Market Information
Europe

Organic Food and Beverages Sector Profile - United Kingdom

December 2003

Canadian High Commission in London
Macdonald House
1 Grosvenor Square
London, UK W1K 4AB
Contact: Rick Cooper, Counsellor (Agriculture, Food and Fisheries)
Tel.: (44-20) 7258-6600
Fax: (44-20) 7258-6384
E-mail: rick.cooper@dfait-maeci.gc.ca
Internet: http://www.dfait-maeci.gc.ca/london

MARKET OVERVIEW

The United Kingdom's agri-food sector is a lucrative market with over 60 million consumers and one of the world's most sophisticated retail sectors. The U.K. grocery market (including non-food sales) was valued at over $230 billion(2) in 2001 and is expected to continue its healthy growth in the future.

The U.K. organic food and beverages market is an important segment of the agri-food sector and ranks second-largest in Europe, behind Germany. In 2002, retail sales of organic food and beverages increased by almost 20% from 2001, albeit a somewhat lower rate than the previous few years. The U.K. organic market was valued at $2.3 billion in 2002, with over 65% of products being imported. Sales of organic food and beverages represent between 2% and 3% of total food sales in the United Kingdom. However, the U.K. government, supermarkets and Soil Association are attempting to boost this share to 10% by 2010. The organic market in the United Kingdom is estimated to reach approximately $2.7 billion in 2003 and increase by 75% over 2002 figures by 2007.

The surge in demand for organic food in 2000 was undoubtedly fuelled by a series of food safety scares including bovine spongiform encepahalopathy (BSE), salmonella and Foot and Mouth Disease, as well as, concern about, and resistance to, the introduction of genetically modified organisms (GMOs). Furthermore, consumers were increasingly being educated about organic products, and several food manufacturers were launching new organic products and relaunching existing ones. Demand for organics continues to experience strong growth, however growth rates have slowed over the last few years. As the market for organic food and beverages matures, boundaries between health foods and mainstream foods are becoming increasingly blurred. A number of new sectors--including sports nutrition and functional foods--have developed in response to consumer interest in their health and what they eat.

While 77.7% of U.K. households have purchased organic products, a mere 4% of the population are considered loyal consumers of organic foods. With increased education about organic products, this percentage is anticipated to grow to 19% in 2007. Typical consumers of organic food in the United Kingdom include its growing number of seniors (aged 50-70) and young families. A health-conscious ageing population who believes in the benefits of eating organic foods has pushed up demand for organics within this target market. Moreover, demand for organic baby products is booming, accounting for half of total baby food sales.

As the second-largest organic market in Europe, the United Kingdom offers a wide variety of organic products. Fruits and vegetables is the biggest segment, accounting for 29% of the market in 2002. The next-largest segment, dairy products, accounted for 19% of domestic sales, followed closely by organic processed foods (16%), cereals and baked goods (13%), baby foods (7%), meat and meat products (6%) and eggs (5%) in 2002. Organic beverages, including organic teas, coffee and fruit juices, accounted for 5% of the market. In 2002, the market for organic beverages amounted to approximately $113 million, increasing 20% over the previous year.

Growth in staple foods is slowing, giving rise to organic variations of convenience meals, processed foods and prepared foods such as yogurts, bakery items, breakfast cereals, sauces and fruit juices. Organic meat and meat products experienced the greatest growth in 2002, reaching a market value of $137 million, a 45% jump over 2001. However, growth levels of organic meat was lower than in previous years. There has been a surge in organic baby foods with the market value rising 37% to over $158 million. Other high growth areas of the U.K. organic sector include cereals and baked goods, which increased 34% to $295 million, and organic processed foods and dairy products--each growing 23% over 2001.

The July 2002 Organic Action Plan indicates strong support from the U.K. government to protect the domestic organic market. Investments in converting arable land to fully organic land are rising. According to the Department of Environment, Food and Agriculture (Defra) there were 536 866 hectares of organic land in the United Kingdom, with a further 204 308 hectares in-conversion in March 2003. Organic land accounts for only 4% of total arable land in the United Kingdom.

