Spain: Specialised organic shops lost their power - but are reacting
by Karin Heinze (comments: 0)
According to latest data by the Spanish Ministry of Agriculture, Food and Environment (MAPAMA), organic sales in Spain increased by 12.52% in 2016 to a volume of €1.686 million. The market report by EcoLogical focused on, among other things, the development of the sales channels and stated that the specialised and independent channel is undergoing an important restructuring process. New competitors have appeared in terms of retail chains and webshops.
The fast growth of conventional retail
There was a dramatic decrease in the market share of the independent specialised organic sales channels from 63% – 73% in 2015 to only 37.1% in 2017. According to the statistics of MAPAMA, the specialised shops declined from 45% to 37 %. Others like direct sales, cooperatives, catering and restaurants also fell, but not as much (2017 data are not yet available). In contrast, the market share of the conventional sales channels have shown massive growth in revenue with organic products over the last three years from 27% – 37% to 61.3%. Supermarkets and discounters have made great strides.
Frontpage of the EcoLogical.bio report, Spanish organic market. Photo: Screenshot report
Specialised shops: more space, more choice
The report found that in order to react to this development the traditional sales format of mainly small specialised stores (herbalists and eco-shops) is evolving towards bigger organic stores, with a greater product offering. Also the size of the specialised stores is increasing from about 100 square metres to an average of 200-250 square metres of sales area. However, there are exceptions, with stores of up to 800 square meters.
In small stores the organic assortment is about 1,000-1,500 products. In bigger shops consumers can choose between 3,000 and 4,000 products on average. But it is not only the number of products, but the differentiation via specialization with high product quality and range, that is even more important, states the EcoLogical report. Fresh produce, fruits, vegetables, bulk, dairy and meat are the main categories in these formats. According to different sources, the consumption share of this channel varies between 30% and 45%.
Share of retail channels in Spain. Graphic © EcoLogical.bio
Growth of organic supermarket chains
According to statistics provided by EcoLogical, there has been notable growth in the leading independent organic chains due to the increase in the number of their stores over the last two years. With the aim of catering for foreign customers, the expansion strategies of Veritas, Navarra, SuperSano and others are focused on large cities and tourist areas. . As well as national initiatives, international chains like the French Bio c´bon are gaining strength and the introduction of new international independent retailers in Spain is expected in the short-term, says EcoLogical.
Buyers choose the specialized shops because of the quality
According to a GfK study from last July, 3 out of 10 buyers say they buy exclusively in specialized organic shops, and there are about 2,500 of them in Spain.The profile of the specialised channel buyer appears to be similar to the buyer of organic products in general, as they have the same profile of age, gender and even geographical location and social level. Those who choose the specialized channel have been consuming this type of products for an average of 6 years. According to the GfK study, they state the same main reasons for starting and for continuing in the category: to avoid products that grown with pesticides and to lead a healthier life. They choose the specialised shops for the quality of the products and for the confidence they give the buyer. The specialised channel seems to cover consumer demands very well. These eco-shops offer products that buyers don't seem to find so easily in the non-specialised channel.
Many companies invested in their brands and production lines the last yeara. Graphic EcoLogical.bio
The conventional sector
The EcoLogical report established that although specialisd independent retail is growing, the conventional retail (modern trade) has also shown itself to be committed to increasing the offer and assortment of organic products on its shelves. In the last two years the vast majority of supermarket chains have introduced the organic category, joining hypermarkets and hard-discount stores like Aldi and Lidl that are continually innovating and incorporating new organic products. The Spanish retailer El Corte Inglés started to operate Biosfera in their department stores in 2017. Biosfera is the new specialised commercial format in its supermarkets that locates the full organic assortment together in a differentiated section. Supermarkets like Dia and Consum have also begun to offer a limited range of organic products, including fruit and vegetables.
Carrefour takes the lead
As identified in the 2016 research, the main obstacle to the consumption of organic products is the price. However, availability has improved in both the specialised channel and the modern trade because of improvements in the supply chain. People can now find organic food in almost every trade channel and prices are going down slightly for basic products or price offers help people to save money.
The most innovative format regarding the bio category is Carrefour. In 2017 the retail chain introduced 1,500 organic products in their new convenience supermarket concept; Carrefour Market. They are also deploying a new specialized channel, Carrefour Bio, which already has two stores in Madrid.. Company sources recently announced that the organic category, with year-on-year growth of 35%, already represents 1.5% of the company’s turnover.