Posted Nov 16, 2022 7:35amUpdated 11/16/2022 7:39 am
It could be a case for the business school: how to respond to the collapse of their market? In view of an average drop in sales of 13% since the beginning of the year, the organic specialists are preparing to emerge from the crisis. But with very different strategies.
“Going from growing 15% per year to almost the same decline is very brutal,” acknowledges Allon Zeitoun, Naturalia’s CEO. Overall, the sector with the volumes of large retailers such as Carrefour or Leclerc had lost 5% of its value by the end of August, according to Agence bio. The decline started in 2021 (-0.5%) after half a decade of double-digit growth.
The actors agree on the diagnosis. Certified organic products suffer because of their price. Their labels are, on average, 54% higher than those of so-called “conventional” production, according to research firm IRI. “The sector has fallen victim to label confusion. Consumer engagement has gone down,” adds Allon Zeitoun. “Some of the public lost confidence when they saw that international brands offered all their ranges in organic versions or that organic products had Nutri-Scores E and F,” adds Pierrick de Ronne, President of Biocoop, of the number one among the specialists in kind.
“Consumers have guided their responsible consumption towards less demanding but more cost-effective propositions, such as B. the label “High Environmental Value” or products “without”, without nitrite, without antibiotics, etc. confirms Emily Mayer, an expert at IRI.
“The HVE label does not have the same depth, the same strength,” says Pierrick de Ronne, who recalls that Biocoop, created by farmers looking for outlets, has no other goals than the development of “organic farming “. In times of a crisis that has slashed their sales by 7.5% since the beginning of the year, the cooperative members are keeping their fighting boots upright. “Activists, more than ever” announces their latest advertising campaign.
“’Without pesticide residues’ or even HVE leads consumers to believe that we can consume better (and above all cheaper!) without going through the organic box. It’s a mirage. A smokescreen to hide harmful conventional practices,” hammered the president and his chief executive, Sylvain Ferry, to the press a few days ago. The announced closure of 40 branches does not deviate from the promise. Forty more will open at the same time. “Those who started during the Covid started with outdated forecasts. They only achieved 55% to 70% of their goals. But we reviewed our model and went back to less expensive, simpler and “cheaper” arrangements,” Pierrick de Ronne admits.
Good to taste
“Our role is not to let scammers and opportunists step in to distort and dilute the value of organic. We must not leave the conventional world, from agricultural cooperatives to mass distribution via agribusiness, to take care of organic alone, ”storms the President from the foot of the Ardèche, where he is installed. However, Biocoop keeps its prices and at least tries to justify them. Because if those responsible are counting on the existence of a new generation of militant customers, they still don’t want to “push organic food back into a niche”. You have 780 businesses to run.
Naturalia belongs to Casino. Listed corporations do not have the same observation period. You show agility. Allon Zeitoun doesn’t reveal all his plans, but the Centralien at the head of Naturalia heralds a turning point. “Naturalia was born in 1973, twelve years before the creation of the organic label, and defined itself as the fitness and wellness business. This corresponds to our raison d’être: “Doing good for people and nature”. Ultimately, our vocation is to offer something better when it comes to food. “In short, how to change while staying true to your origins.
Naturalia offers its followers a subscription of 5.99 euros per month for a 5% discount on their purchases. The 2023 revolution will focus on assortment. Organic remains central. It may no longer represent the 95% of sales that qualify as a “health food store”. “We will select other products on the subject: Eat better at an acceptable price,” explains the managing director and specifies: “It has to taste good and be good for your health.” »
Naturalia will begin its transition with two product categories. The manager does not give details. “What is certain is that we have to regain our role as coaches,” he explains. The brand will open up to “free” products, to local production if it has a plus, to other forms of health products. It is not organic but itself that it wants out of the niche.
Opportunistic supermarkets and hypermarkets have shrunk their organic shelves. Independent or regional specialists like Les Nouveaux Robinson lay down their arms. The consolidation favors the market leaders Biocoop and Naturalia. “There will be room for an activist and a more open concept,” predicts Allon Zeitoun.