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Customers stay away from organic markets

More and more health food stores, health food stores and organic supermarkets are struggling to survive. Overall, more and more organic products are being purchased.

In the crown pandemic, organic supermarkets, health food stores and health food stores were still among the winners of the crisis. But since energy and food prices have exploded due to the war in Ukraine, the picture has changed. Customers stay away. Traditional organic retailers are also struggling to survive.

“Organic supermarkets, health food stores and health food stores are currently experiencing a significant drop in sales,” said retail expert Robert Kecskes of German news agency’s market research firm GfK. The reason: Due to tight budgets, many consumers are increasingly buying organic products at the supermarket

supermarket or discount store.

According to the latest data from GfK, sales in organic supermarkets in August were 10.8% below the level of the previous year. Health food stores and health food stores even recorded a 37.5% decline. The head of the Alnatura organic product chain, Götz Rehn, recently complained: “The organic market is experiencing the worst crisis in the last 35 years.”

The first retailers had already had to go to bankruptcy court: the Bacher health food store chain, founded in 1927 and with more than 100 branches nationwide, filed for self-management during the summer. The Superbiomarkt chain with around 30 branches in North Rhine-Westphalia and Lower Saxony sought help with a protective shield procedure.

But not only the industry giants, many small, unpackaged shops are also struggling to survive. And the trade magazine “Lebensmittel Zeitung” warns: “The selection process has just begun.”

Kecskes went on to say: “If you just look at the data from specialty stores, you might get the impression that, given the high level of inflation, organic products no longer play such an important role in consumer awareness. But that’s not true.” . Organic is gaining market share. But people have significantly changed their buying behavior to reconcile their desire for sustainable consumption with their diminishing financial leeway due to rising prices.

According to Kecskes, it has been observed since late last year that people shop less at organic specialty stores, often perceived as expensive, and seek cheaper alternatives instead. Step by step, consumers have shifted organic purchases to classic supermarkets such as Rewe or Edeka.

“We now see the next level thanks to the strong price increases,” said Kecskes. When shopping at the supermarket, more and more people switch from organic brand products to organic private labels. Or organic products would be bought directly from the discount store. “Consumers continue to buy organic but cheaper products.”

Producers of branded products in the organic sector are also affected. According to GfK, between June 2021 and June 2022 they lost about 8.9% of their sales, while the brands of the retail chains increased by 9%.

Indeed, many consumers need to save. After all, according to the latest data from the Federal Statistical Office, food was on average 18.7 percent more expensive in September than a year earlier. And heating, refueling and electricity were also significantly more expensive.

Kecskes believes that if the financial woes of consumers in Germany continue to worsen in the coming months, the organic sector will be threatened by further adversity. Many people have still tried to continue shopping for organic products by switching to cheaper offers. But there may come a point where some people would have to do without it altogether due to tight budgets.

But even if people’s financial situation improves further in the near future, Kecskes believes it will not be easy for specialty retailers and brand manufacturers to win back lost customers. On the contrary: “If people are satisfied with the cheaper retail brands and discount products they have come to know, this is a real challenge.”

More and more health food stores, health food stores and organic supermarkets are struggling to survive. Overall, more and more organic products are being purchased.

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