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Export Study - Chapter 3.2 France - Organic Trade Association
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Export Study - Chapter 3.2 France

 
3.2.1 Development of Organic Agriculture

The organic movement in France established itself in the early seventies, carried by a strong philosophical and ideological background. The first organic standards in France were published by the producers association Nature et Progrès in 1972. In 1980 approximately 40% of Europe’s organically cultivated land was located in France.


Figure 6
: Number of Organic Farms and Acreage under Organic Cultivation in France

 

After 1980, France’s position as a leader in organic agriculture deteriorated steadily until the mid-nineties, owing to virtually non-existing government support, stagnating demand, an inefficient manufacturing and processing sector and an immensely splintered and professionally poorly developed distribution system. All of these factors contributed to insufficient availability of a range of organic products and extraordinarily high prices on the retail level. Another factor in France’s decline was the pronounced rise of organic agriculture in its major neighboring countries Germany, Italy and Switzerland (as well as Austria and Denmark, which are not direct neighbors), accompanied by substantial subsidies for organic producers in those countries. The progress of organic agriculture in those countries led to declining imports from France and an overall weakening of the French organic market. For example, France had been by far the biggest foreign organic wheat supplier for Germany. This role reverted completely when in the mid-nineties German wheat was exported to France. Since 1997 the French government, under the impression that its European neighbors had made great strides with respect to improving organic agriculture, has shifted to a more organic agriculture friendly policy aimed at closing the existing gap.


The "Plan Pluriannuel de Developpement et la promotion de l’Agriculture Biologique", launched by the French Ministry of Agriculture in 1997, calls for the conversion of 2,47 million acres (1 million hectares) of farmland and increasing the number of organic farms to 25,000 by the end of year 2005. This goal is tantamount to quintupling the number of farms and acreage within 8 years. The plan calls for subsidies in the amount of approximately 10 million EURO to advance organic farming, distribution and sales. [13]


Figure 6 above clearly demonstrates the stagnation of organic farming in France in the eighties and the impact the above mentioned plan had on the increase of the number of organic farms, resulting in more than doubling the number of organic farms in a period of two years. The average acreage per farm rose from 70 acres in 1980 to 96 acres in 1999.


Most of the converted land is grassland, resulting in an increase of dairy product output of more than 30% in 1998 as well as an improved meat supply. On the other hand, this leap in grassland conversion created a gap between organic animal and plant production raising the necessity for imports of organic plant products by as much as 40% in 1998.


French organic farmers are organized in several different producers associations, the oldest and one of the best-known Nature et Progrès, which still has its own organic label. The Fédération Nationale d'Agriculture Biologique (FNAB, National Federation of Organic Agriculture) is the federation of producers associations.


3.2.2
Infrastructure of the Organic Market

3.2.2.1 Processing, Distribution and Wholesaling

The French Processing sector for organic products historically consisted of a large number of small, almost exclusively on organic products specialized processors. This has changed since 1995, when major originally exclusively conventional food processors began entering the organic field, among them Besnier, Bougoin and Danone. The exact number of processors is not known, as some of the large distributors also own processing plants and therefore it is practically impossible to distinguish completely between the processing and the distribution level, but estimates put their number around 800 (excluding bakeries, of which there are 4,000-5,000).


In 1999, Biconvergence, the Association of Organic Agriculture Comprising French Processors, Manufacturers and Distributors of Organic Products (Association d’agriculture biologique regroupant des transformateurs -industriels et distributeurs français des produits biologiques) was comprised of more than five hundred member companies. (The "Annuaire vert" lists organic processors and distributors and con be acquired from Edition OPEC, for address see Annex 1, France).


The French processing sector today is still dominated by small, medium-sized and artisan companies, which in 1997 represented 40% of the total output. However, as in other European countries, the tendency of more and larger conventional processing companies to create their own organic arm or at least start some organic lines can be observed in France, too. [22]


Table 3 demonstrates the output of the Organic Processing sector in 1996. Main product categories are cereals and dairy products, with condiments and aromatic and medicinal plants playing a relatively large role in France. The development of organic prepared dishes and convenience food has been relatively low, mirrored in the low output volume in this category.


Table 3
: Output of the French Processing Sector in 1996

Product Group (including exports)

US $million

Cereals

190

Dairy Products

153

Fruits and Vegetables

110

Condiments

27

Poultry

23

Aromatic and medicinal plants

20

Meat

12

Prepared dishes

11

Coffee

7

Others

15

Total

568

Source: INRA [19]


It should be noted, however, that in comparison to other sources, e. g. Comber [7]) and in relation to the total sales estimation for 1996 the numbers in table 3 seem overly optimistic.


