Just when it seems like the Australian organics market can’t grow anymore, it skyrockets. The market has grown 88% since 2012 and is now estimated to be worth $2.4 billion, according to 2018 Australian Organic Market Report.
So, what does this mean for Australian food & beverage manufacturers? Where are the growth areas? What can you do about it?
Delving deeper into the organics trend
The report reveals that 40% of consumers are deepening their purchase of organics since 2017. In fact, as many as six in 10 Australian households now spend food dollars on organics every year.
So what’s driving the trend?
- Mindfulness: Today’s consumer displays a high level of mindfulness about well-being and environmental issues. They want to know what’s in their foods in order to make decisions about health, sustainability and ethical issues. Consumers have a growing awareness of the impact of non-organic farming on the environment.
- Full product transparency: Consumers are increasingly demanding complete and total transparency from food and drink companies, according to Mintel. The need for reassurance about the trustworthiness of products means consumers are looking for natural, ethical and environmental claims on labels. (Here are 5 serialisation lessons food & beverage manufacturers can learn from the healthcare industry.)
- Healthiness: Consumers want products that are natural, unprocessed and healthy. According to the report, two-thirds of Australian shoppers said they started buying organics for personal health reasons.
- Quality: The quality of a product is central to how good it tastes, and organic products have a perception of high quality.
- Making a statement: Most major trends today are driven by Millennials, and the demand for organics is no different. Being seen to choose organic makes a statement about the individual – a very “Instagrammable statement”. (You may be interested in how Millennials are forever changing the face of packaging.
Here are 3 lessons manufacturers can learn from award-winning health food and check out here how blockchain can improve food traceability.
Going global with organics
Australia isn’t the only market experiencing soaring demand for organics. According to the 2018 Australian Organic Market Report, the global organic market saw 10% growth since just last year and is now valued at US$89.7 billion. Organic food currently represents 5.3% of total retail food sales in the United States, while the UK organic sector hit a record value of 2.2 billion British pounds in 2017.
If you need proof that the trend is taking off globally, just look to Amazon’s US$13.7b purchase of Whole Foods Market in mid-2017, and the rolling out of Whole Foods products on Amazon Prime.
How to ride the organics wave
Whether you look at home or overseas, it’s an exciting time to be in the organics market. So, what can you do about it? If you want to compete and grow, you need to not only stay on top of the consumer trends, you need to find ways to embrace and take advantage of them.
Here are some strategies for food & beverage manufacturers:
1. Open up. Focus on transparency around your business practices and products, as that’s where consumers are willing to pay a premium. Make sure you have an online presence showing where the product comes from and telling the brand story. Incorporate this into product labelling too. Transparency and authenticity are increasingly important in gaining consumer trust, as consumers want a connection with the brands they use. (This blog uses a great example of building a story.)
2. Diversify. While the most common organic items in Australian shopping bags are fruit and vegetables, increasingly consumers are choosing organic eggs, with sales up 10% in two years, and organic dairy products, red meat and poultry (all up 6%). Explore opportunities to diversify your product range to fill gaps in the organic market. For example, added nutrients and fortification in organic beverages ticks the boxes for consumers seeking a natural energy boost. (While we’re thinking about diversification, here’s an interesting blog on how to innovate for an ageing world.)
3. Use the Australian Certified Organic logo. Certification awareness has increased 17% since 2010, with 85% of all shoppers saying that, all other things being equal, an organic certification mark would have some level of influence on their purchase decision. In other words, the logo is a valuable addition to your product packaging. (As an example, see here how the ‘Australian Made’ logo can give your business an advantage.)
4. Go global. Look to the export market to fulfil the strong demand for Australian organic produce – countries such as China, Japan, South Korea, Hong Kong and Singapore are great markets for Australian organics. In 2017, Australia’s top seller in the category was organic beef, with organic fruit and vegetables, dairy and wine also strong sellers. For example, Arcadian Organic & Natural Meat Company is one of Australia’s great export success stories, with around 75% of sales attributable to offshore markets, including the US and high growth Asian markets. The company has twice won ‘Exporter of the Year’ in the Australian Organic awards.
5. Rethink your packaging. Design and construction of your organic product packaging will influence customer buying decisions. Tap into the macro-trends of convenient packaging, and find a synergy with more sustainable packaging options that have less impact on the environment. (Here are 4 essential factors to consider when packaging your product, while this blog looks at several trends in packaging, including greater consumer awareness of health & wellness.)
6. Keep your finger on the pulse. Consumer are the gatekeepers of the food industry. Their purchase decisions are the single most important factors in any brand’s future. Listen to what customers have to say and adapt where needed, while staying true to your brand values.
7. Follow the leaders. Learn from the best of the best in the organics sector, such as Honest to Goodness, winner of Favourite Organic Brand at the 2016 Organic Consumer Choice Awards, and Whole Kids, Australia’s leading organic brand of snacks for kids. Look at what they’re doing right and try to emulate where you can.
Do you need more information about going organic? Visit Australian Organic, the national peak body for organic industry farmers, operators, processors, producers and traders.
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