All You Need To Know About The Australian Organic Market 2018Naturely
Organic products are becoming more and more popular, not only in Australia but also in other countries all over the world. Consumers are more aware of the benefits of the organic products- not only to their health, well-being and food safety, but also to the environment and the surrounding habits of other species.
With such an increase in the importance and popularity of the organic products, it is essential for the farmers, the producers, and the retailers to gain more understandings about the organic market, its position, target customers, and popular products. They should also learn more about the trends and the growth rates of the market for better adaption.
This article is about the summaries of the main points about the Australian organic market containing the most important things that you need to know about the Australian organic market. It includes details of the market segments, the target customers, as well as the trends and growth rate of this market in 2018 extracted from the 2018 Australian Organic Market Report conducted by Australian Organic and the University of New England. For the full report, you can click here http://austorganic.com/ao-market-report/.
According to the Australian Organic Market report 2018, the Australia organic retail market can be valued at about $1.6 billion and the Australian organic market is valued at about $2.3 billion, featuring the compound annual growth rate of 13 %. Compared to the year 2012, the market value of the organic industry in Australia has increased by 88 %.
The Australian organic market can generate more than $1 million annually with food, health and beauty products consisting of more than 50 % of the total sales.
Some Australian organic products contribute a significant amount to the total value of such commodity. For instance, organic fruits, vegetables, and nuts contribute to 8 % of the total of conventional and organic fruits, vegetables, and nuts. Eggs and poultry meat contribute to 4 % of the total value. Meat and dairy products are 3 % each. Some other products such as grains, livestock fodder, and fibre contribute to less than 1 % of the total production value.
Australia is the number 1 country in the world in terms of the agricultural land with 35 millions of hectares under certified organic management in 2018. However, given the fact that 35 millions of hectares is only 10 % of the total agricultural land in Australia, this number is going to be expanded rapidly in the coming years. It is certainly expanded at a high rate as back in 2017, the amount of agricultural land for organic farming is only 7 % of the total land in Australia.
While the number of certified organic operations in Australia grew by 5 % in 2017, reaching the number of 4028 operations in total, the number of producers reduces by 3 % in 2018, showing a general trend of consolidations among smaller farms into bigger farms. On the other hand, the number of processors and handlers increases by 23 % and 17 % respectively. Nevertheless, from figure 1, the number of total operations in Australia as well as the numbers of producers, processors, handlers and others increase from 2002 to 2017.
Figure 1: Estimated Organic Operations In Australia 2002-2017 (Based on the report)
The number of Australian organic consumers is also increasing. Every year, there are 384000 additional households starting to purchase organic products.
The most significant trend of the organic industry (including the organic retail industry) is that it is going to consistently grow, not only in Australia but also in other countries all over the world. Consumers in developing countries see an increase in their disposable income, which in turn fuels their demand for premium and more expensive organic products.
The Main Customer
The main customers of the organic products are young people aged between 18 and 29. Women are more likely to purchase organic products than men. According to the survey conducted by Mobium group, 57 % of participating women have purchased organic products while for men, this number is only 43 %. They are also the group that is more familiar with online shopping via mobile phones and other devices.
It is also worth noting that the group with the highest level of disposable income in Australia is not the group that is most likely to purchase organic products. In fact, the group which is more likely to purchase organic products have low to medium income. This finding can be consistent with the finding of the age group. The younger group, with lower income, are becoming more aware of the impact of their behaviour on the environment. They are also exposed to various sources to learn about the benefits of organic products.
Australian consumers love purchasing organic products. 6 out of 10 Australian households have purchased organic products. 40 % of these organic purchasers keep buying organic products and even spend more and more each year on organic products.
For the overseas consumers who purchase Australia exported organic products, the majority come from East Asia (37%). Other popular destinations for Australia exported organic products are North America (29%), South America (12%), and South East Asia (12%). Top countries include the USA, China, South Korea, Japan, and Singapore.
So what do Australian organic customers want when they decide to purchase organic products?
- 2/3 of the Australian consumers decide to buy organic products for their own health
- 81% of the Australian consumers consider the chemical-free feature of the organic products as the most outstanding feature, which is followed by additive-free, environmentally-friendly, and cruelty-free.
- Another reason includes the higher quality of the organic products. According to organic product purchasers, organic products taste fresher and better. They also last longer.
- Other reasons include support for the local farmers, traceability of the product, improved animal welfare and sustainability
The Main Channel
Chain supermarkets are the dominant channel for consumers to look for and purchase organic products. According to the report, 70 % of the organic consumers would like to buy in specialised organic and wholefood stores. Therefore, smaller yet more specialised retail channels start to play a bigger part.
Products In High Demand
Australian customers highly appreciate organic dry groceries, dairy products and health and beauty products. They pay more attention to organic food as 40 % of the organic buyers increase their share of income on purchasing organic food, including organic dry groceries and dairy products. They like organic and natural foods as well as beverages and cooked foods which are made with the minimal processing or without processing.
Export Australia products are also well loved all over the world. According to the report, Chinese consumers purchase Australian organic dairy products while American consumers love beef, lamb, fruits and vegetables. On the other hand, Sweden consumers love Australian organic wine products. Korea is the main market for Australian baked goods and soya products. Significantly, Hong Kong purchases 100 % of the exported organic eggs from Australia.
Among all of the exported organic products, processed food, beef, and baby food make up the majority of the total export tonnage in 2017.
Here is the breakdown of the proportion of the total export tonnage in 2017 based on the statistics of the report.
Figure 2: Proportion Of Total Export Tonnage Of Australia-2017 (Based on the report)
While more and more consumers are persuaded to purchase organic products, there are certain barriers including the high price and the lack of trust in a certain product. Therefore, consumers are more confident in purchasing an organic product with an organic certification mark. Also, labels and packages are critical for the consumers to learn more about the product before they decide to buy.
Lessons To Take Away
From the summaries of the report, it can be concluded that the Australian organic markets, especially the retail market, continue to develop at a high and consistent rate. Customers are willing to spend more on organic products, focusing on food (dry food, meat, dairy products, and baby foods) as well as health and beauty products. This provides more opportunities for farmers, manufacturers and retailers as organics purchasing is becoming mainstream and the barriers to consumers are decreasing.
The main focus should be placed on raising the awareness of the benefits of organic products as well as making use of certification labels on products. Introducing and selling organic products in many channels- including supermarkets, specialised stores, and online channels will help organic retailers to approach a wider range of Australian customers.
With consumers’ increasing awareness of health, food safety and environment, the useful help of the certification labels and packaging, the easier access to more retail channels both online and offline, the Australian organic market is highly attractive and promising.