Challenging times in the Organic Food & Products Market

"The organic market in Europe continues to grow. In 2015, it increased by 13% and nearly reached 30 billion euros (European Union: 27.1 billion Euros). Almost all the major markets enjoyed double-digit growth rates.Farmland increased by 8 %." - FiBL Organic Farming Statistics.

The organic market grows with the consumption having a higher growth than the farmland, bringing challenges for all the companies in the market since the demand is not met. 

Nevertheless, other challenges not less important arise by:

- The emergency of the FMCG companies to improve their product formulas to met the EU regulations and the growing demand for healthy, fair trade, free from, vegan and organic products.

- The emergency of the independent privately owned organic food & products companies to find sources of funding to answer the growing demand.

- The emergency of health and organic food & product stock exchange listed companies in creating products out of an authentic will to contribute to health and the environment.

The Health and Organic Food & Products Market grown out of the genuine will of the founders of the Organic Food Movement in spreading the goodness of organic food around the world. Several founded companies, being until today part of a great "family" with very good intentions, that trough hard work achieved very interesting positions in the organic food & products market.

Many of those people started their businesses at their home, just like Michael Dell in a garage...being experts in nutrition and food, they aimed to bring to other people the very best of nutrients and flavour and in fact they achieved their goal, not because they had a very good strategy but because "culture eats strategy for breakfast" as Peter Drucker stated. Some of them became victims of their own hard work and passion that drove such a growth, bringing an everyday increasing complexity to management to whom doesn't have skills in management.

As Privately owned Organic Food & Products growth, the family structure became insufficient from manage the daily to daily activities to strategic decisions, not familiar with mentors, consultants and the skills needed to overcome the challenges in the fields of supply chain, marketing, NPD, negotiation of Supply Agreements in Off-Trade, On-trade and Health Food Trade, added the next generation successor that not always exist, lead some of them to sell their companies to the stock exchange listed companies and more recently to FMCG companies.

The Privately owned organic food & product companies happy with the growth but without a strategy, have taken several times decisions that lead to the excessive growth of sales volume in the conventional sales channels, Off-Trade and On-Trade, reducing the sales profitability and increasing the costs due the the lack of adequate supply chain solutions. In order hand the control of profitability is many times done by reducing fixed costs, namely salaries, not enabling theses companies to became interesting for the ones with the skills.

These factors lead Privately owned companies to became easy preys to the others.

Privately owned companies need to add strategy, skills and sources of funding to the culture if they want to survive, as well, Public owned companies need to attract investors with so good intentions as the founders of Privately owned companies to improve their market share amongst the most authentic organic food consumers that are also the "heavy" organic food consumers if they want to have a sustainable growth.

Culture & Strategy is the key to success everywhere!