Essay About Western Organic Accreditationorganic Milk And Organic Food

Organic Packaged Food in Egypt
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Organic Packaged Food in EgyptCategory Briefing | 11 Apr 2016HEADLINES21% current value growth from 2014 to reach EG£72 million in 2015Trust begins to build thanks to hypermarkets and Western organic accreditationOrganic milk sees strongest current value growth of 26% in 2015Isis extends dominance by over half a percentage point from 2014 to reach almost 73% value share in 20159% value CAGR at constant 2015 prices expected for forecast period to reach almost EG£112 million in 2020TRENDSThere were no regulations covering organic food in Egypt at the end of the review period, with producers able to use the word “organic” on packaging without proving evidence of organic production methods. Consequently, consumer scepticism regarding organic claims is high, while many consumers remain unconvinced by the healthy image of these products. High prices furthermore place organicpackaged food beyond the reach of all but affluent consumers in Egypt, with organic milk for example priced at around 50% higher in comparison to standard milk.However, consumer trust is increasing in organic packaged food. This is partly thanks to the efforts of hypermarkets, with this channel not only offering a wider organic product range but also benefiting from consumer trust in leading brands such as Carrefour and Spinneys. In the absence of trusted Egyptian organic certification, many players are also increasingly utilising Western accreditation on packaging in order to reassure consumers, such as International Demeter Standards. Hypermarkets are also able to offer organic products at a slightly lower cost due to these large retailers economies of scale, with this resulting in unit price growth below the level of inflation in areas such as organic olive oil and organic milk in 2015. As a result, hypermarkets are continuing to gain share in organic packaged food, gaining over half a percentage point from 2014 to account for close to 22% value share in 2015.Organic packaged food saw a strong current value sales growth of 21% in 2015 over the previous year, with this being higher in comparison to a review period CAGR of 17%. Higher growth in 2015 was however chiefly due to the impact of higher inflation in the year, with value growth at constant 2015 prices being in line with the review period CAGR. Consumers of organic packaged food are from high-income groups, with inflation and economic factors thus having little impact on their consumption of these products.Organic milk was the strongest performer at the end of the review period, with organic reduced fat milk and organic standard milk seeing 25% and 26% current value growth respectively. This product area benefits from strong consumer trust in dominant player Isis, with this players international certification ensuring strong trust. The company also benefits from a highly-ethical positioning, operating under strict Fairtrade principles. For many organic consumers, milk is meanwhile a first choice product, due to concerns over the use of hormones and other medicines in standard dairy production.Other organic packaged food products are however struggling to attract consumers, chiefly due to high prices. Only organic dried baby food, olive oil, rice and honey had significant sales during the review period and even then these products combined sales totalled only around 400-500 tonnes in 2015. Some niche products are offered by dominant domestic player Isis via hypermarkets and organicspecialists, including organic sauces and snack bars, but other product areas have limited and inconsistent availability in the country.COMPETITIVE LANDSCAPEIsis is the dominant leader in organic packaged food and also saw the strongest gain in value share in 2015 over the previous year, gaining over half a percentage point to reach almost 73% value share. This company benefits from a highly trusted reputation and its use of numerous international accreditations, such as International Demeter Standards. In the absence of trusted Egyptian organic or indeed food safety certification, this ensures the companys strong appeal to affluent and health-conscious consumers.Isis indeed drove sales growth for many product areas across organic packaged food during the review period. The company notably accounted for 91% of value in organic milk in 2015, with this being the most dynamic product area. The company however leads in most significant product areas and dominates organic honey and organic rice with 93% and 70% share respectively. The company is however losing share in organic milk, chiefly due to hypermarkets offering a wider range of imported brands. The company is also facing growing competition from Safa in organic honey, with this player benefiting from focusing on the numerous health benefits offered by honey.Major multinationals thus far showed little interest in launching organic brand extensions in Egypt. This is chiefly due to limited demand in the country. Retailers are often reluctant to stock high-priced organic products, while many consumers remain sceptical about these products. While sales are growing strongly, sales growth is from an extremely low base. In the absence of major multinational launches, Isis thus remains the main force behind sales growth for organic packaged food.PROSPECTSOrganic packaged food is expected to edge slightly further into the mainstream in the forecast period, at least among upper-mid- to high-income consumers living among cities. There is expected to be widening awareness of these products and growing consumer trust, with many affluent consumers equating organic production with premium quality. Distribution is also expected to widen in the forecast period, particularly via hypermarkets as this channel continues to expand across the country, with dominant player Isis also pushing for a wider distribution reach.These trends are likely to result in a wider range of organic packaged food becoming available to a growing number of consumers in the forecast period, with new product areas thus likely to emerge. Consequently, forecast period growth could be even stronger than the dynamic 9% value CAGR at constant 2015 prices predicted. Sales are thus likely to see a considerably stronger performance in comparison to the 6% CAGR seen during the review period.However, organic packaged food is expected to remain limited in terms of consumer appeal in the forecast period. These products are simply too expensive for the majority of Egyptians, while many continue to remain sceptical regarding organic health claims. Even many of those buying organicpackaged food will restrict their purchases to a few key areas, such as organic olive oil, with this mainly purchased for its nuanced and premium flavour rather than its health benefits.Organic milk is meanwhile set to remain the standout performer in organic packaged food in the forecast period, seeing a striking 11% value CAGR and accounting for an estimated 55% value share by 2020. This product area is expected to benefit from growing concern over dairy hygiene and quality in Egypt, with this likely to be heightened for many consumers by media coverage of the countrys proposed food safety legislation. As the country develops and enforces clear food safety legislation, newspaper reports covering the dairy industry and other food industries are likely to proliferate. This could also result in organic yoghurt gaining a significant presence in the forecast period, particularly if this is launched by trusted and dominant player Isis.CATEGORY DATATable 1 Sales of Organic Packaged Food by Category: Value 2010-2015EGP million201020112012201320142015Organic Baby Food 0.70.80.91.01.11.2Organic Baked Goods ——Organic Biscuits and Snack Bars ——Organic Breakfast Cereals ——Organic Chilled Processed Meat and Seafood ——Organic Confectionery ——Organic Dairy 13.316.019.523.628.736.2Organic Frozen Meat, Seafood, Fruit and Vegetables ——Organic Ice Cream and Frozen Desserts ——Organic Oils and Fats 16.316.918.620.923.827.7Organic Ready Meals ——Organic Rice, Pasta and Noodles 1.21.51.72.12.42.9Organic Sauces, Dressings and Condiments ——Organic Shelf Stable Meat, Seafood, Fruit and Vegetables ——Organic Soup ——Organic Spreads 1.72.12.73.23.64.1Organic Sweet and Savoury Snacks ——Organic Packaged Food 33.237.343.350.759.772.1Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources