22 October 2008 - Faced with higher costs, UK consumers are cutting back on spending and are seeking for cheaper food solutions. As a result, sales of organic food (considered as more “up-market”) in the UK have also decreased recently.
Marks & Spencer, which offers many organic food products, reported a 6.1% drop in Q2 overall sales and a 6.5% fall in food sales (food accounts for 51% of the company’s business). The retailer also said earlier this month that it would cut investment and step up promotions in a tough market.
Sir Stuart Rose, executive chairman of M&S, was reported as saying that M&S food still sits at the 'top of the quality tree', but the retailer will have to step up cost savings to bring down food prices.
The Chairman also believes that Christmas will prove to be very difficult.
Created in April 2006, Hain Celestial UK is a subsidiary of the Hain Celestial Group, headquartered in New York, USA. The company is a leading natural and organic food and personal care products company and produces well-known organic food brands.
The company supplies M&S and its facility in Luton provides the retailer with 30 million sandwiches every year.
Quite popular in the UK, Hain Celestial’s main brands are Linda McCartney, Soy Dream, Realeat and Granose.
Hain Celestial’s CEO Irwin Simon was speaking at an investor conference in Boston last week and provided an overview of the company’s global business.
Talking about the US and UK markets, Simon confirmed that in the last month or so organic sales in general were down. However, he stressed the fact that his company was not impacted.
“We are not seeing that, we are seeing consumption and good sales at the end of September and continuing strong into October, and I think we will continue to see that”, said the CEO.
Meanwhile, Helen Browning, the UK Soil Association’s director of farming, thinks that the recent drop in organic food spending is only seasonal and should pick up the coming months.
At a food summit in London a few weeks ago, she argued that the UK has had recessions before and the organic market has stagnated but the momentum grows again once the economic conditions are more favourable. At the same time, organic shoppers will continue to pay a premium for the produce, added Browning.