With sales having grown 30% year-on-year for three decades, organic food - once the domain of beardy, papoose-toting hippies - is mainstream. But the UK market could be in trouble. Sales of British organic food fell 8.1% in the second quarter of 2008, and last year Whole Foods Market, the US organic chain that owns Fresh and Wild, lost £10m on its UK operations. Against a backdrop of the credit crunch, food-price inflation and claims that there's no added health benefit, consumers are abandoning expensive organic produce and heading to discount stores like Aldi and Lidl (whose share of the UK food market now stands at 6%). But there might be a silver lining for the organic food industry. Artificial fertilizer makes conventional farming heavily reliant on fossil fuels, and as the cost of oil and gas has soared, fertilizer has doubled in price. Think-tank Chatham House has predicted that the price of oil will rise to $200 a barrel within 10 years; at that price, argues farm business consultant Andersons, organic crops will be more profitable than non-organic. So don't give up on those wonky carrots just yet.
Source: TNS (retail analyst).