(2 rânduri libere, 11p) Studies and Scientific Researches. Economics Edition, No 27, 2018 http://sceco.ub.ro 142 EVOLUTION OF THE EU ORGANIC FOOD MARKET AFTER 2010 Laura Cătălina Ţimiraş “Vasile Alecsandri” University of Bacau, timiras.laura@ub.ro Abstract This paper presents the evolution of the organic food market at EU level, as well as its place in the world. Market size was highlighted based on the retail sales of organic food indicator, and the consumer penetration rate of this product category was assessed by retail sales of organic food per capita. Europe is the second largest market in the world for organic food, out of the total, 91% being related to EU member states (in 2015). In the last few years, the analyzed market has seen increases in EU countries, with differences between them, both in terms of dynamics and consumption intensity (old EU members far outstripping the new ones on this indicator). Despite the positive evolution, the analyzed market remains a market with a huge potential for development, still untapped, the penetration of organic food consumption still being at a low level. Keywords organic food, market, European Union, retail sales, evolution JEL Classification M31, M39, C10 The emergence and development of organic agro-food products is a consequence of public awareness of the role that food has on the health of the population and, implicitly, of raising consumer concerns for their own health, corroborated with the government’s policy of sustainable development, amid the exacerbation in the last decades of nutrition illnesses caused by inadequate nutrition. According to EU legislation, organic (ecologic or bio) food can be labeled as organic only when at least 95% of ingredients are organic. Thus, according to Council Regulation EC No. 834/2007 on organic production and labelling of organic products, organic production is an overall system of farm management and food production that combines best environmental practices, a high level of biodiversity, the preservation of natural resources, the application of high animal welfare standards and a production method in line with the preference of certain consumers for products produced using natural substances and processes. Certification of organic products has many advantages for both producers and consumers. Lohr, L. (1998) identifies three functions: - guarantees to consumers that the certified product, which has no observable differences compared to non-organic products, has been grown, processed and packaged in compliance with the rules limiting or prohibiting the use of synthetic raw materials and protecting the environment; - ensures producers that illegal use of the organic term (by competitors) does not deprive them of the use of premium prices and of obtaining market shares that can be generated through certified products; EVOLUTION OF THE EU ORGANIC FOOD MARKET AFTER 2010 143 - increases market efficiency by reducing contradictory information along the marketing channel from manufacturer to consumer. The evolution of the global organic food market The global organic food market in 2015 reached more than 75.7 billion euros, representing average purchases per person of 10.3 Euros. North America is the region with the highest average spending per person, followed by Europe, but at a considerable distance (on average 100 Euros spent in North America for organic food, 33.8 Euros are allocated in Europe with the same destination). (Table 1) Table 1. The global organic food market, in 2015, on world regions Region Retail sales (Million Euro) Retail sales per capita (Euro / person) Africa 17 n.d Asia 6255 1,5 Europe 29781 36,4 Latin America 31 n.d. Northern America 38539 107,7 Ocenia 1085 27,6 World 75709 10,3 n.d. – no data Source: FiBL -AMI survey 2017, in Willer, Helga and Julia Lernoud (Eds.) (2017): The World of Organic Agriculture. Statistics and Emerging Trends 2017. Research Institute of Organic Agriculture (FiBL), Frick and IFOAM – Organics International, Bonn. Version 1.3 of February 20, 2017 (table 