While in the earlier years the distribution system was almost completely splintered, this situation changed somewhat with the advent of the distributor Distriborg. Until 1995 Distriborg was the only major distributor of organic foods. It now faces fierce competition by the distributor Le Goût de la Vie. Distriborg also started its own chain of health food stores (La Vie Claire and the natural supermarkets Dame Nature) while at the same time distributing to supermarkets. It also owns the chain Aux Plaisirs de Fleurance. In 1999 Distriborg stated a gross turnover of $250 million. The company is not only active in France, but also in Italy and Belgium. It owns subsidiaries in Belgium (Prona, Hagor and Genucchi), in Italy (GB TRE) and in the United Kingdom (Brewhurst Health Food Supplies, Tasty Food, and Nicholson & Evans). The Le Goût de la Vie brand can nowadays be found in many French supermarkets. During the last years the company acquired two bakery and biscuits factories, a processing plant for cereals and La Cepad and Domaines de la Nature, two organic companies.


Subsequently, major conventional food manufacturers, especially from the dairy and cereal sectors, ventured into the organic market. Besnier (Lactel milk and B’A yogurt), and Triballat Noyal (Vrai brand of organic fresh dairy products) are examples for the dairy sector, while Les grands moulins de Paris (bread and bakery Products), Sofrapain (bread and bakery products) and Céréal (owned by Novartis, packaged bakery and cereal products) represent the bread and cereal sector, whereas Danone’s Bio vivre organic brand encompasses a wide range of grocery products such breakfast cereals, flour, bakery products, vinegar, oil pasta, rice, fruit jam, fruit juices, dried fruit, and more.


3.2.2.2 The Retail Market

Size of the organic retail market


Figure 7
: Organic Retail Sales in France 1994-1999


As figure 7 illustrates, retail sales in France rose steadily from 1994 to 1999 with and average growth rate of more than 15%. This growth is forecast to remain on the high side with an average of 20-25 percent [22, 25]. As the annual per capita consumption of organic food in France with $11.95 per head is still very low, this growth rate appears to be realistic.


Coincidentally with the market entry of a second major organic distributor, a change took place among some of the major supermarket chains, which up to this time if at all carried only a fairly limited selection of organic products. In the mid-nineties Carrefour and Monoprix started selling organic products and shortly thereafter began creating their own private organic labels. The Monoprix Bio brand was soon followed by the Carrefour Bio label, which carries dry and some fresh products. Other supermarket chains like ATAC, Auchan (very active in the meat sector), Casino, Champion, Cora, Leclerc, Match, Prisunix, Continent and Super U followed suit, albeit mostly with less engagement than the first two.


Especially Carrefour is known for its conscientious and appealing consumer information as well as for excellent shelf-presentation of its organic products. Within three years the supermarkets and hypermarkets (grandes surfaces) achieved a market share of approximately 40%. It is worth noting, however, that the private label development of the major retailers is still not very well developed and that they mainly buy their organic goods from the national distributors. [7,22]


The rise of the supermarkets as major retail outlets for organic products forced the individually operated health food shops to collaborate in purchasing groups or franchising systems. The most important of these specialized chains are Aux Rayons Verts, Biocoop, Bio Markus, Bothiclub, Croque Nature, L’eau Vive, Naturalia, and.Satoriz.


Figure 8
: Organic Food Sales by Retail Outlet Channel in France in 1999


Fig. 8 shows the dramatic shift in the distribution through retail outlets within a period of five years. Before 1995 health food shops dominated the French organic scene as the retail outlet of choice for over two and a half decades. This situation has changed. Currently supermarkets account now for 50% of the retail sales, approximately twice as much as health food stores. Bakery sales, which account for a relatively high percentage of overall sales in France, and direct sales and open air markets sales have decreased relatively, but have grown in absolute sales. This is also true for health food stores, albeit the net growth has been fairly small. The number of health food shops selling organic and natural foods and food supplements is estimated to be 1,800, with an additional 140 cooperative stores and more than 25 farmers markets.


3.2.3 Breakdown of all Organic Products Sold


Figure 9
: Sector Shares of Organic Food in France in 1996


In contrast to most other European countries, where produce and dairy tend to play a larger role, cereals dominate as the main product category in France (figure 9). Apart from consumer preference this is mainly attributed to the widespread availability of bread, baked goods and cereals in health food shops, more than 4,000 small bakeries, and the supermarkets, which initially emphasized this product category. The next important product category with 25% is vegetables.


