Has the rot set in for organic food?

By Tom Colls
Today programme

Organic food sales have fallen 19% in recent weeks compared with last year

Spam sales are up. M&S are holding day sales. As the recession hits, fancy is out. Value is in.

Profits at low-cost clothing producer Primark have gone up by 5% in the last six months and low price supermarket Aldi reported a 26% jump in sales last year.

This shift in spending comes at a cost for higher-priced brands. Particularly hard hit has been the organic food market, which has seen a 19% drop in supermarket sales over the last four weeks compared with the previous year, according to market analysts TNS Worldwide.

"There has been a seismic shift in consumer behaviour," says Ian Henderson, managing director of brand agency Totem.

"It is more fashionable to carry a shopping bag from Aldi than a handbag from Fendi."

Before the recession hit, he says, organic food was perceived as "a permission to indulge" - you could eat organic chocolate and still feel you were doing something vaguely good.

But with tightening budgets, the lack of understanding about the reasons organic food is more expensive has led to slump in sales.

"It is now fashionable to be frugal where it was fashionable to be organic. The game has moved on," he says.

Spreading the word

Discount supermarkets are increasing their market share in the UK

The Soil Association, which verifies 80% of Britain's organic produce, accept that the organic market has stalled and that a lack of understanding about organic produce may be the cause.

Association director Patrick Holden believes that while people have a good idea of the personal benefits of organic food - less pesticides and no additives - the big challenge is to communicate the wider implications.

"Organic farming has the highest animal welfare standards, it is always free range, it substantially reduces greenhouse emissions and it is better for wildlife and the environment," he says.

"This is not a niche market. It is a strategic response to unprecedented threats that our food systems are facing.

"The single most effective action that the public can take to promoting a more sustainable and secure food future is to buy organic food."

Morally flawed?

Some areas of organic produce, such as dairy, have continued to grow

The slump in organic, after a decade of double digit growth in sales, has led some to suggest that shoppers are turning away from ethical products in favour of the cold, hard bargain.

It might be tempting to imagine that the recession has shaken off the moral veneer of consumers, to reveal the ruthless capitalists underneath.

But for Rob Harrison, editor Ethical Consumer Magazine, it is not ethical, but rather luxury products that are under pressure.

"Yurt holidays may be suffering," he says. "But a carrot isn't usually seen as a luxury.

"Ethical shoppers aren't immune to price issues, but they are still fundamentally people who have been convinced to make ethical decisions."

ORGANIC WINNERS AND LOSERS Organic sales in 2008 compared with the previous year: Dairy: +6% Produce: -3% Meat: +1% Sweets, crisps and snacks: -8% Delicatessen: -23% SOURCE: THE NIELSON COMPANY

He points out that many aspects of ethical consumerism actually save money - particularly the savings on bills that come from a low energy lifestyle.

And with much of the blame for the financial crisis being heaped on mainstream banks, ethical banking has seen significant growth.

For example, the Co-operative Bank reported a 123% increase in the number of people who switched to their current account in the last six months, compared with the same period last year.

In the energy sector, Green energy brand Ecotricity have reported a slowdown in the numbers of new customers, but sales are not down.

Other ethically branded products are faring better in the recession

"It is no drama at all," says company founder Dale Vince. "It's natural that people have other things on their minds."

And in the clothing industry, Safia Minney, CEO of ethical clothing manufacturer People Tree, says that the company has seen a 20% increase in orders from last year.

"There is a huge amount of commitment and loyalty to support Fairtrade," she says.

"People are fed up with the conventional ways of buying fashion and are looking for alternatives in Fairtrade, organic, recycled and vintage."

Figures from John Lewis seem to back up the idea that consumers are not necessarily only covering their backs with Primark t-shirts - haberdashery sales are up by 20% this week compared to last year as more people make and mend.

Perhaps the best illustration is found with egg sales. While sales in organic eggs, which at their peak only made up 7% of sales, have dropped, sales of free-range eggs, which make up 60% of the market, have stayed roughly the same.

"What people are looking for, in this new mood of austerity and thrift, is value," says Ian Henderson.

"People still want to be good. They just want value from it."