Recession hits sales of organic food

Demand for organic produce was strong when I visited a local market in Cambridge yesterday but overall, sales of organic foods in the UK slumped by more than 12% in 2009 as cost-conscious consumers cut back on their purchases of premium-priced organic fruit, vegetables and meats.

Organic sales fell last year from a record high of £2.1bn in 2008 to £1.84bn, according to the Organic Market Report 2010 and the recession must have had a big impact. Real incomes have been falling and organic food’s reputation for being expensive has caused many consumers to rein back on spending. The three biggest categories of organic food – dairy; fruit and vegetables; and fresh meat – saw supermarket sales fall by 6.5%, 14.8% and 22.7% respectively.

Demand may also have been influenced by a recent Food Standards Agency report last year which found that there were “‘no important differences in nutritional content, or any additional health benefits, of organic food when compared with conventionally prepared food.”

The slump in demand for organic produce is a good example of how market demand for products with a high income elasticity of demand is hit when the economy declines. After many years of steady growth the market has contracted and it will be interesting to see if there are any signs of a rebound in 2010. Supermarkets dominate organic sales - they account for 75% of all organic produce sales in the UK. More here from the Guardian: Organic sales slump for first time as recession takes a bite out of market