Organic Packaged Food in Sweden

PROSPECTS

Drought and forest fires affect agriculture

In 2018, Sweden was struck by drought and rampant wildfires across the country. The early dry, warm and clear summer initially drove sales in some categories in 2018, causing some players to experience better growth than normal, but the negative net effects were substantial for the entire agricultural industry.

Eco is the new standard

Continued consumer interest in “natural” products, thematically closely related to a generally strong consumer interest in environmental issues, will continue to help drive the growth of organic packaged food. Increasingly, these products are becoming the new standard offering, even among budget brands, with product lines such as ICA’s I Love eco and Coop’s Änglamark coming to the fore.

Supply chains and economies of scale expected to hamper growth

As organic packaged food increasingly becomes part of the standard consumer basket of goods, companies are set to experience increasing pressure to find adequate sources of supply of organic food. The 2018 summer’s drought accentuated the need to ensure that supply chains are up to the task.

COMPETITIVE LANDSCAPE

Opportunity arises for sustainable companies to expand following emergency slaughter and state subsidies

Following the severe drought in summer 2018, the Swedish agricultural sector was faced with large-scale challenges. Supply chains were interrupted as animal feed stores were depleted, farmers were forced to slaughter their livestock, and consumers experienced rising prices due to falling harvests.

Organic products compete with both standard and premium products

Since organic products are increasingly becoming the norm, they are also increasingly cannibalising, piggy-backing on, and coming into direct competition with “ordinary” products of the same types. This will inevitably create a much tougher competitive atmosphere, and organic packaged food has shown signs of oversaturation since late 2017.

Are organic products with or against naturally healthy products?

As consumers increasingly associate sustainability and healthiness, and organic with healthy products, naturally healthy and organic products are set to come into competition and, eventually, to merge. In this struggle, it is likely that naturally healthy alternatives will be forced to give way to organic as the overarching brand narrative, with more and more products able to brand themselves as organic through various labelling schemes.

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