With the increased effort to support domestic production and supply of organic products, the level of imports is anticipated to decline. However, imports are expected to continue to play a significant role in the U.K. organic market as consumer expectations grow. Leading organic food imports include fruits and vegetables, cereals and bakery items, multi-ingredient foods and beverages--each of which holds more than 75% of their subsector import share. Furthermore, approximately 50% of organic baby food is imported in the United Kingdom, as well as 45% of organic meat.

Market-Access Considerations

Many European growers and farmers have converted to organic methods of production, so competition for the supply of organic fruits and vegetables is relatively high. Furthermore, discussions of depleting nutritional values from shipping organic products over long distances have raised concerns about the vitality of non-European organic products.

Barriers to accessing the U.K. market are generally those that apply to the European Union as a whole. Organic exports to the United Kingdom also require certification that they meet EU organic standards. There is no value-added tax on food items sold in the U.K. For information on labelling requirements and/or regulations for imports of organic food to the United Kingdom, refer to the Agriculture and Agri-Food Canada's Agri-Food Trade Service website at http://ats.agr.ca/can/e3469.htm.

OPPORTUNITIES

Although the U.K. government is attempting to reduce the level of imports, continued growth in its organic sector will provide Canadian exporters with abundant opportunities to supply a wide variety of organic foods. Canadian companies will find good potential in supplying organic versions of Canadian products already offered in the U.K. market, such as breadmaking wheat, grains, pulses, apples, cheese and niche products. Many primary products are sold to manufacturers for further processing.

Highly competitive importers and grocery retailers are progressively searching for quality, novel/innovative organic variations of traditional grocery products to expand their organic food and beverage product offerings. Furthermore, consumers' continued demand for convenience presents opportunities for organic processed foods and beverages such as ready meals, baby food, yogurt, breakfast cereal, biscuits, sauces, condiments, tea and fruit juices.

Moreover, demand for healthy convenience foods or functional foods is largely influenced by the increased popularity of Britains eating out or eating on-the-go. In 2002, the propensity for Britains to eat on-the-go was 22% and is forecast to rise to 25% by 2007. There is a definite lack of healthy convenient options available in the U.K., with only 31% of British consumers who eat on-the-go finding healthy meals. As a result, Canadian food manufacturers will find opportunities to supply a wide range of healthy/functional organic foods and drinks to the U.K. market.

While regulations and requirements may sometimes seem daunting, Canadian companies have done well exporting to the United Kingdom and have carved out some important market niches. The United Kingdom is Canada's eighth-largest agricultural trading partner, ranking seventh as an export market and eighth as a source for imports. In 2002, bilateral trade exceeded $620 million. Furthermore, Canada offers high reliability, compared to many alternative non-EU suppliers, and quality guarantees that are second to none.

The Government of Canada has several programs to help Canadian firms gain a competitive advantage in international markets. For instance, Export Development Canada (EDC) offers export financing and insurance to Canadian exporters. Exporters may also find financial and other assistance through the Department of Foreign Affairs and International Trade's Program for Export Market Development.

Trade Shows

Event:
Natural Products Europe
April 4-5, 2004 (Annual)
Grand Hall Olympia, London, United Kingdom
The United Kingdom's largest and most respected trade show for the natural and organic products industry. Note that Organex, the organic food and drink show, is now Organic Products Europe and held concurrently with Natural Products Europe.

Organizer:
Full Moon Communications
58 High Street
Steyning
West Sussex, UK BN44 3RD
Tel.: (44-1903) 817300
Fax: (44-1903) 817310
E-mail: info@naturalproducts.co.uk
Internet: http://www.naturalproducts.co.uk

KEY PARTICIPANTS

The organic food and beverages market in the United Kingdom is characterized by a large number of small organic growers/producers and processors. In March 2003, there were more than 4000 organic food producers and over 1800 food processors in the United Kingdom, with 84% located in England. However, high growth in the organic sector has attracted large food manufacturers such as Heinz, Masterfoods, RHM and Gerber Foods to the market--mostly through the acquisition of a smaller organic supplier.

Given the shared food and beverage standards and regulations within the European Union and reduced transportation costs associated with the close proximity of member countries, EU member countries are leading suppliers of organic food and beverages to the United Kingdom, most notably Denmark, Sweden, Italy, the Netherlands, Switzerland, Austria and Germany.