41). According to data for 2015, the largest organic food markets in the world are: USA (holding 47.3% of the world market), followed by Germany with 11.4%, France and China (under 10%). (Figure 1) Over time, between 2010 and 2015, the largest expansion of the organic agri-food market was recorded in China (an increase of approximately 6 times), which in fact led to its entry in 2015 among the top 5 countries in terms of analyzed market size. In the other countries at the top of the list (except for Sweden, where over 5 years the organic food market has increased more than 2 times), the increases were below 100%. Table 2. The ten countries with the largest organic food markets, in 2015 and compared to 2010 Country Retail sales (Million Euro) - / + in % in 2015 compared to 2010 2015 2010 USA 35782 20155 77,5 Germany 8620 6020 43,2 France 5534 3385 63,5 China 4712 791* 495,7** Canada 2757 1904 44,8 United Kingdom 2604 2000 30,2 Italy 2317 1550 49,5 Switzerland 2175 1180 84,3 Sweden 1726 804 114,7 Spain 1498 905* 65,5** *Data for 2009; ** - / + in 2015 compared to 2009 Source: taking over and processing after:FiBL-AMI survey 2017, in Willer, Helga and Julia Lernoud (Eds.) (2017): The World of Organic Agriculture, Statistics and Emerging Trends 2017. Research Institute of Organic Agriculture (FiBL), Frick and IFOAM – Organics International, Bonn. Version 1.3 of February 20, 2017 (Table 41); FiBL survey 2012, in Willer, Helga and Lukas Kilcher (Eds.) (2012): The World of Organic Agriculture, Statistics and Emerging Trends, 2012. FiBL-IFOAM Report. Research Institute of Organic Agriculture (FiBL), Frick and IFOAM, (Table 12). Țimiraș 144 Figure 1. Total share of the ten countries with the largest organic food markets in 2015, in the global organic food market Source: adapted after: FiBL-AMI survey 2017, in Willer, Helga and Julia Lernoud (Eds.) (2017): The World of Organic Agriculture, Statistics and Emerging Trends 2017. Research Institute of Organic Agriculture (FiBL), Frick and IFOAM – Organics International, Bonn. Version 1.3 of February 20, 2017 (Table 41); Referring to average spending per capita, a more relevant indicator for assessing the level of development of organic food markets, Switzerland is the country with the highest global value (more than 25 times higher compared to the global average and over 7 times higher than the European average, according to data for 2015). Table 3. The ten countries with the highest per capita retail sales of organic food product in 2015 and compared to 2010 Country Retail sales per capita (Euro / person) - / + in % in 2015 compared to 2010 2015 2010 Switzerland 262 153 71,2 Denmark 191 142 34,5 Sweden 177 86 105,8 Luxembourg 170 127 33,9 Liechtenstein 142 100* 42,0** Austria 127 118 7,6 USA 111 65 70,8 Germany 106 73,6 44,0 France 83 52 59,6 Canada 77 57 35,1 *Data for 2009 ** - / + in 2015 compared to 2009 Source: taking over and processing after: FiBL-AMI survey 2017, in Willer, Helga and Julia Lernoud (Eds.) (2017): The World of Organic Agriculture, Statistics and Emerging Trends 2017. Research Institute of Organic Agriculture (FiBL), Frick and IFOAM – Organics International, Bonn. Version 1.3 of February 20, 2017 (Table 41); FiBL survey 2012, in Willer, Helga and Lukas Kilcher (Eds.) (2012): The World of Organic Agriculture, Statistics and Emerging Trends, 2012. FiBL-IFOAM Report. Research Institute of Organic Agriculture (FiBL), Frick and IFOAM, (Table 12). The evolution of the EU organic food market By subscribing to the global trend, the size of organic food markets and average per capita spending on such products have grown in recent years in EU countries. The EU 47.3 11.4 7.3 6.2 3.6 3.4 3.1 2.9 2.3 2.0 0 10 20 30 40 50 U S A G e rm a n y F ra n c e C h in a C a n a d a U n it e d K in g d o m It a ly S w it z e rl a n d S w e d e n S p a in % EVOLUTION OF THE EU ORGANIC FOOD MARKET AFTER 2010 145 organic food market amounted to more than 27 billion euros (91% of the total European market) in 2015, of which 98% belong to the old Member States. Average