UK sales of organic products fell 5.9% in 2010, according to the annual Organic Market Report from the Soil Association. The dip is a continuation of a steep sales decline in 2009, when the UK organic market shrank 12.9%. Overall, the market has shrunk about 18.0% since its peak of £2.1 billion in 2008.
The report cited fragility in consumer confidence as the impetus for the decline, as economic woes and the specter of unemployment still haunt much of Europe. The impact of public spending cuts in April could also affect recovery of the organic market, the report adds.
The report did note select double-digit year-on-year growth in sales smaller categories like organic beef and baby food, which grew 18% and 10%, respectively, but production and sales in the bigger organic categories like dairy and produce faltered.
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On the other hand, according to preliminary Nutrition Business Journal figures, organic food sales in the United States made a major rebound last year, growing 8.1%. In 2010, the annual growth of dairy—which was one of the harder-hit categories in 2009—reached 9.0%, which, in comparison to the decline in the UK, is momentous. Organic fruits & vegetables, historically a fair-weather category in U.S. organic sales, grew an impressive 11.9% in 2010.
The growth of sales in the U.S. organic market illustrates a rebounding economy coupled with a stabilization of commodity prices. Thus, as conventional commodity prices have increased over the past year, organic supply costs have remained relatively stable, narrowing the price point between organic and conventional finished goods. Consumers are opting back into organics because the price premium is substantially less than two years ago.