccategory i.e. vegetable production.

•Large export potential exists for Irish food companies to develop organic linesof traditional Irish foods (meat, dairy, fish, cereals) across Europe

•Organic food production can offer a ‘value added proposition’ to smaller scaleproducers and for larger operators

•Some organic food lines have become the mainstream in their categories e.g.yogurt, farmed fish, baby food, etc.

•Organic and ‘local’ works as a marketing tool – there is also increased interestin promoting Irishness. Social media is the way forward to explain organic..

•Successful organic products tend to be good products in their own right

• ‘Free-From’ health benefits and key environmental benefits, remain its keyUSP with consumers – ‘value’ must be communicated through these ‘values’


Thank You

market potential for organic food & irish consumer ... · growing the success of irish food...

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