spending per person has surpassed more than 5 times the world average, but this outpouring is specific only to the old members, with the countries in the old communist bloc far below average (around half of the world average). Compared to Northern America, the region where organic food has the largest penetration in consumption, the average EU consumption is only around 50%. Table 4. The EU organic food market in 2015 Region Retail sales (Million Euro) Retail sales per capita (Euro / person) European Union, din care: 27107 53,7 EU - 15 26586 65,9 The new member states 521 5 Source: FiBL -AMI survey 2017, in Willer, Helga and Julia Lernoud (Eds.) (2017): The World of Organic Agriculture. Statistics and Emerging Trends 2017. Research Institute of Organic Agriculture (FiBL), Frick and IFOAM – Organics International, Bonn. Version 1.3 of February 20, 2017 (table 59). Confirming the above-mentioned idea, it is noted that in the old EU Member States, average spending per capita ranged between € 30 and € 191 (except for Portugal), while in the new Member States they were below € 30 (Table 5). This can be explained both by economic and cultural differences between the two categories of countries, such as: the purchasing power of the population, the knowledge of consumers about the impact of diet on the state of health and the importance given to them, exigence regarding the products on the market etc. Table 5. The organic food markets of EU countries, in 2015 and 2010 Country Retail sales - / + in % in 2015 compared to 2010 2015 2010 Retail sales Retail sales per capita Million Euro Euro / person Million Euro Euro / person Austria 1065 b) 127 b) 986 117,8 Belgium 514 45,7 421 38,8 22,1 17,8 Bulgaria n.d. n.d. 7 0,9 Croatia 99 d) 23,4 d) 69,2 15,6 43,1 e) 50,0 e) Czech Republic 74 d) 7 d) 59 7,4 25,4 e) -5,4 e) Denmark 1079 190,7 791 142,2 36,4 34,1 Estonia n.d. n.d. 11,8a) 8,8 a) Finland 240 43,9 80 14,9 200,0 194,6 France 5534 83,3 3385 52,3 63,5 59,3 Germany 8620 105,9 6020 73,1 43,2 44,9 Greece n.d. n.d. 60 5,3 Hungary 30 3 25 a) 2,5 a) 20,0 f) 20,0 f) Ireland 142 30,7 103,2 23,1 37,6 32,9 Italy 2317 38,1 1550 29,8 49,5 27,9 Latvia 4 b) 2 b) n.d. n.d. Lithuania 6 b) 2 b) n.d. n.d. Luxembourg 94 170 65 127,5 44,6 33,3 Netherlands 1072 63,4 656,5 39,6 63,3 60,1 Poland 167 4,4 58,9 1,5 183,5 193,3 Portugal 21 b) 2 b) 21 2,1 Romania 80 b) 3,7 b) 45 2,1 Țimiraș 146 Slovakia n.d. n.d. 4 0,7 Slovenia 49 c) 26,6 c) 38 18,6 Spain 1498 32,3 905 a) 19,5 a) 65,5 f) 65,6 f) Sweden 1726 177,1 803,8 86,1 114,7 105,7 United Kingdom 2604 40,2 2000 32,2 30,2 24,8 European Union (28 countries) 27107 53,7 n.d. n.d. Europe 29781 36,4 n.d. n.d. n.d. – no data Dynamics was calculated for periods of at least 4 years a)Data for 2009; b) Data for 2011; c) Data for 2013; d) Data for 2014; e) - / + in % in 2014 compared to 2010 f) - / + in % in 2015 compared to 2009; Source: taking over and processing after FiBL-AMI survey 2017, in Willer, Helga and Julia Lernoud (Eds.) (2017): The World of Organic Agriculture, Statistics and Emerging Trends 2017. Research Institute of Organic Agriculture (FiBL), Frick and IFOAM – Organics International, Bonn. Version 1.3 of February 20, 2017 (Table 66); FiBL survey 2012, in Willer, Helga and Lukas Kilcher (Eds.) (2012): The World of Organic Agriculture, Statistics and Emerging Trends, 2012. FiBL-IFOAM Report. Research Institute of Organic Agriculture (FiBL), Frick and IFOAM, (Table 58). Analyzing the dependence between average spending per capita and Gross Domestic Product at market prices in some of the EU countries for which we have data, we see a direct link; of the average expenditure variation in the 16 countries surveyed, almost 50% being determined by the Gross Domestic Product variation. Note that by checking the statistical significance of the relationship between the two variables with the Fisher test, it was found that this is significant for a significance level of 5%. (Table 6 and Figure 2). Y = 231,9x + 19961 R² = 0,4946 R = 0,703 0 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000 