Germany sees increase in organic food sales

Germany’s organic food sales for 2006 are estimated at 4.5 billion euros (US$5.91 billion), up by 17%. Supermarkets hugely expanded their sales of organic food in 2006 and are expected to further increase sales in 2007, as chains are continuing organic expansion.

Germany’s organic food sector was becoming increasingly moulded by marketing professionals and many small shops set up in past years by ecologists were likely to close.

“Only five to 10 years ago organic food sales were largely confined to a small number of ecologically-minded people,” he said. “Now about 80% of the population buys at least some organic food.” The country’s big-name supermarket chains had decided to dramatically expand organic sales partly because of low profit margins on conventional foods.

“Retail profit margins on conventional food are around two percent,” said one analyst. “It is unclear how much margins are on organic food but they are considerably higher.”

Ironically, Germany’s organic food industry had tried to cold-shoulder discount supermarkets, such as Lidl, with wholesalers refusing to supply them, but discounters had now developed sufficient sources to include organic food in their high-volume outlets.

Some people believe that the more organic food which is sold the better for the industry. Others are concerned that it is only a matter of time before discounters use their market power to force the industry to accept big price cuts, as they have with producers of conventional food.