Growth of Sweden’s organic food market slowed sharply in 2018 as Swedish consumers switched to other ethical labels and value propositions, according to new report published by leading analyst EkoWeb.
The report suggests that the runaway growth of 20-40% seen in the Swedish organic market through 2013-2015 is over – for now at least. In response, EkoWeb has halved its longs-term growth forecast for the sector.
The latest Ekoweb Market Report says the Swedish market for organic food grew by just over SEK 1 billion (€ 97 M) to SEK 28.8 billion (€2.80 Bn), an increase of 4%.
The report shows that market growth has been slowing since 2016 and that during 2018 it virtually flatlined. The effect was found across all three major national retail chains ICA, Coop and Axfood. The development, EkoWeb suggests, is a result of the retail industry shifting its focus away from organic to other added values. This, in turn, reflects current public debate in Sweden and the general changes in consumer behaviour.
The total value of organic food sold in Sweden during 2018 was SEK 28.8 billion (€2.80 Bn). The organic share of total food and drink was forecast to pass 10%, but fell slightly short of that at 9.6% (9.3% in 2017).
EkoWeb says that the growth that was achieved in 2018 was largely value driven, while volume increase was “minuscule” and some categories even recorded negative growth.
“Compared to other segments in the food industry (4%) is a significant increase, but it also represents a clear slowdown”
However, that modest value growth helped Sweden’s organic market to another record year at retail value. “Compared to other segments in the food industry (4%) is a significant increase, but it also represents a clear slowdown, which has gone on since 2016. It is mainly in the retail sector, the largest channel for organic food, that the increase has stagnated” said Olle Ryegård, analyst at Ekoweb.
Out of the three largest retail chains, only Axfood reports an increase in value for organic sales in 2018. Sales at ICA and Coop stayed at 2017 levels. However, growth figures of 20-70% can be seen for the smaller chains Lidl and Netto, as well in e-commerce outlets. The leading actor in the food service sector, Martin&Servera, reports unchanged share of organic, by value.
“The organic industry has been unable to match the interest for local products with its own values. Instead we see an increasingly competitive situation has arisen, where organic and local fights for the same consumers”
“The focus in the retail sector has shifted from organic being the main option for sustainable food, to organic being reduced to one of many options available in the sustainability concept. This year the industry has made very few conspicuous efforts to nudge the consumer towards organic alternatives. We see reduced marketing and less exposure of organic products, compared to previous years. On the other hand it is obvious that the retail industry has been successful in marketing of Swedish origin, and ever more local food with identity. In this context local has become an alternative to organic, rather than an added value. The organic industry has been unable to match the interest for local products with its own values. Instead we see an increasingly competitive situation has arisen, where organic and local fights for the same consumers. In 2018, organic products increasingly found themselves at the loosing end of that battle” said Cecilia Ryegård, fellow analyst at Ekoweb (pictured).
EkoWeb report – the headline findings
• During 2018, the Swedish market for organic food grew by just over SEK 1 billion (€ 97 M) to SEK 28.8 billion (€2.80 Bn), an increase of 4%.
• The growth of sales in ICA, Coop and Axfood )_ the largest sales channels for organic º– have flattened, after several record breaking years.
• Systembolaget, the alcohol monopoly which is also the second largest single actor on the Swedish organic market, reports the largest growth of all domestic channels. Sales at Systembolaget grew by 9 per cent (SEK 500 million, €49 M), which represents half of the total sales increase in Sweden in 2018.
• The drought of 2018 led to lower volumes and qualities, which in turn reduced the value of exported organic food by more than SEK 200 million (€ 19.4 M).
• The market clearly turned to a state of being limited by demand. In response to a lack of growth, a number of certified organic farms reverted back to conventional management of their holdings.
• Ekoweb is reducing its long-term growth forecast for the Swedish organic market, from an annual increase of SEK 2 billion (€194 M) to 1 billion (€ 97 M) 2019-2028.
The full market market report in Swedish is available for download at the Ekoweb website. A translation of the report into English will be available shortly.
Photo: Organic lines from Swedish supermarket chain Coop, where organic sales in 2018 stayed at 2017 levels