Since October 2021 the natural foods and drinks market has seen a decline in quantity gross sales, down by 16% for the 12 w/e 10 July 2022.
This decline has occurred after an extended interval of progress. Natural meat and dairy have seen a rise in costs correlate with a drop in quantity gross sales. While customers are keen to purchase natural, value stays a key barrier, made worse by inflation. In the long run, natural must proceed to extend its visibility and justify that value premium by highlighting its environmental and well being advantages.
Natural has seen a gentle enhance in whole market quantity share over time as, up till lately, gross sales have been outperforming the remainder of the market. It now makes up 1.2% of whole foods and drinks quantity, that is up from 1% in 2019 (Kantar, 52 w/e 10 Jul 2022). The natural meals and non-alcoholic drink market is now value £1.2 billion (Kantar, 52 w/e 10 July 2022).
Inflation vs. natural and the way this compares to the remainder of the market
The rising price of foods and drinks is inflicting a change in shopper behaviour, that is no totally different for many who purchase natural. Of those that are scuffling with their funds, 27% have said they’re slicing again on shopping for natural meals (AHDB/Blue Marble, Aug 2022).
Though gross sales of natural meat and dairy have dropped since 2021, this displays the affect of inflation, which is being felt throughout the market and affecting customers shopping for habits. If we glance again to pre-pandemic (2019), natural meat and dairy remains to be performing comparatively properly contemplating the present local weather and outperforms the non-organic equal.
Dairy
Natural dairy accounts for two.9% of whole dairy retail volumes After a comparatively lengthy interval of progress, natural dairy has seen a steep decline in quantity gross sales since January 2022, which correlates with a swift enhance in value. This value level is closely influenced by milk and yogurt which make up the bulk quantity share of natural dairy gross sales (77.1% and 19.5% respectively).
Regardless of each natural and non-organic dairy experiencing a 3% enhance in value, natural dairy has solely seen a 2.0% quantity decline year-on-year while non-organic dairy recorded a sharper decline of 6.5% year-on-year (Kantar, 52 w/e 12 Jun 2022). The character of those merchandise and the position of manufacturers inside these classes contribute to the truth that there may be solely a 7p/litre distinction between natural and non-organic dairy (52 w/e 12 Jun 2022), making natural dairy a extra accessible buy for customers than another natural merchandise.
Meat, fish and poultry
Within the 52 w/e 10 July 2022, natural meat, fish, and poultry (MFP) made up a 0.2% share of the overall MFP market quantity. Quantity gross sales of natural MFP have seen constant decline since October 2021, when natural noticed its highest quantity sale ranges to-date. This lower in quantity coincides with a big rise in value since October 2021, with the common value of natural MFP rising by 5%, from £11.83/kg to £12.40/kg. The common value of the non-organic equal is now £6.52/kg, a 4% enhance from October 2021 (Kantar, 52 w/e 10 July 2022).
Beef, lamb, hen, and fish have all seen quantity declines year-on-year. The principle supply driving this decline in quantity are customers now not shopping for natural meat off promotion. This implies that as value turns into an rising subject for natural MFP customers, many are actually solely partaking when there’s a promotion on. On condition that the primary cause for this decline is earlier customers shopping for much less, volume-driving promotions may enhance gross sales of natural meat within the quick time period. Not like the opposite proteins, pig meat has carried out properly, that is owing to 89% of gross sales coming by way of processed pork, which usually have a extra accessible value level (52 w/e 10 July 2022).
With greater than half of customers (52%) planning to spend much less on visiting pubs and eating places than normal over the subsequent three months (Two Ears One Mouth, Aug 2022), this gives a big alternative for retailers to seize natural steak meal events misplaced from out-of-home. In-home natural steak events are seen as extra social and celebratory than the non-organic equal with style and enjoyability being probably the most defining parts (Kantar Utilization, 104 w/e 15 Could 2022). Right here customers are keen to pay extra for style and can purchase natural steaks for these premium moments. Retailers ought to look to focus on the perceived high quality of premium natural cuts and embody meal offers and recipe inspiration that helps households ship (IGD ShopperVista).
What to speak to customers
Natural has better perceived advantages associated to setting and well being however justifying the value premium stays a key goal. Greater than a 3rd of adults really feel that natural meals are more healthy than non-organic meals, rising to 48% of under-35s (Mintel, Attitudes In the direction of Wholesome Consuming, April 2022). That is significantly related for natural dairy, the place quantity share progress from 2019 is coming by way of youthful customers.With 23% of customers now claiming to be following some type of meat discount food plan – up by 2percentpts on a 12 months in the past, waverers stay a essential group for natural to focus on. Flexitarian customers usually tend to make buy choices with moral and well being issues in thoughts. Due to this fact, by reassuring this viewers of the well being, sustainability, and welfare credentials of natural crimson meat and dairy, retailers can display to those environmentally aware customers the advantages of paying that value premium and promote high quality over amount.
Natural dairy is able to convey this to customers nevertheless messaging may transcend generic sustainability claims to supply clear element. For instance, natural can achieve help by speaking its soil well being and biodiversity credentials (Mintel, Dairy and Dairy Different Drinks, Milk and Cream, UK, 2022).
Conclusion
Retail gross sales of natural meat and dairy stay increased than pre-pandemic. Defra information suggests some farmers want to capitalise on this, with a 3.6% enhance land farmed organically between 2020 and 2021, primarily pushed by a 34% rise within the space of in-conversion land contributing to this. With Defra set to announce the natural a part of the Sustainable Farming Incentive in 2025 for England, additional recognition for the ecosystem companies natural gives is forthcoming.