There are over a dozen certifying bodies for organic food and beverages in the United Kingdom (for a detailed list of approved U.K. certifying bodies, consult the Defra Web site at http://www.defra.gov.uk/farm/organic/approved.htm). One of the largest certifying organizations is the Soil Association, which also promotes the development and conversion of organic land and growth of organic livestock. Approximately 70% of organic food sold in U.K. supermarkets is labelled with the Soil Association name and logo. In April 2003, Defra appointed a new Advisory Committee on Organic Food and Farming (ACOFF) to govern organic standards in the United Kingdom, administer approvals of organic certifying bodies and implement the U.K.'s Organic Action Plan. ACOFF replaces the role of the United Kingdom Register of Organic Food Standards.

PRIVATE-SECTOR CUSTOMERS

The U.K. food distribution system is highly concentrated, as consumers look increasingly for one-stop shopping. The main distribution channel for organic foods and beverages in the United Kingdom are major supermarkets, which account for 85% of organic food sales.

While the distribution system is largely dominated by retailers, U.K. retailers rarely buy products direct from overseas companies. Canadian exporters will find more ease in entering the U.K. market by appointing a local distribution partner. These companies purchase organic products for further processing or redistribute the products to supermarkets, hypermarkets and other retail outlets. Furthermore, a distribution partner will have a better understanding of the market and know how to promote organic food products effectively in the United Kingdom. For a list of local organic importers, contact the Canadian High Commission in London.

The main supermarket chains leading the organic food and beverage market in the United Kingdom are Sainsbury's, Waitrose and Tesco. In 2002, Sainsbury's organic food sales amounted to nearly $555 million or 20% of the total market. Sainsbury offers more than 1300 organic products. Waitrose also offers over 1000 varieties of organic products and has a 10% market share. Tesco is increasing its organic product offerings and aims to reach $2.3 billion in organic sales by 2006.

With the organics market slowly maturing, competitive pricing and positioning have become significant factors to British buyers. In addition, although hotels, restaurant and caterers (HORECA) are slow to adapt to the rise of organic products, the HORECA industry is an alternative customer with great growth potential.

KEY CONTACTS

Canadian Contacts

Agriculture and Agri-Food Canada (AAFC)
Sir John Carling Building
930 Carling Ave.
Ottawa, ON K1A 0C5
Contact: Sylvain Wilson, International Market Development Officer
Tel.: (613) 759-7726
Fax: (613) 759-7505
E-mail: wilsons@agr.gc.ca
Internet: http://ats.agr.ca

Canadian Food Inspection Agency (CFIA)
59 Camelot Dr.
Nepean, ON K1A 0Y9
Tel.: (613) 225-2342
Fax: (613) 228-6653
E-mail: cfiamaster@agr.gc.ca
Internet: http://www.inspection.gc.ca

Canadian Organic Growers (COG)
125 S Knowlesville Rd.
Knowlesville, NB E7L 1B1
Tel.: (506) 375-7383
E-mail: info@cog.ca
Internet: http://www.cog.ca

Department of Foreign Affairs and International Trade
125 Sussex Dr.
Ottawa, ON K1A 0G2
Internet: http://www.dfait-maeci.gc.ca

International Business Opportunities Centre (IBOC)
Tel.: (613) 944-6000
Fax: (613) 996-2635
E-mail: iboc@dfait-maeci.gc.ca
Internet: http://www.iboc.gc.ca

Market Research Centre (TMR)
Contact: Sean McLean, Senior International Market Analyst
Tel.: (613) 996-0688
Fax: (613) 943-8820
E-mail: sean.mclean@dfait-maeci.gc.ca

Market Support Division (TMM)
Contact: Rick Winter, Trade Commissioner
Tel.: (613) 995-1773
Fax: (613) 943-8820
E-mail: rick.winter@dfait-maeci.gc.ca

Northern Europe Division (REN)
Contact: Graham Gleddie, Desk Officer
Tel.: (613) 995-9766
Fax: (613) 995-6319
E-mail: graham.gleddie@dfait-maeci.gc.ca

