The Spanish market for organic products will grow by around 12% annually until 2020 and will increase from the €905M turnover registered in 2008 to €12.182M in 2020. This is the conclusion drawn from the comparative analysis of organic food consumers, conducted by everis. The report analyzes the country's potential, in terms of production and distribution of these products, based on analysis of the situation of the organic market and the current and future behavior of Spanish consumers. It also draws comparisons with other European countries such as Denmark, Germany, France and England, where the organic market is more mature, and others like Italy, where the habits and culture are similar to Spain.
The analysis indicates the exponential growth in demand for these products. Health, taste and quality are the main reasons for purchasing in Spain, while in Europe, as well as health, environmental awareness stands out as a purchasing factor.
The report highlights the potential of the organic market in Spain, where in the last ten years it has grown at a rate of 25%, exceeding the average growth for the entire European Union, which stands at 12%, and also above that of countries with strong roots in organic culture, such as Denmark and Germany.
Overcoming the brakes on consumption
Although society clearly seems to want to consume more organic products (65% of the population indicates this), the high price, lack of awareness and the difficulty of finding organic products outside of specialist stores are the principal obstacles to the consumption of this type of product.
The study showed the viability of reducing the differences in price between organic and conventional products by taking advantage of economies of scale and without losing margin. So, while in Spain this difference is, on average, 74% in countries like France and the United Kingdom, the difference is reduced by more than half. everis analysis estimates that, if the difference in price were reduced to 40%, the Spanish market could triple and exceed 3 billion euros.
everis concludes that it is possible for companies to reduce their prices within losing their sales margin as, currently, the margin on organic products is seven times higher than that for conventional products.
In this sense, the study conducted by everis considers the need to shift sales so that they are also distributed in large supermarkets to increase organic consumption to an exponential degree. In fact, major distributors have already developed their own brands, offering a wide range of products – including some commodity products – and occupying exclusive spaces in their stores.
Take advantage of economies of scale
Despite the strong demand, currently only 1% of food consumed in Spain is organic, while in countries like Denmark and Germany it represents close to 7% and 4%, respectively. And in other countries, like Italy, which are more similar in terms of culture and structure of sales channels, the weight of organic food is three times greater than in Spain.
Another factor extrapolated is that, although Spain is Europe's leading producer of organic products, the reality is that over half of production is exported to the European market. A poorly developed organic farming network, focused on export, is the reason for this stagnation in relation to Europe. Furthermore, at the moment, the country only has small producers with average turnover of 60,000 euros, which will find it difficult to take advantage of economies of scale to offer more competitive prices.
In the light of this situation, analysis points to the need for these small producers to increase their volumes of production to take advantage of economies of scale that will allow them to reduce prices without losing their margins. In turn, the study shows the need to create alliances between specialist stores and produces, to reduce prices and gain competitiveness with the big distributors. This would also help to respond to growing future consumer demand.
In short, both the purchasing reasons and consumer profile in Spain coincide with the attributes of the European consumer. The difference is that, while in Europe it has already reached critical mass or a majority of the population, green consumers in Spain are still considered to be early adopters and represent a small niche market with great growth potential in the near future.