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Organic Trade Board in the UK secures €10 million EU funding to grow organic food and drink sector

The Organic Trade Board (OTB) has been awarded €10.4 million by the EU to run a three year campaign to promote organic food in the UK and Denmark.

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The Organic Trade Board (OTB) has been awarded €10.4 million by the EU to run a three year campaign to promote organic food in the UK and Denmark. Starting in January 2017, the OTB will work with brands, processors and retailers to drive growth in the organic food and drink sector.

The OTB won the EU bid by demonstrating that the funding for the campaign will help grow retail sales of organic, increase employment in organic agriculture, and improve awareness and understanding of the benefits of organic food and drink.

In the UK, the organic market is worth £1.4 billion p.a. and accounts for 1.8% of all grocery sales and grew by 5.6% in 2016. In contrast, the non-organic sector saw its sales contract by 0.6% in the same period.

Yet despite the buoyancy of the market, the UK still lags behind its European counterparts in terms of annual per capita spend on organic. Britons spend approximately €28 per person on organic food each year compared with €162 in Denmark and €97 in Germany so there is much room for growth.

The new campaign run by the OTB will seek to accelerate growth of the organic food & drink market and to build retailer value, by partnering with Denmark who are global market leaders in organic penetration and market share.

In 2015, the organic sector in Denmark grew by 11% and organic sales now account for 9% of all retail food sales. In the last six months of 2016 growth of organic reached 18%. The organic sector in Denmark is aiming to reach 25% of the retail food sector in the coming years and in some categories this has already been achieved. Organic accounts for over 30% of dairy sales in Denmark (compared with 10% in the UK).

Globally, there is growing consumer demand for organic food demonstrating significant growth opportunities for export. In 2014, the global market for organic food was $80 billion. The US is the largest single market, worth $43 billion and forecast to grow by around 15% by 2018. Nor is organic the preserve of the West, with China now the fourth largest market.

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Commenting on the campaign, Paul Moore, CEO of OTB said:

“The organic market is in a clear growth phase in the UK. We produce world beating organic food that is loved by more and more consumers. But there’s still much more we can do – we need to increase availability of organic products and that means convincing retailers that organic should be a key part of their sales strategy. That’s where our partnership with Denmark will be crucial as we share the insights and strategy they have pursued to get more organic on shelf in the UK.”

The campaign has been match funded by sixty OTB member companies accounting for 70% of the UK organic market. These include retailers, such as Tesco and Sainsbury’s, major brands such as Doves Farm Foods and Rachel’s, as well as processors such as OMSCo and independent retailers and wholesalers. Together they have pledged £340k per annum. The EU match funding of 80% means annual funding will now stand at £1.7m per annum.

Adam Wakeley, CEO Ethical Fruit Company, Organic Farm Foods:

“As a direct result of what the industry has done, we have seen growth that has outstripped the non-organic sector. It has been amazing. Now, the OTB has gone one step further and has secured a record three year EU grant to continue to promote the benefits of organic.

“As the UK’s leading importer and distributor of organic fruit, which is one of the fastest growing sectors of the organic market, we fully recognize the market opportunity for us and the OTB campaign will continue to play an important role in further developing that market.”

Catherine Fookes, OTB’s Campaign Manager responsible for securing the EU bid said:

“This award will enable us to triple the investment in helping grow the organic food and drink sector. The “Organic, Naturally Different Campaign” succeeded in growing sales and changing attitudes to organic – many more consumers now understand its value. With the increased spend we will do even more to grow the market, including collaboration with major retailers, in-store promotions, shopper marketing, and national ad campaigns.”

Henrik Hindborg, Marketing Director at Organic Denmark:

“Denmark has become the world’s leading organic nation in terms of market share and overall consumption of organic foods. Organic Denmark estimates organic share at 10% of all food sales in 2016, taking organic from “niche” to “mainstream.” Following 10 years of consistent growth, half of all Danes now buy organic food every week. This has been achieved through a combination of effective organic policies and close cooperation with Danish retailers regarding development of the organic market.

“We are at the next phase of our development and this ground-breaking campaign is a key part in helping us achieve our further objectives. We are looking forward to working alongside our British counterparts and sharing our joint enthusiasm and expertise in helping maximise the opportunities available to us all from this – the largest international organic campaign.”

According to a Consumer Attitudes Report (commissioned by OTB in 2016), consumers increasingly understand the health, taste and environmental benefits of organic. Growing demand is driven in part by young consumers who are health conscious, engaged and increasingly educated about making choices that benefit themselves and the environment. Whilst the Danish and UK organic markets are at different stages of development, the consumer in Denmark and the UK has the same profile.

The consistent strong demand for organic presents UK farmers with an opportunity. The latest US organic farm survey, (published in 2016) shows that over 14,000 organic farms sold $5.5 billion in organic food in 2014 – a rise of 72% since 2008. Despite the massive growth in domestic production, the US is still a large net importer of organic produce and represents a real opportunity for British exports.

To take advantage of this opportunity, there needs to be a step change in organic farming in the UK. Currently, only 548,000 hectares are organic accounting for less than 2% of total agricultural production. By contrast, in Denmark there has been a 30% rise in total acreage converting to organic. The organisations that certify organic land are reporting an increase in the numbers of farmers applying to become organic and UK organic production needs to increase to meet growing demand from domestic consumers and for export.

From 2010 to 2016, the OTB has spent £3.2 million of industry and EU funds promoting the benefits and value of organic products, working across industry to deliver a program that has contributed to increasing sales of organic. This funding increases that money threefold.

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