The organic food industry represents one of the most exciting investment opportunities around. However, no franchise has yet emerged to capitalise on the gap in the market. Here, we take a look at what’s happening in the industry, who the main competitors are, and why organic franchising could prove successful.
State of the industry
Though the organic food industry is relatively new, it’s experienced enormous growth over the last decade and become one of the most promising sectors for investment in the UK. The industry generates approximately $849 million a year in revenue and has grown by 5% over the last five years. It employs well over 7,000 people and consists of approximately 550 businesses. As consumers become more and more aware of how their food is grown and sold, organic’s share of the food market should continue to increase.
The organic trend
Several factors drive the trend toward organic. These include a greater interest in healthy eating, an acknowledgement that organic produce is often tastier, and an emphasis on ethical consumer choices. As we become more aware of how produce is sourced and the effect that large-scale consumption is having on the environment, organic food becomes an increasingly attractive proposition. However, it’s also important to recognise how vital a role the increase in disposable income amongst the middle class has had on the growth of the organic industry. Without this spending power, the sector would not have expanded as quickly as it has.
Organic health food store online
The organic food industry has been defined by a move away from traditional large-scale retailers and supermarkets. Companies like Tesco and Asda are losing market share, while organic specialists are picking up customers. However, the organic market remains highly concentrated with the most significant organic businesses, Abel & Cole and Whole Foods, dominating the market. Smaller retailers trying to break into the industry often struggle because they can’t compete with the prices and purchasing power of the larger companies.
Store or delivery box?
A particularly important internal division in the organic food industry splits the sector into two different types of business. First, there are the brick and mortar stores. Then, there are the delivery box specialists. The models for these types of business contain significant differences, but they compete for the same market share. Whereas Whole Foods offer the archetypal in-store experience, Abel & Cole are the delivery box experts. Anyone hoping to break into the market will have to consider ways in which they can compete on both fronts.
Abel & Cole
Abel & Cole are the pin-up stars of the organic delivery box movement. With over 30 years of experience in the industry, they’ve seen organic food rise from a small, niche market to one of the fastest growing food sectors in the country. With an emphasis on environmentally friendly farming, seasonal fruit and veg, and a low carbon approach, they practice what they preach and have earned their place at the peak of the organic food industry. With a strong brand and intelligent marketing campaigns, they’re one of the key players in the modern organic food industry.
The other big name in UK organic food is Whole Foods. Originally established in the US, Whole Foods made the leap across the Atlantic relatively recently and has now opened seven stores, all of which are situated in London. Unlike Abel & Cole, they specialise in the in-store, “market” experience. However, they’ve also teamed up with online partners to offer a unique delivery service. Whole Food stores often host a variety of in-store events – ranging from lectures to supper clubs – and the company has worked to foster a distinct identity. Consequently, brand loyalty is high and their brick and mortar business model well respected throughout the industry.
Established in 1995, Planet Organic can count itself amongst the most popular organic chains in the UK. Stocking a wide range of fruit and veg, as well as artisan bread and health and body care products, it contains everything the modern organic shopper needs, all under one roof. Though the majority of Planet Organic stores are situated in London, there are many other locations in smaller cities around the country. The business has pioneered some significant developments in the organic industry, including free-from-packaging shopping and an official Planet Organic loyalty and payment app.
Space for a franchise?
With several big name brands already operating successfully in the organic sector, it’s reasonable to question whether there’s room for a new organic food franchise to succeed. However, some factors point to the fact that such a franchise has a good chance of success.
First and foremost, the organic sector is highly centralised in London and is yet to spread too far beyond the borders of the capital. While it’s true that London is an ideal market, there’s plenty of opportunity in other, smaller cities, too. Second, the larger organic businesses have committed to an aesthetic and image that would be difficult to sustain over an entire network of smaller stores. Whole Foods, in particular, prides itself on its elaborate stores and big in-house events. Then there are the independents to consider.
An image problem?
While there are a large number of independent organic stores to compete against, they too have their problems. To begin, many independents suffer from an image problem. The traditional, high-street organic store is modelled on the health food store and typically contains a large amount of unappetising, poorly marketed, dried foods. Their brands are neither eye-catching nor exciting, and there’s little about them that appeals to the mainstream consumer.
Though there are many big name brands and smaller, independent stores in the organic food industry, there is space for an organic franchise to succeed. With carefully-considered branding and marketing and an intelligent growth strategy, a franchise could exploit the gap in the market that exists between the industry superstars and the less glamourous independents.