Organic Denmark the Danish Organic Model

Organic Denmark The Danish Organic Model

March 2nd, 2016 Henrik Hindborg Organic Denmark

1 Source: Organic Denmark 2016 Organic Denmark

• Organic Denmark is a non-profit organisation, that works in different areas in order to influence the growth of the organic share • Our members count organic producers/companies, organic farmers and consumers

Advisory teams Political Media Press (farmers/ Marketing producers)

2 Source: Organic Denmark 2016 Organic Denmark: www.organic-denmark.dk @OrganicDenmark Leading organic Food cluster in Denmark with more than 180 member companies

3 Source: Organic Denmark 2016 The activities from Organic Denmark focusing on growing the organic share

Tailor-made strategies with retailers e.g. advice on assortment, profiling of organic offers etc PR & key messages Trends, market data, consumer & shopper archetypes

Concept development Visibility in retailer’s & education own media

Match making - retailer <> specific Instore visibility organic producers

Events Category & retailer Campaigns

4 Source: Organic Denmark 2016 Denmark is the world leading organic nation - The story of how we got this position

Denmark 7.6

Switzerland 7.1

Austria 6.5

Sweden 6

Germany 4.4

Luxembourg 3.4

Netherlands 3

France 2.6

Italy 2.2

Croatia 2.2

0 1 2 3 4 5 6 7 8 Market share in %

5 Source: FiBL 2016 Two golden triangels of developing organics in Denmark

Government

Organic Companies Organic Denmark

Retailers

6 Source: Organic Denmark 2016 History of organic in Denmark

1981: First organic rules in Denmark 1985: First organic products introduced to some COOP supermarkets 1987: First Danish organic legislations in 1987 (the World’s first) 1987: Governmental control of organic products in DK 1989: Organic Milk introduced in supermarkets 1990: Organic Label Ø on the first products 1992: Major assortment of organic products in COOP 1993: Major adjustment of retail prices in COOP (= organic year 0) 1995: Govermental action plan for organic products 1996: Organic products launched in all the discouters 2000: 5 years of stagnation in organic sales (MS=2,9%)

7 Source: Organic Denmark 2016 Organic market share has increased to 8,4% in 2015

9 8.4

8 7.6 7.2 6.9 6.9 7 6.6 6.4 5.9 6

5 4.8

4 3.7 3.2 2.8 2.9 2.9 2.9 2.9 2.9 3 2.6 2 2 1.5 1.3 1 0.69 0.46 0.18 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Danish organic market share in %

8 Source: Danish Statistics 2015 Netto 2005

By making a major organic move with Netto, we rapidly changed the consumer perception of Netto, attracting new costumers & building strong consumer loyaility

9 Source: Organic Denmark 2016 Netto has increased the organic activities since 2005

10 Source: Organic Denmark 2016 With 16,8% Netto is the single retailer with the highest share of total sales of organic products in Denmark. Total COOP Denmark stands for app 39% of the total sale of organic products in Denmark

8 MS total organic food sales

6 MS total food sales

0 Lidl Aldi Spar Irma Bilka Føtex Netto Fakta Kvickly SuperBest Rema 1 000 Kiwiminipris SuperBrugsen Dagli' Brugsen

11 Source: GfK ConsumerScan 2015 It’s all about building shopper loyality and ‘utilising’ the shoppers interest in organic products

Bubble: Potentialets størrelse

250

200

SuperBrugsen

150 Fakta Netto

100 Kiwi Kvickly Rema 1000 Spar total Føtex Bilka SuperBest kædeloyalitet på dagligvarer. kædeloyalitet på 50 Lidl Kædeshoppernes kædeloyalitet på Økologi i forhold til shoppernes shoppernes til forhold i Økologi på kædeloyalitet Kædeshoppernes Aldi

0 RelativLoyalitet:

-50 68 73 78 83 88 93 98 103 108 113 Relativt potentiale: Kædeshopperens andel af det økologiske marked i forhold til shopperens andel af dagligvaremarkedet.

