1. O&F Consulting Organic and Fairtrade Food and Drink Distillation Session 1 Supply side issues & retail challenges Simon Wright, O&F Consulting

2. O&F Consulting Organic and Fairtrade Food and Drink 1. Supply side issues - current issues & future challenges Protecting organic integrity from GM Organic ingredients - are they a limitation to the development of the organic market? Why is there so much ‘poor’ organic food? How to increase production as customer demand increases Linking organic to global warming & sustainable development Should the various organic certification bodies be unified?

3. O&F Consulting Organic and Fairtrade Food and Drink Protecting organic integrity from GM GM issue not dead - alive & kicking! Consumers do not want GM contamination New EU proposed standards would allow 0.9% contamination by GM Conclusion Keep GM out of organic food - this is a USP of organic products Action required: use concern over GM to grow the sale of organic food

4. O&F Consulting Organic and Fairtrade Food and Drink Organic ingredients - are they a limitation to the development of the organic market? Yes! Organic ingredients can limit the market because of price, availability, consistency & reliability of supply But, the market will correct itself so long as demand increases & integrity is upheld

5. O&F Consulting Organic and Fairtrade Food and Drink Organic ingredients - are they a limitation to the development of the organic market? Conclusions We need to improve knowledge through the supply chain from farmer to retailer We need more support from NGOs regarding dissemination of information (trends, opportunities & training) The solution is increased demand & volume to drive efficiencies, sustainability & better information sources

6. O&F Consulting Organic and Fairtrade Food and Drink Why is there so much ‘poor’ organic food? Role of organic food awards should not be judged by foods but by “normal people” Warrants better entries? Organic products can be poor cosmetically -does this matter? Taste is subjective Conclusions Increased target (only way is by offering more conventional style products) Offer a mainstream product made with organic principles Bench-mark organic vs non-organic in same area Consider authenticity of product Communicate the role of processing aids permitted in non- organic products

7. O&F Consulting Organic and Fairtrade Food and Drink How to increase production as customer demand increases Need to take into account the barriers to producers/farmers converting, such as: conversion time & cost historical influence & price deflation at the retail end

8. O&F Consulting Organic and Fairtrade Food and Drink How to increase production as customer demand increases Possible Solutions Upstream supply chain contracts Use imports to ensure continuity of supply Collaborative working e.g. between farmers Knowledge transfer e.g. packers holding workshops for growers Widening of specs e.g. Class 2 Investment in R&D into growing better varieties specifically for organic

9. O&F Consulting Organic and Fairtrade Food and Drink Linking organic to global warming & sustainable development Global warming - the single biggest issue of our time - organic farming is part of the solution For new entrants to organic production the environment is now the biggest reason for buying organic food We can quantify and prove environmental benefits To be more sustainable the public need to eat less meat The organic industry has not yet communicated this to ‘the people’ - (rural employment, enjoyment of work, rural economies) Action: To campaign to clearly convey these basic ‘people’ issues

10. O&F Consulting Organic and Fairtrade Food and Drink Should the various organic certification bodies be unified? EU standard to be raised to set a standard worthy of superior quality Lobby UK government to support the creation of this high standard Single certification body, one core logo to remove current confusion Conclusions UK should adopt Soil Association full (higher) standard We should push for this to be accepted across Europe

11. O&F Consulting Organic and Fairtrade Food and Drink 2. Retail related challenges Branded packaged organic - how to justify shelf facings when major conventional brands out-sell in the same shelf- space Location, location, location - parent department or organic section? Price - what do we really think?

12. O&F Consulting Organic and Fairtrade Food and Drink Branded packaged organic - how to justify shelf facings when major conventional brands out-sell in the same shelf-space Poor retail buyer perception of organic beyond fresh Supermarkets have to ‘hit numbers’ which influences range review decisions The message that organic is a retailers investment in the future needs to be enforced by supplier & organic industry together Need to influence retail buyer outside the one hour meet

13. O&F Consulting Organic and Fairtrade Food and Drink Branded packaged organic - how to justify shelf facings when major conventional brands out-sell in the same shelf-space Conclusions Organic to be mainstream not premium Organic alone is not enough - market proposition must be clear Organic movement needs to learn from Fairtrade brand proposition

14. O&F Consulting Organic and Fairtrade Food and Drink Location, location, location - parent department or organic section? Pros of integrating in main fixture Attract more occasional/lighter users if price not too high In main fixture greater likelihood of frequent replenishment Some customers don’t like going down the ‘worthy’ aisle Cons of integrating in main fixture Annoy dedicated customers so they can’t do whole shop in aisle Risk of committing offence through mixing up organic & conventional If organic premium more than 20% consumers less likely to buy if side by side Conclusion - probably worth integrating experience so far positive

15. O&F Consulting Organic and Fairtrade Food and Drink Price - what do we really think? People may not pay more for organic but they will spend more if you tell them why a product is better Justify price by talking about trading relationships, cost of ingredients etc. Committed vs dabblers have different attitudes towards price premium No consensus if organic would sell more if cheaper People will pay a lot for high quality - organic is unsophisticated at proving this and is therefore still vulnerable to price