The 2023 Soil Association Organic Market Report, published today, shows that the UK organic market grew by 1.6% in 2022 to be worth £3.1 billion.
This represents a slowing of the high growth rates seen in the early stages of the pandemic (+12.6% in 2020 and +5.2% in 2021), and for the first time in eight years organic sales growth lagged behind conventional. But the Soil Association points to the “phenomenal” 25.4% growth in the overall value of market over the last three years (the market was worth £2.45 billion in 2019). The organic charity also predicts a return to stronger growth as the cost of living crisis subsides.
The new report confirms that the UK organic market has now recorded its 11th year of positive growth (at retails sales value) despite multiple economic and political challenges.
Supermarket sales down, Foodservice market soars
In a year when many consumers were faced with “difficult choices” at the grocery checkout it perhaps isn’t surprising that in mass channel retail organic sales fell slightly in 2022. Organic sales in supermarkets fell 2.7% with share of category (organic’s share of total food and drink) dropping from 1.8% to 1.7% – although the market remains sizeable at £1.92 billion. In the final four weeks of the year organic sales in the supermarkets rallied and returned to growth of 0.5% – although lagging behind non-organic. This follows eight years in which organic food and drink has grown faster than non-organic.
“With sales exceeding £3.1 billion we have seen a transformation in the organic food and drink market since the pandemic with a phenomenal 25.4% growth in just three years.”
Soil Association Certification Commercial Director Alex Cullen said: “With sales exceeding £3.1 billion we have seen a transformation in the organic food and drink market since the pandemic with a phenomenal 25.4% growth in just three years. Despite the economic turmoil and significant challenges everyone faced in 2022 the organic market delivered a strong and resilient performance growing a respectable 1.6%.”
Despite facing multiple pressures and another challenging year foodservice saw organic sales grew by a remarkable 152% as sales leaped to £195.5m (from £78.2m in 2021) largely driven by sales of organic hot drinks and milk in a number of leading café chains – highlighting the public’s appetite for quality sustainable ingredients.
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In home delivery, despite a mixed performance across companies, sales were flat at £558.6m following exceptional growth during lockdown where sales grew from pre-pandemic levels of £362.9m. There were winners and losers as consumers spent less time at home and faced inflationary pressures but this in turn has driven innovation, new technology solutions and broader organic product ranges.
Independent retailers faced a challenging year with sales dropping 3.3% to £432.1m following a buoyant period during the pandemic when some retailers were classed as ‘essential businesses’. Over the last year they faced the challenge of trying to retain these new customers but also saw shoppers spend less and shop less often. Over 60% of retailers saw inflation as the number one challenge but two thirds believe that sales will increase in 2023.
All UK farmers faced huge challenges in 2022 and organic farmers were not immune from those pressures. Inflation and supply chain disruption meant the cost of doing business for farmers rose as heating bills and feed costs rocketed. As the focus switched to value at supermarket checkouts, the price farmers received for their products was under intense pressure. This inevitably impacted on organic farmers as people increasingly sought cheaper products.
But there was some relief for organic farmers as they don’t use chemical fertilisers, so they weren’t impacted by escalating fertiliser prices sparked by the war in Ukraine. This also presents an opportunity for the organic farming movement to grow as conventional farmers look for cut costs by adopting more natural ways to fertiliser their crops.
This year’s Organic Market Report includes a new Sustainability Report which sets out to highlight that fixing a broken food system demands a “holistic approach from the roots up”. The free mini-report features contributions from leading global charities and NGOs the Soil Association works with WWF, Fairtrade Foundation and the Forest Stewardship Council, who, the organic charity says, “share the same holistic view of how we should be caring for our land and changing food and farming systems, regarding tackling climate change through the choices we make at the checkout”.
The report emphasises that organic is a key solution as governments around the world are looking for the best quality solutions for the environmental, nature and health crises. As the Treasury looks for efficient investments to deliver on the government’s net zero and nature commitments organic, it says, offers an established choice which addresses many of the key priorities backed up by evidence and verifiable standards.
Cullen commented: “Organic is a good choice for governments, business and individuals because it is a ready-made solution for the climate crisis. Increasingly people are recognising the crucial role that organic farming can play in restoring nature, replenishing soils and providing clean air and water as well as nourishing food.”