100.000 0 50 100 150 200 G ro s s d o m e s ti c p ro d u c t (E u ro / p e rs .) Retail sales of organic food (Euro / pers) Figure 2. Relationship between retail sales of organic food (Euro/pers) si Gross domestic product at market prices (Euro/pers) in some UE countries* in 2015 *Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Luxembourg, Netherlands, Poland, Spain, Sweden, United Kingdom, for which we have data. For Croatia and Czech Republic, data is for 2014. Source: adapted after FiBL-AMI survey 2017 (for data regarding retail sales of organic food) and Eurostat, 2018 for Gross domestic product at market prices EVOLUTION OF THE EU ORGANIC FOOD MARKET AFTER 2010 147 Table 6. Relationship between retail sales of organic food (Euro/pers) si Gross domestic product at market prices (Euro/pers) in some EU countries* in 2015 Countries Regression equation Coefficient of determination (R2) Correlation coefficient (r) Calcula ted F- Value Signific ance level Theoretic al F- Value European Union (EU – 28) Y = 231.9x + 19961 49.46 0.703 13.7 0.01 8.86 *Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Luxembourg, Netherlands, Poland, Spain, Sweden, United Kingdom, for which we have data. For Croatia and Czech Republic, data is for 2014. Source: adapted after FiBL-AMI survey 2017 (pentru datele privind retail sales of organic food) and Eurostat, 2018 for Gross domestic product at market prices Although characterized by a rapid growing, population consumption of organic food remains at a low level. For example, in Denmark, the country with the highest level of organic spending at EU level, in 2015, the share of organic food in total food sales in retail stores was estimated (Ekoweb estimates) at just 8.3%. However, it is worth noting that this share is increasing, in 2010 the indicator was 5.7%. (Statista, 2018). Also, in the same year, in Germany (another country for which we have data) organic share of the total food market was 4.78% (http://orgprints.org, 2018). There are many reasons behind the limitations in the growth of the organic product market. Thus, according to the study published in Denmark, Italy and the United Kingdom by Jensen, K., Denver, S., Zanoli, R. (2011), with data for 2006 and 2007, some of the reasons behind the slow increase in demand for organic products are: - (higher) prices for some of these products, but also the poor or even the non- existence of organic products for certain categories of food; (barriers for those who regularly consume organic products); - lack of confidence in organic farmers, low importance for healthy eating and / or lack of knowledge of organic food (barriers to the occasional or non- consumers of organic products). Strengthening the last idea presented, the study carried out in 6 European countries by Zander, K., Padel S., Zanoli R. (2015) shows a low level of knowledge of the European ecological logo (introduced in 2010); of the total of 3,000 respondents, only 15% of them knowing the significance of that logo. It is obvious that in the absence of knowledge of the benefits of organic products consumption and / or their recognition (via the logo), the possibilities for extensive market growth are practically limited. Conclusions Responding to the orientation of more and more consumers to a healthy diet, the EU organic food market has seen a positive development in recent years. However, the statistical data shows that the average consumption per capita for this product category is kept at a low level, with a huge potential for development now. Starting from the results of an EU study (presented above) that identified many factors justifying the relatively low consumption of organic food, we can appreciate that the diversification of the range, the intensification of the media coverage of the characteristics of these products and their impact on health and finding solutions for price hikes are lines of action with potential effect in the expansion of this market. 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