Fruit Juices have gained a market share worth mentioning only in the last few years, but are one of the fastest growing market segment. Soy products are also still fashionable in France.


Cereals

Table 4: Brand Shares for Dried Organic Food in France in 1996

Brand/Company

% Value

Bjorg (Distriborg)

60.0

Céréal (Novartis)

24.0

La Vie Claire (Distriborg

5.0

Bio Vivre (Danone)

4.5

Others

6.5

Total

100.0

Source: [Leatherhead]


Table 4 shows the brand market share for dried organic foods. Distriborg with its Borg brand clearly dominates this market sector, followed by the Novartis-owned subsidiary Céréal and Danone’s Bio Vivre. Note, however, that the numbers for this table originate in 1996. Since that time major changes occurred in the distribution structure of dried cereals, most notably the introduction of Carrefoure’s and Monoprix’s own private label lines for breakfast cereals, flour, biscuits, dried bread, pasta and rice.


Vegetables

Fresh produce is the next biggest sector with a 25% of the total market share. A large portion of the sales still occur on farmers markets, through farmgate sales and in health food shops, with supermarkets slowly increasing their fresh produce supply. Arcada, after having teamed up with the British produce distributor Organic Farm Foods to create the new company JK Natur, has become a leading source for fresh produce especially as a supermarket supplier, and Distriborg is also very active in this area. Soleco S.A., a conventional produce distributor, started to experiment with organic fresh produce in 1998. [7]


Dairy

Milk products are presently an especially fast growing product group during the last five years with yearly growth rates for the domestic production of milk of up to 43%, between 1995 and 1996, and a total domestic production of 65 million liters (17.2 million gallons). A large part of this milk is sold as UHT milk, and preferably in supermarkets, where the price differential to conventional milk is only 23%, as opposed to a price differential of 39% in specialist health food shops. [7]


Besnie
r, the largest dairy company in France, is also dominating the UHT organic milk market, followed by Nactalia, which is owned by Eurial Poitouraine.


An important milk producer for the private label market is the La Domaine de la Croix Morin, the first farm to be certified for organic milk production in Franc in the mid-eighties.


Meat

The organic meat market in France is still relatively small, and initially it was the poultry producer LDC, which started to venture into the organic market with its "Bio Fermier Sarthe" and "Le Bio Authentique" labels, while red meat was hardly available. Supermarkets had not yet developed this product line and specialist food shops were not equipped to sell fresh meat. A few years ago, the overall leading slaughterhouse company Selvi established a partnership with the multiple Auchan and teamed up directly with organic farmers to improve the red meat supply with the label "Selection Viandes".


Others

Production of packaged goods such as groceries, cooking oil, jam, or meal accompaniments are clearly on the rise, and supermarket chains are expanding their own private label range in this regard very fast. By the same token, fruits, and especially more exotic ones, are also becoming more popular, as are candies and chocolate.


Table 5
: Organic Food Purchases by Type and Demand for Organic Grocery Products (Carrefour) in France in 1997

Type of Food

% Buyers

Grocery Product (Carrefour)

% share of demand

Fresh fruit and vegetable

62.6

Biscuits

19.3

Bread

37.4

Crispbreads

16.0

Dairy Products

25.0

Cakes

13.1

Poultry

23.5

Fruit Juice

9.0

Biscuits

18.3

Jam

9.0

Red Meat

13.8

Breakfast cereals

7.4

Others

27.6

Flour

6.0

Pasta

4.0

Rice

4.0

Others

12.2

Source: Comber, Kortbech [7,22]


Under serviced product areas

While the demand of dairy products is clearly on the rise, domestic supply is also increasing, and other European countries, notably Denmark and Germany, have currently an oversupply of organic milk. The meat sector, and especially red meat, is just about to become more of an issue in France, but overall we do not see an immediate opening for imports there.


Specific importing opportunities exist for the following product groups:

