Organic industry reports better than expected sales

Sales of organic products slowed last year according to the latest figures from the Soil Association, but still fared significantly better than anticipated by some analysts who had predicted that organic and green consumer products would be particularly badly hit by the recession.

Far from collapsing, UK sales of organic products increased 1.7 per cent last year to just over £2bn, according to data from the Soil Association, the body responsible for certifying goods as organic.

The Soil Association's annual market report admitted that the increase in revenue was partly the result of food price inflation, which masked a decrease in sales by volume. But a spokeswoman for the organisation said that consumer demand for organic products had held up far better than expected by some analysts who had predicted sales could fall by as much as 30 per cent as a result of the economic crisis.

"There has been a slowdown in sales by volume, and it is difficult to predict what will happen in 2009," she said. "But some supermarkets have reported that they have seen sales stabilise in the first few months of this year and there is evidence that there is a sizeable core of consumers who remain fully committed to buying organic products."

The report, which will be largely welcomed by producers of both organic and green consumer products, suggested that for many consumers, interest in environmentally sustainable products is proving surprisingly resistant to the economic slowdown.

A survey of organic shoppers carried out by the Soil Association found that while 15 per cent expected to spend less on organic products, 36 per cent intended to spend more. "There is a core of consumers who are in no mood to ditch their commitment to organic products," the report said. "They are far more likely to cut their spending on eating out, leisure activities and holidays than to reduce what they spend on organic food."

However, across the entire organic sector the figures showed a mixed picture, with Tesco reporting that sales fell almost 10 per cent last year, while Asda saw organic sales increase 25 per cent, albeit from a lower starting point.

Similarly, sales of organic poultry, dairy, textiles and health and beauty products all enjoyed significant increases in sales, while the more established organic fruit and veg sector saw a sizeable sales decline.

Peter Melchett, Soil Association policy director, said that while the sector was suffering along with the rest of the retail industry, the figures suggested there is an "underlying resilience" in the organic market, which suggests it will " grow again once the economy picks up".