Organic Packaged Food in Australia

PROSPECTS

Ongoing declining demand for organic milk, but niche areas of organic dairy perform well

One of the most expensive categories within health and wellness, organic packaged experienced positive but undynamic demand in 2019. It continues to be driven by organic dairy, and while health and ethical factors play important roles in purchasing decisions for consumers of organic products, high unit prices, particularly for frequently consumed products such as organic milk, have resulted in some price sensitivity amongst the average consumer, leading to declining demand, with many Australian families content to purchase standard milk.

Organic edible oil benefits from expansion and positive perception of healthy fats

Organic edible oil continued to experience positive demand, with a particularly strong retail volume performance recorded by organic vegetable and seed oil, as manufacturers continued to explore a variety of exciting sources of oil to cater to increasing demand for healthier cooking oils, including avocado and coconut. Rising consumer awareness of “healthy fats” have propelled growth for these oils, while organic olive oil is generally perceived to be healthier consumed cold and used to dress a dish.

Healthy snacking trend drives growth of organic savoury snacks

Indulgence in terms of permissible treats and snacking is a trend that has emerged across a number of health and wellness categories towards the end of the review period in Australia. It has also supported the strong performance of organic savoury snacks, with organic savoury snacks excl nuts, seeds and trail mixes recording the most impressive growth in both retail volume and current value terms within overall organic packaged food in 2019.

COMPETITIVE LANDSCAPE

Woolworths leads fragmented landscape and feels pressure from more dynamic players

Woolworths Ltd (Australia) retained its lead of overall organic packaged food in 2019, due to its wide product portfolio, spanning organic dairy and a number of other popular products including edible oils and nuts, seeds and trail mixes, which if offers in a number of private label lines, Macro, Macro Organic and Woolworths. However, although the retailer expanded the footprint of its Macro Organic line across Australia, increasing its stock from mid-2018 in a bid to outpace other major retailers in the stocking of healthier packaged food items, the range was the worst performing in 2019, losing strong value share and sales.

Smaller local players likely to attract consumers within organic honey

The niche of organic honey is well-positioned for stronger growth over the forecast period, with Pure Harvest from Ceres Natural Foods Pty Ltd retaining its leadership of a consolidated category. However, along with the other main organic honey lines including Aldi’s private label Just Organic, and Ambrosia, the leaders are slowly losing value share to the increasing number of small local brands that are entering with a natural positioning.

Domestic player ventures into organic canned tomatoes

Domestic player, SPC Ardmona, has ventured into a new line of organic packaged food with its Organic Finely Crushed Tomatoes, comprising locally-grown organic tomatoes which have been certified by Organic Australia. It claims to be the first Australian company to launch an organic product within canned tomatoes, which could lead to further development within processed fruit and vegetables moving forward, as time-pressed consumers who value convenience still appreciate healthier options.

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