As natural products industry professionals prepare to gather in London for next year Natural & Organic Products Europe event (18-19 April), a buoyant UK market is signalling confidence on several fronts.

Plant-based and CBD set the pace for UK natural products sector

In February the Soil Association published its 2020 Organic Market Report, showing that Britain’s organic market grew 4.5% in 2019. It’s the eighth consecutive year of growth for the sector, and the organic charity expects the market will hit the £2.5 billion mark by the end of 2020.

Indies setting the pace

The annual survey of the UK organic scene revealed that supermarket sales of organic increased by 2.4%, comfortably outpacing the overall food market. Independent retailers meanwhile enjoyed a 6.5% rise in sales of organic in 2019.

The biggest growth category was online and home delivery, with sales up 11.2%. The Soil Association puts the success of this channel – which includes organic veg box schemes and online retailers like Ocado – down to its especially wide organic offer.

Ocado, the UK’s biggest organic online retailer, expanded its organic lines to over 4,500, helping it achieve a 12% sales increase. Searches on the Soil Association website for ‘organic box scheme’ increased 174% year-on-year to the end of 2019.

Away from food and drink, sales of certified organic and natural beauty and wellbeing products soared by 23%. Additional good news for the category is that more consumers are looking for trusted labels, like organic, when choosing beauty products.

While continuing uncertainty over Britain’s post-Brexit trade agreements isn’t helpful, the organic sector remains upbeat about longer term prospects. One reason for this optimism is the growing trend towards ‘planet-centric’ purchasing behaviour, which directly advantages organic. Whether it’s food, or beauty and wellbeing, organic increasingly chimes with consumers who are aligned with the growing environment and climate movements, says the Soil Association.

Plant-power

The UK’s plant-based and vegan sectors continue to power ahead. According to Mintel, the UK has now overtaken Germany as the world leader in vegan food launches. Its latest report into the category reveals that 23% of all new UK food product launches were labelled vegan in 2019, and that sales of meat-free food products have grown an impressive 40%, from £582 million in 2014 to an estimated £816 million in 2019. If the category continues its current growth trajectory, sales will be in excess of £1.1 billion by 2024.

Most of the growth in vegan and plant-based foods is coming from ‘flexitarians’ rather than full-time vegans (who Mintel suggests still only equate to 1% of the population).

One of the challenges for vegan and plant-based brands is to find ways to distinguish themselves from competitors in an increasingly crowded market. From being a small niche category that the specialist health food trade had all to itself, the vegan category has very quickly gone mainstream, with everyone from Tesco and Mark & Spencer to Greggs and KFC (“fingerlikin’ vegan” are words few of us ever expected to hear) rushing into the market.

‘Vegan junk food’ claim

But the health credentials of vegan foods have suddenly become the subject of fierce debate in the natural products community. That’s because many meat and dairy alternatives are highly-processed products that without the ‘vegan’ or ‘plant-based’ labels would struggle to earn their place on a health food store shelf.

Mintel says companies “will need to be transparent about the healthiness of their products, and also address the quality and quantity of nutrients to win over the discerning consumer”. It isn’t coincidence that health-leaning brands in the category align themselves with the term ‘plant-based’ rather than vegan; consumers associate it more with desirable health attributes. It’s also why specialist retailers sometimes value plant-based diet enthusiasts over vegans (they’re more likely to be the high-spending, health-focused shoppers they need to attract).

The CBD explosion

The UK food supplements category has struggled for attention in recent years, eclipsed by the successes of the organic, free-from and plant-based food sectors. But the explosion of interest in CBD is changing all that. In a handful of years CBD has come from virtually nowhere to become the fastest growing natural health category in industry memory.

And it seems that the UK is setting the pace for CBD sales in Europe. The Cannabis Trade Association estimates that Europe’s cannabidiol market currently is worth about £480m, with the UK commanding the biggest share at around £110m. Some forecasts suggest this figure could double by 2025.

Last year, in an unexpected development, the European Food Safety Authority (EFSA) reclassified CBD as a novel food, meaning that it requires pre-market authorisation before going on sale in the EU. Since the classification is legally non-binding, individual EU states can decide whether or not to enforce novel foods rules. In February 2020, the UK Food Standards Association announced the UK would enforce the rules from 31 March 2021, and warned that companies would have to demonstrate compliance, or see their products removed from shelves.

Parts of the UK CBD industry have welcomed the FSA decision, saying that regulation is needed to protect both consumers and responsible brand-owners. Others in the sector see it as part of a ploy to nudge CBD towards medicines-style regulation, that only large pharma companies can afford to operate to. One thing does seem certain: CBD’s ‘gold rush’ phase is almost over.

Author: Jim Manson, Editor-in-Chief, Natural Products Global | www.naturalproductsglobal.com

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