Despite a year of political and economic turmoil, the UK organic market returned to value growth in 2023. Overall, the sector grew by 2% to reach £3.2 billion. 

The figures are contained in the 2024 Soil Association Organic Market Report, which is published today.  

Standout performance
Independent retailers put in a standout performance, delivering 10% growth in 2023 with sales totalling £475 million. Encouragingly, two thirds of indies say they expect further growth in 2024. 

Supermarkets, which account for 62% of organic sales, also returned to growth last year, up 2.7%. Online continues to be a strong performer with 22% of all supermarket organic sales made through the channel. And there was significant organic growth on Amazon. 

Home delivery had a tougher year with the channel shrinking -6% to £525 million. And while sales of organic textiles grew by 8% to be worth £100 million, the organic beauty and wellbeing category was down 8%. 

Resilient performance
Soil Association Certification commercial director Alex Cullen said: “Organic has delivered a positive and resilient performance despite challenging financial and political conditions and without the support that organic food and farming receives in Europe and elsewhere in the world.

“The market and macro trends are pointing to an upward trajectory but there are still many challenges and barriers to the level of growth that UK organic should be delivering for farmers – with price the biggest barrier.

“We need a radical rethink if organic is going to reach its full potential and bring organic farming into the mainstream. The entire supply chain must work together to grow the market and unlock demand for homegrown UK organic fresh produce, supported by the government.

The report acknowledges that inflation is largely behind the uplift in sales, and points out that units were down -6.7% in 2023.

Organic’s share of the total UK for and drink market remains at just under 2%, one of the lowest in Europe among mature markets. 

Cullen added: “ … we can learn valuable lessons from Europe where there is greater support and commitment from governments and retailers for farmers and from some exciting innovations taking place right here across the UK – to make organic more available and affordable.”

The report shows that the UK organics also trails much of Europe with its share of total farmland, at around 3%. While the amount of UK organic land grew by 0.4% in 2023, organic farmland grew by 5.1% across Europe. 

Exaggerated shopper premium
The report suggests that consumers in the UK may be paying an “exaggerated premium” when they buy organic, leading to affordability issues. It says that new information comparing the farmgate premium (reflecting higher environmental and animal welfare standards required by organic) to the price customers pay in the supermarket for organic suggests that some premiums being charged by retailers are “significantly out of kilter and warrants closer scrutiny”.

And the report points out that supermarket pricing in other major markets including many EU countries have reduced the relative premium and unlocked growth in core organic lines. Similar action here would make organic more affordable for shoppers, the report says. 

Cullen said: “Food is not a particularly profitable sector, the recent Competition and Markets Authority investigations have been clear. Of course, every player in the supply chain needs to make a profit but when price is the biggest barrier to scaling the most sustainable and trustworthy farming system we have, there need to be more questions about what it would take to achieve economies of scale. We are undertaking thorough research to understand fully what is happening and how this is impacting organic sales.” 

Organic For All
The report restates the ambitions set out last November by Soil Association in its vision of ‘Organic For All’, which calls for a whole-industry effort to drive UK organics forward.  

Cullen said: “We have spent the last few months getting our heads together to understand the barriers and what is required to make organic accessible, affordable and available to all. The next stage is to engage with government and supply chains to build a shared plan. We are getting some of the major retailers and organic brands around the table, they are a vital part of the solution.

“We have also explored shining examples of innovation and growth across Europe where retailers and governments are getting behind organic. Countries like Austria and Germany have gone beyond the EU’s own targets for organic farmland to grow to 25%, instead pushing for 30%, and in Italy discounters Eurospin and Lidl have been instrumental in driving 12% growth in organic sales.

“PENNY, a leading German discount supermarket, launched its ‘true cost’ trial to highlight the impact of food products on climate and health. The prices of nine products from their organic and conventional ranges were increased to reflect this additional cost. This doubled the price of lines with a big environmental and health footprint and saw more moderate price increases on organic and other sustainable choices. The retailer also claims in its advertising that it’s cheaper to do an organic shop with them than a branded one.

“These examples, together with a patchwork of innovation at a local level here in the UK, are demonstrating how growth is possible when supported and scaled. Such as Unicorn Grocery in Manchester who are going head-to-head with the supermarkets and beating them on organic produce prices, and Food Sense Wales who are creating local supply chains delivering local grown organic vegetables to schools in Cardiff.

“We are committed to collaborating with the supermarkets to share and develop this kind of innovation as we come out of the cost of living crisis. A rebalancing of the price and availability of organic foods will drive further strong demand and unlock the benefits for people, nature and the planet.”