After years of strong growth, sales of organic food and drink in Sweden’s major grocery retail channel stalled in 2019.
That’s one of the key findings of a new report by the specialist organic consultancy EkoWeb.
EkoWeb says the slowdown started in 2016 and has now “reached across all of the retail industry, with organic food losing market share in all four major retailers – ICA, Coop, Axfood and Bergendahls”.
Shift in retailer focus
The stalling of Sweden’s organic food market reflects a shift in retail focus away from organic to other ethical labels – especially plant-based and vegan, but also local and Swedish.
But EkoWeb says a stronger organic performance is being delivered in the food service, monopoly alcohol, e-commerce and wholesale channels. Here sales and share are shown to be growing. The organisation also suggests that Sweden’s market organic market overall will soon return to growth, albeit at a more modest level than in recent years
Summarising the findings from the EkoWeb Market Report published today, EloWeb analyst Olle Ryegård says: “Sales of organic food and beverages increased by SEK 0.4 billion (€38 M) during 2019, reaching a total of SEK 28.2 billion (€ 2.68 Bn). However, the Swedish food price index grew by 3.5% during the year which means that the organic share of the total value of food sold dropped from 9.3 to 9.0 percent during 2019.”
EkoWeb says that the shift in retail to other added ethical values is reflected by a wider public debate and consumer trends. This has seen a prioritisation of concerns around health, environment and climate change. Rapid growth in interest in vegetarian and plant-based eating has led to retailers highlighting these categories, sometimes over organic (there has been a notable lack of high-visibility organic promotions over the past 12 months, the report notes).
“It is clear that growth of organic foods stopped in Swedish grocery retail during 2019. Organic foods are not as “hot” and on-trend as vegetarian”
On-trend competitors
“It is clear that growth of organic foods stopped in Swedish grocery retail during 2019. Organic foods are not as “hot” and on-trend as vegetarian. A large part of the added value within organic and, above all, KRAV (Sweden’s organic label) is the exceptionally high animal welfare standards. This added value is of course pointless for shoppers that are looking for vegetarian alternatives. To make things worse there are also other trends that work against organic. The rapidly increasing interest in convenient, pre-cooked and ready-to-eat food serves as a good example of this – there are hardly any organic alternatives in these segments,” says Ryegård.
The clearest impacts on organic sales in the retail channel are in meat and dairy based products. Sales of Swedish organic dairy products were down by about five percent in 2019. Organic beef, lamb, chicken, eggs and pork have also had a tough year, amplified by market surpluses.
EkoWeb believes that Sweden’s grocery majors (the country’s primary organic outlets) are struggling to understand the often contradictory debate on health and sustainability. “They appear not to know what horse to bet on and as a result, none of the major players in the market has announced investments in marketing organic in 2020,” it says.
SEK 1 billion a year growth potential
Organic does have an “obvious place in the debates on health and climate change…(and) as long as these issues are in focus, it benefits the organic segment,” says Ryegård. He adds: “I believe that the organic market has the potential to grow at least SEK 1 billion (EUR 95 M) at current prices per year. However, this still requires retailers to get serious about organic products and, specifically, the marketing of these products. Failing such efforts, the organic market may stagnate. Currently, I see no signs of any such change in attitude among the retailers”.
Main image: Swedish supermarket. Courtesy, KRAV