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Inflation: sales of organic products are collapsing

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Inflation: sales of organic products are collapsing
Written by madishthestylebar

For organic, 2022 is a lean year. “There is a decline in volume of consumption, probably around 7 to 10% over the year 2022. And 10 to 12% in specialized brands”observes Pierrick de Ronne, president of Biocoop and the Maison de la Bio, which brings together professionals in the sector.

The sector had however tripled its sales volume over the last decade, from 4 to 12 billion euros. If 2020 had been marked by a 12% increase in the organic market, in a context where confined households were ready to invest more in food due in particular to increased savings, the year 2021 nevertheless ended with a drop of 1.3%, which is accelerating sharply this year.

Consumer tips for fighting food price inflation

Inflation eats away at budgets

Producers, distributors and economists unanimously point to the effect of food inflation, which could peak at 15% at the end of the year, well above general inflation. The rise in prices nibbles away at the budget of the French, who first reduce their food expenditure by around 4%. Manageable, they can be reduced more easily than fixed charges such as rent or a subscription. Result: organic is among the first purchases to be crossed off the shopping list, along with fresh produce.

“Customers make trade-offs against organic. They go downmarket, switch from an organic product to a conventional product, opt for a cheaper organic product”notes Pierrick de Ronne of Biocoop. “However, the inflation of conventional products is twice as high as that of organic products, which do not require fertilizers and pesticides and consume less energy”, he continues. Insufficient, however, to bridge the gap between the prices of organic and conventional, around 20 to 50% according to Pierrick de Ronne.

Low-income households are not the only ones counting their pennies. The rise in the cost of living spreads and affects more and more households. “In 2019, half of French people said they had difficulty eating what they wanted. Today, they are 63% and the middle and upper middle classes are increasingly affected”warns Pascale Hébel, associate director of the firm C-WAYS.

“Loss of confidence in organic”

Beyond budgetary considerations alone, the representative of the Maison du Bio feels “a loss of confidence” in organic. Organic products are becoming commonplace as they become more popular in supermarkets. More and more customers are scanning purchases on their smartphones and are surprised by the ” inconsistencies » apparent organic products. Especially when they are imported from distant countries.

Above all, the consumer struggles to digest all the injunctions to consume more green than green: local, seasonal, respectful of animal welfare, guarantor of fair trade, without plastic packaging… So many labels that carve out a share of the cake of products sold as “ethical” or “sustainable”, long monopolized by organic.

“Today, the sole criterion of organic is no longer enough to convince. Consumption habits have changed very quickly since the pandemic. Under the influence of the most educated consumers, a new consumption criterion systematically drives out another. People were disappointed to see that organic did not necessarily rhyme with local”, analyzes Pascale Hébel. This consumer specialist insists on the enthusiasm for their local products and the success of the local stores that sell them, especially at the producer’s.

Competitor greenwashing

The boss of the National Federation of Organic Agriculture (FNAB) sees “a trend towards greenwashing with many products claiming to be ecological”. Among them, organic faces three competitors on the shelves “local, which does not mean that it is a trustworthy product even if local organic is obviously the ideal. Then the “high environmental value” certificate promoted by the Ministry of Agriculture and the “zero pesticide residue” which in fact provide only a few environmental guarantees compared to organic”deplores the president of the FNAB Philippe Clamadieu.

To regain the ground ceded to their competitors, organic producers and distributors boast of their specifications which impose an agriculture without pesticides, without GMOs and without chemical fertilizers. Since May 30, a communication campaign to this effect called “Bioréflexe” has been a reminder of the commitments of the sector.

Do not fall below 5% market share

In the coming months, the leaders of the FNAB and the Maison du Bio expect that players, in particular those who had invested betting on the growth of the sector, will find themselves in difficulty or even, for some, driven into closing. Indeed, mass distribution, which accounts for more than 60% of organic sales, restricts the references marketed. Taking note of the fall in organic purchases on its shelves, it is reducing orders. The phenomenon has already begun. In a district of western Paris, an organic brand, which had set up after confinement in place of a discount brand, closed its doors in 2021 after a few months, leaving the walls to… same brand at low prices that it had replaced.

On the other hand, the leaders of the FNAB and the Maison du Bio salute the resilience of the sales channels which do not depend on the large distributors to set their prices. Thus, they do not anticipate a massive return from organic to conventional agriculture. According to Pierrick de Ronne of Biocoop and the Maison du Bio, the challenge will be not to fall below 5% organic food consumption. That would condemn him to become again “a niche market”.

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