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1 Genuinely Premium Products - Organics, Fairtrade… and the Q Awards Simon Wright, O&F Consulting FDIN Product Premiumisation September 19th 2007.

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Presentation on theme: "1 Genuinely Premium Products - Organics, Fairtrade… and the Q Awards Simon Wright, O&F Consulting FDIN Product Premiumisation September 19th 2007."— Presentation transcript:

1 1 Genuinely Premium Products - Organics, Fairtrade… and the Q Awards Simon Wright, O&F Consulting FDIN Product Premiumisation September 19th 2007

2 2 Today’s Presentation 1.Introduction to O&F Consulting 2.What Does The Success of Organics tell us ? 3.What Does The Success of Fairtrade tell us ? 4.The Organic and Fairtrade Future 5. Case History : Whole Foods London 6. Insight From The Q Awards 7. Q & A

3 3 1. Simon Wright - O&F Consulting Working with Organic and Fairtrade Food since Examples of current clients include; Sainsbury’s Supermarkets (multiple retailer) Planet Organic Ltd (independent retailer) Free Natural (Organic liquorice from Finland) Lyme Regis Fine Foods (snack bars) The Organic Spirits Company (gin, vodka, rum) The Soil Association (UK premier organic body) Nexus Media (Quality Food Awards) Information / contact

4 4 ADVERTISEMENT ! The Handbook of Organic and Fair Trade Marketing Published February 19th 2007 by Blackwells First ever book on this subject Edited by Simon Wright and Diane McCrea More information at Written by industry experts - covers UK, Germany, Italy and the USA Case histories on the success of key brands such as Green & Black’s, Yeo Valley, Clipper, Duchy Originals, Abel & Cole

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6 6 2. What Does The Success of Organics Tell Us ? Hypothesis One “ The ongoing success of organic food in the UK suggests that UK consumers are interested in investing in food that is of inherently better quality, rather than in recipe-enhancement or flashy packaging”

7 7 2. What Does The Success of Organics Tell Us ? Latest official sales figures are approx £1.94 billion (2.87 billion Euros) in the calendar year 2006 This equals 27% year-on-year growth Equivalent to only 1.6% of total food sales (Denmark is 6%) 34% of primary organic produce sold in the UK by supermarkets is imported Global market worth £19.3 billion (28.6 billion Euros) in 2006 Source: Soil Association Organic Market Report 2007

8 8 2. What Does The Success of Organics Tell Us ? Supermarkets account for 76% of all sales of organic food in the UK The other 24% includes all other channels - independent retailers, farm shops, box schemes, internet delivery companies and farmers markets Last year direct sales of organic food via box schemes, farmers markets and farm shops rose by up to 53%

9 9 2. What Does The Success of Organics Tell Us ? The UK organic market is now the third largest in the EU after Germany and Italy Mintel’s latest report indicates that more than half of respondents had purchased organic fruit and vegetables in the previous 12 months (1 in 6 had purchased organic packaged goods) Households with children under the age of 15 tend to buy a wider variety of organic products Organic product growth rates year-on-year include babyfood (+7%), poultry (+39%), milk (+20%) Source: Soil Association Organic Market Report 2007

10 10 Why do UK Consumers Buy Organics? Reasons have changed with time Main Reason to BuyPercentage Who Cited Taste38 Health26 No pesticides22 Animal welfare18 No hormones16 Natural and Pure11 SOURCE: Sainsbury’s Supermarkets 2002

11 11 Why do UK Consumers Buy Organics? Reasons have changed with time Main Reason to Buy Organic 1. Taste 2. Health 3. Origin UK (certification - 60% more likely to buy) Local (regional - 52% more likely to buy) SOURCE: TNS work for Organic South West / South West RDA / Welsh RDA (2003)

12 12 Why do UK Consumers Buy Organics? Reasons have changed with time Why choose organic ? Avoid pesticides and additives 95% Protect the environment 93% High standards of animal welfare 91% Tastier diet90% (72% say organic fruit & veg taste better, 71% prefer taste of organic meat) Source: Interviews with 813 organic consumers conducted by Market Tools for the Soil Association 2005

13 13 2. What Does The Success of Organics Tell Us ? Market Share 1. Tesco (35%) 2. Sainsbury’s (28%) 3. Waitrose (18%) 4. Asda (8%) 5. Morrisons (5%)

14 14 2. What Does The Success of Organics Tell Us ? Organic Sales as Percentage of Total Sales 1. Waitrose (3.3%) 2. Sainsbury’s (1.3%) 3. Marks & Spencer (1.2%) 4. Tesco (0.9%) 5. Asda (0.4%)

