The latest in a series of exclusive quarterly reports on Spain’s organic market prepared for NPG by Diego Roig at specialist consultancy Ecological.Bio shows the country’s domestic market continuing to set new records.
Ecological.Bio’s 2019 First Quarter report confirms that the Spanish organic market is going through a remarkable period of growth, setting new records in organic production, international trade and, especially, in domestic consumption.
Key findings
- Spain is now firmly established as the world’s fourth biggest producer of organic crops, with over 2 million hectares under organic production
- Domestic organic sales in Spain are now worth 2 billion euros.
- A increase in consumption of 16.13% per capita, reaching over €42/person
Spanish organic market overview
With 2.08 million hectares of farmland under organic production, Spain has reclaimed its number 4 position in global organic production rankings (after Australia, Argentina and China), further strengthening its European leadership in organics.
These figures mean that organic now accounts for 8.21% of total farmland in Spain. Pastures, cereals, nuts, olive groves and vineyards are the main crops devoted to organics.
Economic impact
The economic importance of Spain’s organic food industry is becoming ever more evident. The sector now supports over 44,000 operators nationally – up 5.3% in 2017. 37,700 of these are farmers or livestock owners, while 4,300 are processors, and the rest are wholesalers, retailers and others.
More than 90% of these companies are SMEs that carry out their businesses largely in a rural environment – so they play a vital role in helping the economic recovery in rural areas, and preventing further population drift to urban centres.
In terms of employment, the sector currently employs more than 85,000 people and statistics show a significant participation of female employees.
Domestic market
These positive effects are also strongly reflected in the performance of Spain’s domestic organic market, which has traditionally had a different behavior than other European economies.
Currently, there is a strong boost in domestic consumption, maintaining the positive trend of the previous years. The internal market continues to achieve records reaching €1,962 million in 2017, consolidating its number 10 position in global organic market rankings.
Year-on-year growth was 16.37%, which is sharp contrasts to flat growth seen in conventional food and beverages market in Spain, where growth rate has only been 2.86%
This recent growth means that organic now accounts for almost 2% of the total food and drink sales in Spain.
Per capita expenditure
Major concerns around health and sustainability are generating greater awareness about organic, which Spanish consumers associate with having health and environmental benefits.
This trend has led to a rise in consumption of 16.13% per capita, going from €36.33/person in 2016 to €42.19/person in 2017. However, Spain still lags behind many other European countries in its figures for domestic consumption and is currently ranked 18 in the world. Here, Switzerland with €288/p, Denmark with €278/p and Sweden with €237/p are the standout performers.
International trade
International trade continues to be crucial for the sector. There has been a slowdown in the growth of exports, which grew in 2017 by less than 1% to be worth €895.3 million. This situation contrasts with a significant increase in imports, which grew 29.73% from €596 million in 2016 to €773 million in 2017. Rapidly increasing domestic demand and increasing interest in the Spanish market are thought to be possible causes of this situation.
The organic consumer
The consumer profile remains essentially the same. Consumers under 35 years old are the main growth segment, and now represents 30% of the national organic buyers. This consumer profile is primarily found in large and medium cities of the main Spanish regions such as Madrid, Catalonia, the Community of Valencia and the Basque Country.
At the same time, a growing interest in searching for sustainable and environmentally friendly products is detected. Hence, new business models of independent stores are arising, focused on the removal of plastic packaging, endorsing the commercialization of bulk products.
The recent openings of the “zero waste” organic supermarkets such as “Yesfuture” (pictured) in Barcelona and “Unpacked” in Madrid are an example of this new business model.
Organic Retailing
The greatest impact at the national level is taking place in the retail arena, where the ‘channel-shifting’ trend seen recently in other parts of Europe – notably, multiple retailers taking organic market share from independent and specialist stores – is also now a feature of Spain’s retail landscape.
Neither the increase in consumption nor the sector’s growth forecasts are going unnoticed by conventional retailers. In fact, in the last months it’s become more evident that the strategy of modern trade is increasing the offer and assortment of organic products in their shelves.
The already existing organic offer by the pioneers of Carrefour (pictured), Aldi, Lidl and El Corte Ingles has been joined by the main national retailer, Mercadona, which commands around 25% of the national food sales market share. Mercadona has begun the introduction of organic assortment through the category of sweeteners.
These movements within the large distributors have a great impact on specialized retailers who are immersed in a restructuring process. It is perceived that the total amount of small-sized specialized stores (eco-shops and herbalists) are showing a declining trend, whilst larger specialized stores (large organic supermarkets) are currently experiencing a flat growth.
The most recent data confirms this trend. Major grocery retailers had a 25%-30% market share in 2016 and has increased up to 35%-40% in 2017, confirming that the majority of growth in retail is being achieved by supermarket trade rather than independent stores. The larger amount of points of sale and lower prices are the main factors attracting customers.
New product launches
Among the most notable recent product launches comes from the multinational baking company Bimbo, that has just made a strong entry in the organic category with its new organic bread line Oroweat Bio. At the same time, the juice manufacturer Juver has just released its new line of organic juices Valfrutta Bio with five new organic references.
Accompanying the organic food sector, organic cosmetics are also gaining presence in the market and have just taken a step forward with the launch of the new line of Garnier Bio. The second brand of the L’Oreal group has just announced an organic and vegan range of 8 references aimed at mass consumption that have been certified by Cosmos Organic.
Wholesale Organic Produce Markets
Along with pricing, availability is recognized as one of the main obstacles for organic consumption.
Even though there have been significant advances towards wider availability thanks to the improvements in the supply chain, both in specialized channels and in modern trade, there is still a pending issue in the supply chain related to local fresh produce wholesalers, who are the main local fresh shops suppliers. These sales points (fruit and vegetable shops, butchers, etc.) are mainly supplied by local wholesale markets, thus a wider offer in organic products will allow a wider availability in local shops.
Some examples of these initiatives are MercaBarna, which will house the first wholesale organic pavilion in 2020, and MercaValencia, where the organic market “La Tira de Contar” will also be launched on the same date.
Beneficial policy development
In January 2019, the Spanish Government announced new regulations concerning the “Green Public Procurement Plan of the General State Administration”. These plan aims to contribute to the attainment of economic and environmental Sustainable Development Goals through the activities of the Spanish public administrations.
Organic stands to be a direct beneficiary of these policy developments, as organic methods align well with these new sustainability policy priorities.
Diego Roig
Organic Food Iberia, a major new international trade fair for the Iberian Peninsula, takes place at IFEMA, Madrid, on 6-7 June 2019.