  • Cereal and other products derived from soy beans, quinoa, amaranth, and sesame
  • Rice and rice-derived products, basmati rice
  • Dry legumes such as different kinds of lentils, beans, flagolets, chickpeas, soy beans, adzuki beans
  • Almonds, pistachios, dates and dried fruits in general
  • As a consequence of the growing availability of fresh produce and fruits demand is rising for a more balanced, high quality supply of traditional fruits like pears, apricots, and oranges as well as for tropical fruits. The same is true for fresh produce.
  • Frozen foods of all sorts are a market segment that is still in its infancy. Fruit purees, and frozen berries are examples for commodities that are in demand.
  • Convenience food and especially vegetarian convenience food and veggie burgers, sauces, salad dressings, and organic ethnic dishes are practically non-existent [10].
  • Chocolate, candies and biscuits are just becoming popular, with companies like Compangnie Francaise de Chocolat, Chocolat Mathez, and Richard de Nyons exploring this product segment of the organic industry. Chocolate ingredients for bakeries and ice cream production are hardly available in France.
  • With the disproportionate increase in organic animal production, demand for animal feed and especially grains and protein-rich feed, is high and cannot be satisfied by domestic production. In 1998 the deficit was estimated to reach 20,000 metric tons equivalent of soybean meal, and according to the latest estimate of the CNRAB this tendency is still increasing [11, 25].
  • According to the market research from Zenith International, fruit juices, which already account for 6% of the total retail sales in France, will be one of the hottest selling organic goods in France. Sales are expected to reach 22 million liters in 2003, or almost tripling within 5 years. [9].

3.2.4 Infrastructure and Characteristics of the Import Market

3.2.4.1 Channels of Entry and Imported Products


Table 6
: Imported Organic Products from Third Countries to France

Imports of Organic Products from non-EU countries

1993

1995

1997

1999

Tons (1999)

Bananas

Apples

Apples

Citrus fruits

3,371

Cocoa Beans

Coffee

Beet sugar

Pineapple

2,554

Fresh Pineapples

Beet Sugar

Cane sugar

Arachides

218

Dried Pineapples

Brown cane sugar

Carrots

avocados

580

Oranges

Cocoa beans

Chickpeas

Bananas

995

Sesame seed

Dates

Clementines

cacao

1,393

Dried Chicory

Cocoa beans

Café

835

Essential oils

Dried bananas

capers

40

Fresh and dried bananas

Dried chicory

Cereals

473

Fresh mango

Grapefruit

Mushrooms

213

Millet

Green coffee

Dates

176

Orange

Lemons

Palm tree products

4,660

Quinoa

Lentils

Figs

106

Sesame seed

Mango

Passion fruit

190

Oranges

Fruits from temperate climate zones

104

Palm oil

Oranges, Clementines etc.

74

Pears

Guavas

70

Peeled Nuts

Guarana

20

Quinoa

Essential oils

28

Raisins

Vegetables

461

Litchis

194

Mangos

987

Nuts

177

Olives

102

Papayas

210

Pine kernels

1

Pistachios

14

Macrobiotic preparations

7

raisins

590

Sesame

623

Cane sugar

1,472

Tea

310

divers

216

Total

21,466

Source: Organic Insights, [22], columns 4 and 5 according to [12]


Table 6 clearly demonstrates the impressive expansion of the imported product range during the last six years. From 1994 to1999 imports of organic goods from third countries increased more than seven-fold, from 2,953 tons to the present 21,466 tons. The growth of organic imports slowed down in the last year to only 6.63%. Growth reached its peak in 1995 with 240%.


To a large extent imports are carried out by food processors, which then in turn process the imported commodities and sell them through their own marketing organizations or to distributors. There are approximately 50, mostly smaller specialized importers, which mostly sell to wholesalers and distributors. There is a growing tendency of larger distributors and the purchasing departments of the large multiples to import directly, although this is not yet the norm.


Among the specialized import companies are Arcadie SA, an importer of spices, herbs and dehydrate vegetables, Bioprim, dealing in fruits and vegetables, Dynamis France, importer of fruits and vegetables, Euro Breizh, cereals and pulses, JK Nature, importer of fruits and vegetables, Sté. Arcada France, importer and distributor of fruits and vegetables (for addresses and additional companies see annex 1, France).


3.2.4.2 US Imports

According to numbers from the French MAFF [12] in table 7 below, in 1999 only 91 tons of the total amount of 21,466 tons imported from third countries originated in the United States, amounting to a tiny 0.42% of the total volume.


Table 7
: US Organic Products Imported to France

Commodity

1997

1998

1999

31/072000

Dates

34

28

66

Millet

20

150

Vanilla Extract

0.4

7

Dried Apricots

0.6

Almonds

14

9

2

Dried apples

3

2

Dried pears

2

1

Oranges

250

250

Citrons

50

50

Grapefruit

100

100

Pistachios

1

3

Raisins

20

Basmati Rice

155

Total

474

441

91

312

Source: French Ministry of Agriculture, Forestry and Fisheries [12]


1999, however, seems to be an exception, as the imports from the US in 1997, 1998 and even the first seven months of the year 2000 already amount to more than this amount. The drop in 1999 was most probably due to the cessation of the imports of one large citrus fruit exporter, whose exports in the years 1997 and 1998 accounted for more than 80% of all US imports. In 2000, major imports of Basmati rice and millet have filled this gap. Nevertheless, overall imports of US organic commodities to France account for little more than 2% of third country imports. Also note that all US imports to France without exception are unprocessed commodities.