15 15 2. What Does The Success of Organics Tell Us ? Sir Terry Leahy, Tesco Chief Executive "I believe we're seeing a fundamental shift in the priority that consumers place on food. The link between diet and health, interest in cooking, provenance - including local and fair trade - is also not only about affluent customers. The growth in the proportion of our customers buying organics is fastest among less affluent customers.” The Observer, 2 September 2007

16 16 3. What Does The Success of Fairtrade Tell Us ? Hypothesis Two “ The ongoing success of Fairtrade food in the UK suggests that consumers want a more direct connection with food producers” (see also Farmers Markets, Farm Shops, Pick Your Own, Local Food sourcing initiatives)

17 17 3. What Does The Success of Fairtrade Tell Us ? Fairtrade Key Facts Number of Fairtrade products onsale in the UK 2,500 Current UK Market Size £400million per annum Global Fairtrade sales £1.1 billion per annum Rate of UK market growth (year-on-year) 42% Awareness of symbol 53% of UK adults SOURCE Fairtrade Foundation, September 2007

18 18 Recognition and Understanding of the FAIRTRADE Mark

19 UK Sales of Fairtrade Products

20 20 Producer Organisations supplying the UK market

21 21 3. What Does The Success of Fairtrade Tell Us ? Justin King, Sainsbury’s Chief Executive “Never before have customers been so engaged on issues of poverty alleviation and never before have so many realised how much difference fair trade makes.” Foreword to ‘The Handbook of Organic and Fair Trade Food Marketing’

22 22 STRENGTHS Consumer demand Environmental concerns (organics) Improving Quality of Offer Increased Awareness re Diet & Food Quality WEAKNESSES Organic and Fairtrade production imperfect Environmental concerns (Fairtrade) Price premium Media no longer 100% supportive Newer trends eg, Slow, Local OPPORTUNITIES Bigger basket spend Better education New areas (beauty, household) One Planet Agriculture THREATS Product recall Hostile media GM EU legislation (organics) 4. The Organic and Fairtrade Future

23 23 5. Case History: Whole Foods, Kensington High Street, London Opened June 6th 2007 Floor space 80,000 square feet over 3 floors Number of Grocery SKUs Around 10,000 Mission Statement “We sell the highest quality, natural and organic foods - all free from artificial flavors, sweeteners, colors, preservatives and hydrogenated fats.”

24 24 5. Case History: Whole Foods, Kensington High Street, London Strengths Scale Size Vision Merchandising & Presentation Instore Bakery and Cheeses

25 25 5. Case History: Whole Foods, Kensington High Street, London Challenges Size of site Basket size Absence of local parking Retail prices Local competition (Waitrose, M&S) Lack of adaptation to local trading conditions (portion sizes, food to go)

26 26 6. Insight From The Q Awards What Are the Q Awards ? Full name is ‘Quality Food Awards’ Running for last 28 years This year there were 26 product categories Open to brands and own-label, big companies and little companies Judged over two weeks by 30+ independent judges (chefs, home economists, nutritionists,consultants) I chair judging

27 27 6. Insight From The Q Awards What Are Judges Looking For ? The Best, Not The Newest Genuine and Honest Quality Foods Outstanding Product Quality Value For Money (not cheap) Attractive Packaging Products that do what they set out to do - often ‘simple things done well’

28 28 6. Insight From The Q Awards New Categories This Year Local (supported by Tesco) Free From Fairtrade NB Organic and Healthier Categories discontinued as there were so many entries it is better to have then throughout the competition

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32 32 6. Insight From The Q Awards Previous Winners - Gold Q 2003 Sainsbury’s Organic Somerset Brie 2004 Sainsbury’s Taste The Difference Lemon Butter Thins 2005 Sainsbury’s Living Salad 2006 Tesco Finest To Cook Thai Green Tiger Prawns 2007 ????????????????????????????????? (To Be Announced at the Awards Dinner in London on November 28th)

33 33 6. Insight From The Q Awards Trends observed over the last 8 years of judging Established often better than New Increased Complexity is not the same as Better (sandwiches, pizzas, ready meals) Fashionable Ingredients (cranberries, pomegranates and this year…Watchstrap Carrots!) Clear Winners Usually 3 products per category stand out Brands Doing Better (including small ones) The rise of Discount Quality (especially Aldi)

34 34 6. Insight From The Q Awards Why enter ? If you win, it is an independently verified badge of quality Supermarket buyers take note of winning products Opportunities for using Q mark on-pack and in advertising to talk to consumers The Awards dinner is highly entertaining For 2008 awards

35 35 Today’s Presentation 1.Introduction to O&F Consulting 2.What Does The Success of Organics tell us ? 3.What Does The Success of Fairtrade tell us ? 4.The Organic and Fairtrade Future 5. Case History : Whole Foods London 6. Insight From The Q Awards 7. Q & A

36 36 Genuinely Premium Products - Organics, Fairtrade… and the Q Awards Simon Wright, O&F Consulting Thank You!


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