Organic Agriculture Centre of Canada
Nova Scotia Agricultural College
PO Box 550
Truro, NS B2N 5E3
Contact: Ralph Martin, Director
Tel.: (902) 893-7526
Fax: (902) 893-3430

British Contacts

British High Commission in Ottawa
80 Elgin St.
Ottawa, ON K1P 5K7
Tel.: (613) 237-6585
Fax: (613) 237-6537
Internet: http://www.britainincanada.org

Department for Environment, Food and Rural Affairs (DEFRA)
Nobel House
17 Smith Square
London, UK SW1P 3JR
Tel.: (44-20) 7238-6000
Fax: (44-20) 7238-6591
E-mail: helpline@defra.gsi.gov.uk
Internet: http://www.defra.gov.uk

Department of Trade and Industry
1 Victoria Street
London, UK SW1HOET
Tel.: (44-20) 7215-5000
E-mail: dti.enquiries@dti.gsi.gov.uk
Internet: http://www.dti.gov.uk

Food Standards Agency
Aviation House
125 Kingsway
London, UK WC2B 6NH
Tel.: (44-20) 7276-8000
E-mail: helpline@foodstandards.gsi.gov.uk
Internet: http://www.foodstandards.gov.uk

Organic Food Federation
Eco-Tech Business Park
31 Turbine Way
Swaffham, Norfolk UK PE37 7XD
Tel.: (44-17) 6072-0444
Fax: (44-17) 6072-0790
E-mail: organicfood@freenet.co.uk
Internet: http://www.orgfoodfed.com

Soil Association
Bristol House
40-56 Victoria Street
Bristol, UK BS1 6BY
Tel.: (44-117) 929-0661
Fax: (44-117) 925-2504
E-mail: info@soilassociation.org
Internet: http://www.soilassociation.org

United Kingdom Register of Organic Food Standards (UKROFS)
c/o Department for Environment, Food and Rural Affairs
Area 5F, Ergon House
17 Smith Square
London, UK SW1P 3JR
Tel.: (44-20) 7238-6000
Fax: (44-20) 7238-6148
Internet: http://www.defra.gov.uk/farm/organic

BIBLIOGRAPHY

Canada. Department of Foreign Affairs and International Trade. "Agri-Food Sector Profile--United Kingdom,"March 2003. Downloaded from http://www.infoexport.gc.ca/ie-en/DisplayDocument.jsp?did=29036 on September 25, 2003.

Canadian High Commission in London. "Presentation: UK Agri-Food Opportunities." August 2003.

Just-Food.com. "UK: Organic food & drinks market to grow by 75% in next five years," November 5, 2003.

------. "UK: Eating on-the-go increases despite lack of healthy products," November 14, 2003.

Key Note. Market Assessment: Organic Foods in the UK. August 2002

United Kingdom. Department of Environment, Food and Rural Affairs. National Statistics. "Organic Statistics--United Kingdom," July 28, 2003.

United States. Department of Agriculture. Foreign Agricultural Service. "United Kingdom: Organic Products Market Brief," March 21, 2003. Downloaded from http://www.fas.usda.gov/gainfiles/200303/145884996.pdf on September 25, 2003.

Useful Internet Sites

Agri-Food Trade Service: http://ats.agr.ca

CanadaEuropa: http://www.canadaeuropa.gc.ca

Department of Foreign Affairs and International Trade: http://www.dfait-maeci.gc.ca

ExportSource: http://exportsource.ca

Food from Britain: http://www.foodfrombritain.com

InfoExport: http://www.infoexport.gc.ca

Institute of Grocery Distribution: http://www.igd.com

International Federation of Organic Agriculture Movements: http://www.ifoam.org

Organic Trade Services: http://www.organicts.com

1. The Government of Canada has prepared this Country Sector Profile based on primary and secondary sources of information. Readers should take note that the Government of Canada does not guarantee the accuracy of any of the information contained in this document nor does it necessarily endorse the organizations listed herein. Readers should independently verify the accuracy and reliability of the information.

2. All monetary amounts are expressed in Canadian dollars unless otherwise indicated. The conversion rate to Canadian dollars is based on IDD Information Services, Tradeline, October 2003.

Date Modified: 2004-06-24

Important Notices