The organic food market in Australia is currently in the midst of a boom. According to the recently released Australian Organic Market Report 2018, the total value of the market sits somewhere around $2.4 billion dollars. The same report states one in six Australian households has purchased organic products in the last year.
With ABM’s manufacturing module, making the shift into new market segments is manageable. But what are organics and is adding them to your product portfolio a good idea?
What is ‘organic’ in Australia?
While the common meaning of organic is to be produced without the benefits of artificial chemicals, there are specific criteria products must meet to be certified organic.
There are six separate organisations in Australia that can certify goods as organic – products need to meet at least one of these party’s criteria before they can be sold as organic.
A fast growing market
The organics market is growing at a rapid pace. Compared with 2016, an additional 384,000 households purchased organic products in 2017 and the market grew by 13.6 per cent overall, according to the Australian Organic Market Report 2018
Andrew Monk, the chair of Australia Organic said that the millennial generation was driving the majority of the demand.
“Millennials know more, they demand more and they expect more,” he recently told the AAP.
For them, the increased price is justified for the peace of mind eating organic products brings. Fortunately for organic food manufacturers, millennials are only growing as a proportion of the food buying market. Currently, cost is the greatest barrier to people buying organic, according to the Organic Market Report. As the purchasing power of millennials increases, those who want to buy organic but currently can’t afford to will begin to enter this premium market.
How can you expand into organics?
There are some hoops to jump through but if you can find a niche that’s profitable it may well be worth doing entering the organics sector. Organic products often retail for a far greater price than their non-organic counterparts. Providing you can find a manufacturing process and suppliers that keep your costs low enough, organic products command a premium that others can’t. In an era of $1 supermarket milk, going organic is one of the few surefire ways to both command a higher price for your product and still have a customer base willing to make the purchases.
For more information on how ABM’s software can take your food manufacturing operation to the next level, request a no-obligation product demo today.