12 Source: GfK ConsumerScan 2015 The most popular organic products in 2014

TOP 10: ORGANIC MARKET SHARE OF PRODUCT GROUPS IN 2014

Product 2014 Oats 35,7%

Carrots 29,3%

Milk 29,3%

Eggs 28,9% Pasta 25,7%

Oils 23,2%

Flour 22,8%

Cultures products 18,2% Müsli 15,4%

Bananas 15,0%

13 Source: GfK ConsumerScan 2015 The ”Irma shoppers” buy more organic products compared to the average Danish shopper and Irma is very good at utilising their organic potential

Bubble: Potentialets størrelse

250

Irma 200

Netto Døgn

150 Fakta

Netto

100 Kiwi

Bilka Rema 1000 Spar total Føtex SuperBest kædeloyalitet på dagligvarer. kædeloyalitet på 50 Lidl Kædeshoppernes kædeloyalitet på Økologi i forhold til shoppernes shoppernes til forhold i Økologi på kædeloyalitet Kædeshoppernes Aldi

0 RelativLoyalitet:

-50 50 70 90 110 130 150 170 190 210 Relativt potentiale: Kædeshopperens andel af det økologiske marked i forhold til shopperens andel af dagligvaremarkedet.

05/12/201 14 8 Irma has the absolutely highest share of total turnover in the food category coming from organic products

0 Lidl Aldi Irma Spar Bilka Netto Fakta Føtex Kvickly SuperBest Rema 1000 Rema KiwiMinipris SuperBrugsen Dagli' Brugsen Dagli'

15 Source: GfK ConsumerScan 2015 Logistics and chains in Denmark

Central purchase and logistics • Product • Price • Logistics • Category management • Advertising fees

Top management, Chain • Stategic position • Image • Price level • Category strategies • Marketing/advertising Tailor made organic strategy

We always offer retailers to present them for a tailor made organic stategy: • To show the retailer how they can use organic • to build a unique and strong branding position, • attracting new costumers • and strengthen custumer loyality

• Differentiating from competitors and • convince shoppers to buy more organic • in order to improve margins and profit

17 Source: GfK ConsumerScan 2015 Assortment strategy

Cross Category approach with focus on: • Main strategic goals of the retailer • The basic needs of main target groups

18 Source: GfK ConsumerScan 2015 The two heavy user archetypes buy organic products for different reasons

The idealist The individualist

18% of pop. 17% of pop. Environment Taste Animal welfare Product stories Health/Purity self perception Taste/Quality

05/12/201 8 Source: GfK survey for Organic Denmark 2012 Prices and sales volume for organic products

Development of product categories

Low price Branded goods

Organic volume Organic value position position

Source: GfK ConsumerScan 2015 Pricing strategy

• Organic basic products should be calculated as all other basic products

• Organic is not a niche and organic products should not be considered as a premium/luxury

• Put attention to lower prices on specific organic products highly relevant to families – even if it gives a lower margin as usual on that products

21 Source: GfK ConsumerScan 2015 Merchandising strategy and visibility

1. Organic and conventional - Side by side

2. Organic products organised in category blocks

3. Organic products presented all together in one major block

22 Source: GfK ConsumerScan 2015 Premium visibility Premium visibility Premium visibility Matchmaking – Rema 1000 and Gram

26 Business issues and ambitions

Situation for most retailers Ambition: A more distinctive profile

Most retailers are facing a number of A more unique positioning can potentially challenges accelerate future growth by: § Shoppers are switching between stores § Establishing a strong, sustainable brand § The challenge is if the retail chain is, position by creating an emotional connection between shopper and brand § considered by shoppers to be mainstream with no strong distinctive § Differentiating from competitors profile and no unique values § Increase loyalty among existing shoppers § perceived by shoppers as very similar § Convince shoppers to buy more organic/ to competitors with almost identical buy their organic groceries at your stores - assortment in order to improve margins & profit § Build valuable partnerships with specific organic producers in order to inspire the shopper

27 The Danish Organic Cuisine Label Organic share in the foodservice sector: 6,5%

1600 1500

1400 1312 1293 1207 1200 1109 1085

1000 900 840 800 757

603 600 462

400 304 230 200 94 36 56 4 5 12 0 Oct-… Oct-… Oct-… Oct-… Oct-… Oct-… Oct-… Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 28 Source: Organic Denmark 2016 Fundaments of Danish Organic Culture

• Security: due to Government controlled organic certification • High trust and awareness of the Danish organic logo (98%) • Experience: Long term experience of producing and selling organic products • Innovation: Innovative, trendspotting and dynamic organic producers • Competition: Technology and cost focus • Danish Organic “Eat-out Label” • Danish organic plan of action

29 Source: Organic Denmark 2016 Organic Denmark: The Danish Organic Model

Thank you!

Henrik Hindborg Market Manager [email protected] +45 5155 8482