continues to accelerate

A LOOK AT EUROPE

Influences of pandemic, war, and other events on a growing category European organic meat demand continues to accelerate

The organic meat market in Europe accounts for approximately 1-4% of the overall meat market, depending on country. Unlike in milk or eggs, where the organic products’ market share can reach double digits, organic meat remains a niche category in Europe. One of the reasons for this is price, as organic poultry and pork can often cost 40-50% more than conventional products. The price difference isn’t as extreme for organic milk or eggs. However, despite this price difference, the organic meat market has grown at fast rates in the past two years.

Diana Schaack, an analyst at Agrarmarkt Informations (AMI), a leading firm for agricultural market information in Germany, estimates the organic meat sector’s volumes growth in Germany in 2021 at 19%. Germany is one of the main European countries in terms of organic meat, so growth rates may not be as high in other countries, but nonetheless it remains a good indicator of trends in Europe.

Organic meat has generally been a dynamic product group during the COVID-19 pandemic, which might come as a surprise to some. But for Schaack it didn’t.

Lockdowns resulted in fewer restaurant outings and more at-home cooking, which drove supermarket sales upwards. When cooking for themselves at home, many consumers decided to treat themselves to premium organic meat. Demand, which was already high prior to the pandemic, rose sharply again, and production couldn’t keep up with the pace. In Germany, there was a need to import more organic beef and pork from markets such as the Netherlands, Austria and Denmark, but also from other countries like Portugal, Spain and Belgium.

For Schaack, demand for organic meat may well have accelerated in the past two years, but the fundamentals for growth also remain in place. Health and wellness are increasingly solid drivers.

“The issues of sustainability and climate change have become even more important,” she says. “Young people especially, care about it. They are politicised eaters and have become a driving force.” Asked which European countries are expected to be most dynamic moving forward, the AMI analyst sees the larger markets such as Germany, France, Denmark, Austria and Switzerland continuing to grow their domestic organic meat markets. To some extent the Sweden, the Netherlands and Belgium will be following a similar pattern. Italy is also growing fast, as are the Baltic states and the Czech Republic.

What is also helping most of these markets is the intra-country trade of organic meat going on, for instance, between Germany and the Netherlands, Denmark and Austria, she says. This trade ensures extra supplies. France, however, is the second largest organic meat market, but it acts alone as it is producing mainly for rising domestic demand, leaving little product for trade beyond the French borders.

Another advantage for organic meat compared to conventional meat is the fact that the larger European meat producers with organic offerings – such as Danish Crown in Denmark, Westfleisch in Germany, or Vion Food in the Netherlands — and the specialised smaller and medium-size providers which have been present in the market for a long time, are both present in supermarkets, and sometimes benefit from equal shelf space.

FEED PRICES

Unlike the conventional meat market, the European organic meat market has always dealt with high feed prices due to its premiumisation and to the lower volumes of organic feeds

“The issues of sustainability and climate change have become even more important,” DIANA SCHAACK

produced. In Schaack’s view, the organic meat market is relatively less exposed to the high feed prices and volatility that have been exacerbated since the start of the Ukrainian war, as organic feed tends to be sourced more locally.

“I think the organic market is not as volatile as the conventional one … But like the conventional market, it’s influenced by the rising prices of conventional food and feed,” she says. “And so, if for example the price of conventional wheat is going through the roof, then organic wheat is surely going there too.”

In this quest to produce organic feeds more locally, animal nutrition companies are already aiming to secure additional capacities and make domestic organic markets more autonomous.

A LOOK AT EUROPE

For instance, leading French animal feed producer Sanders announced plans in September 2021 to increase its own GM-free, 100%-French-origin soy production capacities as well as volumes of organic animal feed. Next month (May 2022), Sanders’ Sojalim factory in southwest France is expected to see its capacity grow from 25,000 tonnes to 50,000 tonnes. Around that time, Belgium’s Arvesta announced its intent to concentrate organic feed production at its site in Ichenhausen, Germany, where it also plans to launch a new production site for conventional feeds by this autumn.

Schaack expects more feed production lines to be converted and facilities to be expanded in the coming years as conventional feed companies have recognised that additional organic capacities are needed. She is also noticing extra storage and drying facilities coming online catering to organic feed.

With feed prices and other input costs likely to continue increasing, and European consumer spending power expected to be increasingly pressured due to the economic context, the AMI analyst does fear for the future of the smaller organic meat specialists who will need to keep producer prices high.

Schaack doesn’t see consolidation between the larger and smaller organic meat producers happening for now, but with the financial problems they may be facing in the coming years, it may just be a matter of time.

“I don’t see it happening just yet,” she says.

By Simon Duke, editor-in-chief

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