Strong growth in the US, but a slowdown in Europe marked the global organic food and drink industry last year.
Overall sales of organic products increased by 10 per cent to €20 billion, according to a new study from UK analysts Organic Monitor.
The highest growth was observed in North America where the US market is expanding at a fast rate. The profile of organic products has been elevated by the recent implementation of the National Organic Program. As a result, organic foods have become more widely available in mainstream retailers.
The European market reported single-digit growth in 2002 for the first time in years. The German market, the largest in Europe, was hit by a food scandal involving organic poultry and other country markets are showing sluggish growth. Italy and Switzerland saw the highest growth with consumer demand for organic products remaining high.
In the future, Organic Monitor predicts that the formation of trading blocs as well as increasing consumer awareness of organic products should drive growth in other regions, notably in central Europe and Latin America.
Organic food production is stepping up across the globe with close to 23 million hectares of farmland managed organically, says the report. Production levels have risen in developing countries, in particular in those countries where governments are encouraging organic farming because of the economic benefits of exporting.
But, warns Amarjit Sahota, director of Organic Monitor, the business potential of export markets is often overstated.
"Slowing market growth rates are causing supply-demand imbalances to become a feature of the global organic food industry. A number of sectors in the European organic food industry are suffering from overcapacity whereas other regions continue to experience product shortages," says the analyst.
Organic fresh produce, estimated at €4.3 billion, still dominates the organic market, despite an increase in the number of organic product categories.
The report pinpoints challenges for the industry, apart from supply-demand imbalances, as overcoming trade barriers and preventing fraudulent business practices.