Organics: down a bit, but far, far from out…
This year’s Selling Organic conference held some real ‘wow’ moments.
Contrary to the doom and gloom you might have expected, we heard of rocketing turnovers, growing exports and successful expansion.
There were a string of upbeat presentations from people at the sharp end of the organic food sector who talked unfailingly of growth. Of course, we can’t say that is representative of organics as whole, but it was certainly true of our speakers’ businesses and maybe that’s why they are people who have been at the forefront of organic brands for many years now.
Overall, growth in the sector has certainly slowed and we can’t ignore the fact that some farmers (notably the dairy ones) may be struggling. But when you hear people such as Rude Health Managing Director, Nick Barnard, talk of 48 per cent sales growth for the quarter, you know things are far from all bad.
Likewise, Renée Elliot, founder of Planet Organic was happy to report that sales were buoyant, up 12 per cent on last year, and that the company’s latest store was trading fully to expectations.
Granted, you wouldn’t expect people to stand up in front of an audience and talk about slumps and failures too much, but the figures speak for themselves here. What stands out is that we were hearing from people behind strong brands. They know where they sit in the market and are delivering to their audience.
Key messages were about focus on quality, building great relationships with suppliers and staff training. Renée was clear that staff had to be fully up-to-speed on the business and its products before they were let loose on customers, because they are the face of the business. It’s a lesson that many retailers could still learn from.
Not so social
One of the bigger surprises of the day was a lack of engagement in social media demonstrated by a question to the delegates about how many of them used the Twitter and Facebook. Very few hands went up – something we reported in our Twitter stream, being updated from the back of the room…
Even where people said they did have a presence on some or all of the social media channels, they were often not personally involved and hadn’t yet grasped the potential, or fully understood why their business should be there.
What was evident, though, was that those who did understand the social landscape had stories to tell of success garnered from being there.
Simon Wright, of OF+ Consulting, who was chairing our Q&A sessions for us, revealed that his latest brand, GO*DO, had been launched entirely on Twitter and Facebook – and had got listed in Holland & Barrett directly on the back of that. Now, that’s a good demonstration of why social media should be part of the marketing mix.
Online marketing consultant, Juliet Fay, made a great point about social channels empowering customers like never before, giving them a voice and democratising the feedback process – something big brands would previously want to control rigorously. Many are still being slow to realise that the world has changed and they haven’t changed quickly enough with it.
Paul Moore, head of marketing at Community Foods, was with us to talk about the Why I Love Organic industry campaign. But during the social media discussion he explained how his company was using Facebook to engage with customers, answering their questions directly and sharing information. This had all grown quietly because they had trusted the task to a member of the office staff who had been getting on and doing a very professional job. Now they are well aware of the value of this direct interaction with their most important audience; their customers.
Our experience is that it is often the case that social media should come out of the traditional communication process and be given to someone in the organisation who ‘gets’ it, or is keen to learn. With a handful of simple guidelines, they can benefit customer relations out of all proportion to the cost of the time they put in.
Understanding the customer
In the course of our three annual Selling Organic conferences we have heard a consistent message that can be summed-up as: “Being organic is not enough.” Meaning that, apart from a committed core of consumers, the rest of your potential customer base is not primarily looking for a product that is just organic. This is partly because they don’t necessarily understand the central implications of organic production (and that’s another issue for the industry), but largely because they have other concerns leading their purchasing decisions.
Each year the research becomes clearer, as experienced academics build ever greater bodies of evidence, both quantitave and, perhaps more importantly, qualitative.
One such leading researcher is Susanne Padel, of the Organic Research Centre, at Elm Farm. Susanne has been involved in Europe-wide studies into consumer perceptions, including taking the main messages from the marketing materials of 100 SME companies in five countries and testing those messages on potential customers. The results are fascinating.
Consumers were found to me most interested in where their food originated, animal welfare and, to a lesser extent, fair prices being paid to farmers. Specific place of origin labels worked better with them than generic ones claiming, for instance, ‘regional produce’. Susanne said the message was clear that shoppers should be allowed to decide for themselves what was ‘local’ to them. Is local a bike ride away, or a product from the same state or county? Everyone has their own definition.
She also pointed out that economic impacts and fairness to farmers were not directly addressed in the European organic regulation, nor were several other issues that appeal to consumers, though it was clear that consumer understanding varied across countries. Appealing to shoppers with arguments about fair pricing to producers only worked with Swiss and German shoppers, where such lines have been rehearsed over some time and are well understood.
The findings by Susanne and her colleagues may have come as no surprise to the aforementioned Nick Barnard, MD of Rude Health. He explained that exports to continental Europe were now about nine per cent of the company’s sales and were spiralling. While Rude Health sees its brand as being about more than organic (quality, vitality), Nick explained that French and Scandinavian buyers wanted to see ‘bio’ or ‘organic’ all over the packaging. It’s a key selling point for them.
By contrast he had been told by a UK supermarket buyer: “You’d be a great brand if you weren’t organic!” He concedes she had a point, because without being organic the products could be cheaper and moved in greater quantities. But of course price isn’t the only consideration.
Yes, but what do ‘the people’ want?
Founder of the People’s Supermarket and, consequently, TV personality, Arthur Potts Dawson, gave us a first-hand insight into the views that shaped his social venture. To his shock, and initial disappointment, it wasn’t all about organic.
The members of his co-operative run the business. They make the decisions. He told us he had assumed that the store would be organic. But when they were asked, at their first meeting, who wanted the store to be organic, only two people put their hands up. Asked who wanted the store to be Fairtrade, there was an overwhelming majority. Yet Fairtrade sales make up only a fraction of the turnover of organic products on a national scale, suggesting that it’s single, clear message resonates more sharply with consumers than the multiple benefits of organic that are stillnot being explained succinctly enough.
In its relationships with suppliers, Arthur explained, the People’s Supermarket insists on being absolutely fair. Some of them were asking for wholesale prices for their goods at below what the Supermarket was prepared to pay – it’s how they’ve been conditioned by the major multiple retailers, with their expectations driven low.
Of course they face some kinds of commercial realities that the People’s Supermarket does not, because it’s not aiming to make a profit beyond that which will be ploughed back into its own operation and it has the benefit of members also being its unpaid staff in return for their membership benefits. But the model does expose how supply chains can work based on mutually respectful relationships.
Still a way to go
If we learnt anything from this year’s Selling Organic, it was that organic brands that know their place in the market can thrive. The evidence was in front of us. But the key word there is ‘brands’. These are recognisable entities that shoppers buy into and understand. They are driven by passion and determination – like any successful, long-term business. They involve their staff and have good relationships with their suppliers, in which everyone knows what is expected of them.
The message is solidifying: don’t expect the word ‘organic’ to do your selling for you. At least not for now. Know what the strengths of your product are and sell it on the back of those.
It is clear from this, and previous Selling Organic conferences, that something still needs to change, at least in the UK, with regard to consumer perceptions and understanding of what organic production stands for. That might happen due to the efforts of the sector and those who work in it getting their messages right, or it might be external shifts caused by scarcity or growing concern for food security. Organic businesses need to stand ready to respond to that, and capitalise on it.
The world has come a long way since organic principles were first solidified and spelled out. Everyone knows the term now, the next step is for more people to truly understand it.
Getting those who represent the sector’s success stories and the researchers who can explain why they had those successes in the same room continues to have huge value, as long as we continue to learn from the exercise.