The start of 2023 has been encouraging for specialised organic shops in Germany, as demand for organic products is slowly growing and turnover losses are decreasing. Collaboration between conventional retailers and organic associations, together with expansion strategies and certification of organic products by large discount chains, contribute to this optimism in the German organic retail sector.
An analysis conducted by BioHandel showed that during the first quarter of 2022, there was an encouraging 13.4% growth in daily turnover. However, in the same period in 2023, an average decline of 8% was observed. This phenomenon is not exclusive to BioHandel, as other specialized organic trade panels in Germany, such as NaturkostSüd and Biowelt, have also detected this trend.
This reduction in turnover losses seems to correlate with a decrease in inflation, which could influence a higher preference for sustainable shopping among consumers. According to an article published by Natexbio, the Bundesverband Naturkost Naturwaren (BNN) is convinced that the demand for organic products will remain at high levels, and consumers will increasingly seek everyday consumer products with organic certification. This growing focus on organic products may lead to an increase in consumer visits to specialized organic shops.
According to the report from the Biovista, during the year 2022, there was an average decrease of 8% in the number of cash receipts and 5% in till receipts values. However, in the first quarter of 2023, the number of receipts has shown a slight decrease compared to the same period the previous year. An encouraging aspect is that small specialized organic shops, especially those with surfaces below 100 m², have managed to retain a significant portion of their regular customers, even though these customers have become more price-conscious when making their purchases.
Specialised organic shops in Germany are experiencing an encouraging development in 2023
The report also highlights that larger specialized organic shops and supermarkets have experienced a greater loss of customers, leading to more pronounced sales declines as those consumers opt for other stores. Despite this, these positive signals indicate a hopeful future for the specialized organic retail sector in Germany. Furthermore, in other distribution channels, the demand for organic products is expected to continue rising in 2023, prompting shops to plan the expansion of their organic product ranges due to growing consumer interest.
Partnerships between organic producer associations are playing a relevant role in this trend. A clear example of this is Lidl’s commitment, who announced that by 2025, they will increase the proportion of organic products in their assortment to 10%. In response, their competitor, Aldi Süd, has decided to offer their customers 15% of organic products. Both Aldi Süd and Aldi Nord have partnered with Naturland since 2023 and plan to introduce Naturland-certified products in the first half of that year.
Additionally, Aldi Süd has ambitious plans to convert 25% of their private label range into Bio+Naturland certified products by the end of 2024. On the other hand, Kaufland has also outlined strategies to expand their product range in collaboration with the Bioland association, having already certified many of their products and committing to certify others in the coming months.
Partnerships between organic producer associations are playing an important role
However, not all associations share the same vision. Demeter does not consider discount stores to meet the necessary criteria for forming an association with them, so they have no plans to partner with such establishments in the near future. Despite these differences, the collaboration between associations and retailers proves to be a key factor in promoting organic products in the market.
In April last year, a significant merger and acquisition took place in the organic market. Basic, which had faced financial difficulties for several years, was acquired by Tegut, a regional retail chain with a presence in six federal states and over 300 stores in its network. Tegut is known for offering a wide range of organic products, with more than 4,600 references, and approximately 30% of its revenue comes from the sale of these products.
This represents a significant opportunity for the consolidation of its organic product range and will allow the chain to continue its geographical expansion. With this integration, Tegut will be able to play a more prominent role as a promoter of organic products, meeting the growing demands of consumers interested in more sustainable and eco-friendly options.
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