3.2.5 Consumer Buying Patterns
and Attitudes toward Organic Products

Consumers in France associate organic foods with a good diet, but are not as inclined to take preventive action in terms of a positive life style and diet as some of their European neighbors like Switzerland or Germany.


In a study in 1995 an INRA-Crisalide study [19] in France determined four major customer groups for organic products:

  • "Nostalgics", a rather conservative and mostly elderly part of the population preferably concerned with foods produced according to "our ancient standard" and who tend to grow their vegetables in their own backyard
  • "Ideologists", zealously idealistic to "revolutionary militants" (the politically correct of the organic movement) for whom the purity of the standards has to be held above all else and any deviation is regarded as almost a crime
  • "Health conscious", among them a large number of young mothers who are especially concerned for their babies and young children, who have severe time restraints and wish to buy all their foodstuff in one place, but are only willing to pay a limited premium for organic food
  • "The fashionable crowd" with the highest amount of disposable income, looking for high-end products in every regard (healthy, organic, good taste, first-class appearance, hip).

While there are no exact numbers with respect to those four categories of customers, it is undisputed that the first two categories of customers are rapidly diminishing and the second two categories even more rapidly increasing.


Among the latter two categories one can differentiate between regular long-term buyers and new occasional buyers. Regular long-term buyers are mainly intellectuals and professionals with higher than average income who attach great importance to the AB logo, which is very well known among the group. They tend to prefer buying through established distribution channels like farmer’s markets, cooperative and health food shops) and are prepared to accept as higher price premium than all comparable groups (up to 50%).


The new occasional buyers who clearly prefer to shop at their usual supermarkets are very concerned about the measurable product qualities and want safe food free of chemical residues. They favor pre-packaged and convenience food and are not prepared to pay more than a 20% price premium, as they belong to a lower income group. In terms of motivation, half of the consumers chose organic foods primarily for health reasons, one third are primarily ecologically motivated and about 20% purchase organic food because of the better or fresher taste. Animal welfare plays a minor role in their considerations. [27]


A very specific characteristic of French shoppers in general is their distinguished preference to do one major shopping trip per week, usually at the preferred supermarket.


3.2.6 Trends and Conclusions

The overall outlook of the French organic market is certainly a promising one. Though the market may not reach sales of 2.5 billion by the year 2002 as forecast by some experts, substantial growth is certainly expected. Due to its stagnation in the late eighties and early nineties, the organic industry has to do a lot of catching up in terms of organic production and retail sales. In addition, the overall improved economic outlook bodes well for the years to come. Supported by ambitious government programs aimed at fostering the organic industry and the organic trade as such, the French organic market is poised for a yearly growth rate of 20-25% within the next five years.


For American exporters, however, France is not an easy target market and few companies aim at the French organic market. Compared to Germany, The Netherlands, and the United Kingdom the US exports only a small amount to France. There is probably a variety of reasons responsible for this occurrence. Certainly language is among them, as a variety of trade sources reported that there is a substantially higher language barrier that needs to be overcome when making "cold calls" or negotiating specific issues with French counterparts than with Dutch or Germans. Not only is the probability of encountering an English-speaking partner much lower, many sources also reported that it appears to be more difficult to start negotiations. Also, when organic trade relations between Europe and the US started to get established in the early nineties, the French market was in a stagnation phase and overall imports where very low, so there was not much room to develop trade ties. In addition, there is not much knowledge about the French market among US organic companies, and few of them visit SIAL in Paris or any other of the specialized organic trade fairs like Vivez Nature in France or Vitasana in Belgium.


There is also anecdotal evidence that some French importers are reluctant to import from the US, and mostly the lack of national organic standards in the US is cited as fueling this reluctance. In addition, there appears to be a lack of information among French importers on the specifics of the certification process for organic agriculture and the organic industry in the United States. Therefore relationships, which based on a high degree of trust in terms of product traceability and certification, are not easily established.


Nevertheless, the prospects of a growing market certainly justify a more in-depth exploration of market opportunities than has occurred in the past. We also expect that with the entry of larger internationally operating companies the language barrier will become less and less important.

 
 
2014 Annual Fund

Research and Promotion 2012

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