By Nigel Hunt
LONDON (Reuters) - Sales of organic food are rising strongly in Britain despite a downturn in overall consumer spending, with locally produced supplies struggling to keep pace with demand, leading retailers said on Wednesday.
David Cheesewright, chief financial officer for supermarket chain ASDA, said his company now stocks about 1,000 organic lines compared with 325 around 18 months ago.
"We've put a lot more choices in those areas (organic and premium own-brand) and they are growing very strongly," he told the Reuters Consumer and Retail Summit in London.
ASDA is a unit of Wal-Mart Stores (WMT.N: Quote, Profile, Research, Stock Buzz).
Andrew Higginson, finance and strategy director for retailer Tesco (TSCO.L: Quote, Profile, Research, Stock Buzz), told the summit there was a growth in demand for premium foods such as organic.
"After years and years and years of just wanting to spend less on food to free up money for other things they (consumers) are actually reprioritizing things and saying actually I want to buy better food," he said.
"I think that will hopefully be reasonably robust in the event of a small consumer downturn which is what we are seeing at the moment," Higginson added.
Analyst Datamonitor last year projected the UK market for organic food would rise to nearly 2.7 billion pounds ($5.38 billion) by 2010, up almost 69 percent from 1.6 billion in 2005.
Higginson said the growth in demand for premium foods reflected changing priorities rather than "wealthy consumers deciding to spend more on better things."
ORGANIC IMPORTS
"For some people it means organic, for some people it means a higher proportion of fresh food and for people like me it means a Finest pork pie rather than a normal pork pie," he said. Tesco's premium own-label food is branded "Finest".
Justin King, chief executive of J Sainsbury (SBRY.L: Quote, Profile, Research, Stock Buzz), said some competitors had been forced to import organic supplies to keep pace with strong customer demand.
"It (the supply) is stretched out and you are seeing a lot of produce from further afield but you won't see that on Sainsbury's shelves," he told the summit.
Organic advocacy groups such as Britain's Soil Association have expressed concern about transporting organic foods over long distances, citing potential harm to the environment.
The Soil Association is considering withdrawing its organic certification for any produce with has been air freighted. Continued...
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