Health and Wellness Series – Organic packaged food trends in Germany

Market overview

In 2021, Germany was the largest European market for organic packaged food and the second largest market in the world, behind the United States. Retail sales of organic packaged food in Germany for 2021 totalled $US 5.2 billion, accounting for 10.2% of the total global organic packaged food sales. The total retail value sales of organic packaged food in Germany grew at a CAGR of 6.2% from 2016 to 2021, whereas overall packaged food retail sales grew at a CAGR of 2.9%. German organic packaged food saw a notable spike in sales, which increased by 14.6% in 2020 from 2019.

The growth of the German packaged food market is expected to slow to a CAGR of 4.1% between 2021 and 2026, but still faster than the growth of the total packaged food market, which is expected to grow at a CAGR of 2.1%. The total retail sales of the organic packaged food are expected to reach US$6.3 billion by 2026, by which time the German market will have slipped to the second largest in Europe, behind France and fourth largest in the world, behind the United States, China, and France.

The German economy grew at a CAGR of 2.2% from 2017 to 2021, suffering a contraction in 2020 and rebounding in 2021, as total exports rose by 17.0%. However, the German economy remains below its real pre-pandemic levels. The German economy is advanced, with strong productivity and the second largest trade surplus of any country in the world in 2021, behind China. In 2021, Germany's trade surplus totalled US$233.7 billion, down from US$274.0 billion in 2017 (Euromonitor, 2022).

Considerable uncertainty for the German economy exists and inflation has been rising faster than projected. There is ongoing concern that Germany may lose access to gas supplies from the Russian Federation, as a consequence of the ongoing conflict in Ukraine. Russia has previously stated that it would terminate all gas supplies to Germany if Germany does not start making payments in rubles, a move which would likely spark a recession in Germany. Germany faces concerns with rising prices, much like the rest of the world (Euro News, 2022).

Consumer characteristics

Many German consumers have a high degree of concern for issues such as sustainability and animal welfare. The pandemic has caused many consumers to revaluate their lifestyle choices and to increase their focus on individual health. German consumers are especially interested in products that they believe can boost immune function or improve the appearance of their skin. Products that aid in caring for wounds, the digestive system and managing weight have all seen sales gains over the course of the pandemic. Herbal remedies have also become more popular, due to a perception as being more natural. Finally, German consumers have also been spending increasing amounts of time cooking at home over the course of the pandemic (Euromonitor, 2022).

Germany has a relatively low fertility rate compared with the rest of Western Europe, with a rate of 1.5 births per woman in 2021. The median age of the population was set to rise and the dependency ratio is expected to rise from 55.6% in 2021 to 70.6% in 2040. Meanwhile, the share of the population, which is obese, is also rising, expected to climb from 27.8% in 2021 to 29.3% by 2026 (Euromonitor, 2022).

Organic packaged food is popular among German consumers due to being perceived as better than non-organic alternatives for the planet, individual and for animal welfare. A desire for animal welfare is a strong factor behind the sales of organic milk, as well as a desire for environmental sustainability and more natural ingredients. Staple food saw a spike in growth due to the pandemic; however growth is expected to slow as German consumption habits start to pivot away from cooking at home (Euromonitor, 2022).

Health and wellness packaged food grew at a CAGR of 4.7% and growth is forecast to slow slightly to 3.3% from 2021 to 2026. The 'free from' category, a category of products being free from an ingredient such as gluten, saw the fastest growth at a CAGR of 13.0% from 2016 to 2021. 'Free from' is forecast to continue rapid growth, growing at a CAGR of 10.0% from 2021 to 2026. Organic packaged food was the largest category of health and wellness and saw the second fastest growth between 2016 and 2021. Retail sales of organic packaged products are expected to grow at a CAGR of 4.1% from 2021 to 2026.

Market size

In 2021, the total retail sales of organic packaged food in Germany were equal to US$5.2 billion, which corresponds to 4.7% of the total packaged food sales. The largest category was organic dairy, with US$1.3 billion in sales, or 25.5% of total organic packaged food sales. Bread was next with US$1.0 billion in sales, or 19.0% of total sales. Organic chilled processed meat and seafood was the third largest category, with US$0.8 billion in sales, or 15.2% of total organic packaged food sales. Organic baby food was the fourth largest category, with US$ 0.5 billion in sales, or 9.0% of total organic packaged food sales. In 2021, 42.2% of total baby food sales were organic, the largest percentage of any of the categories. The category which saw the fastest growth from 2016-2021 was organic edible oils, which saw growth at a CAGR of 12.4%.

From 2021 to 2026, organic packaged food are expected to grow at a CAGR of 4.1%, rising from US$5.2 billion in 2021 to US$6.3 billion in 2026. From 2021 to 2026 organic sauces, dressings and condiments are expected to see the fastest growth, rising at a CAGR of 12.2%, up from US$63.6 million in 2021 to US$112.9 million in 2026. Organic edible oil is expected to register the second fastest growth at a CAGR of 9.7%, rising from US$138.2 million to 219.2 million in 2026. Organic dairy is expected to register the greatest rise in absolute terms, with total sales rising by US$211.0 million from 2022-2026, followed by organic chilled processed meat at US$131.5 million, organic bread at US$106.9 million, and edible oils at US$67.3 million.

Competition and distribution

The German organic packaged food market has a diverse array of players and 39.1% of sales are held by private labels. The largest player in the market is Alnatura Produktions- & Handels GmbH, and its brand Alnatura, held a 7.1% share of the total market in 2021. This company is a dominant force in a number of relatively small organic categories, with a 60.0% market share in organic savoury snacks and a 41.7% share of organic ice cream. However, the company is not a player in the largest organic sector, organic dairy, and the company has a relatively modest 6.6% market share in the second largest category, organic bread.

The second largest player in the organic packaged food category was Hipp GmbH & Co Vertrieb KG and its brand Hipp, with a 59.4% share of the lucrative organic baby food market, however no significant presence in any other category of organic food. The third largest company, Andechser Molkerei Scheitz GmbH, had a relatively modest 1.8% share of the organic packaged food market, achieved through a 6.9% share of the organic dairy market.

In general, in 2021 larger organic food sectors such as dairy and bread tended to be relatively fragmented, with top players enjoying market shares below 7%, while smaller categories were dominated by a single player. Organic baby food was an exception, being dominated by a single player despite being the fourth largest category of organic packaged food in terms of total retail sales.

Subsector Growth

Organic baby food

Organic Baby Food saw total retail sales of US$463.6 million in 2021, with 56.7% of organic baby food sales being prepared baby food. From 2016 to 2021, other baby food saw the fastest growth, while from 2021 to 2026, other baby food was once again expected to see the fastest growth. Other baby food is expected to rise at a CAGR of 3.6%, while prepared baby food grows at a CAGR of 3.3%.

Organic bread and breakfast cereals

In 2021, sales of organic bread totalled US$985.3 million, making it one of the largest categories of organic packaged food in Germany, and sales grew 9.4% from 2020 to 2021. However, year over year growth is expected to slow to 5.0% for the year 2021-2022, while growth from 2021 to 2026 is expected to slow further to a CAGR of 3.0%.

As a result of the Covid-19 pandemic, consumers have become increasingly concerned with the health and ingredients of their bread, with consumers paying special attention to sugar, fat, and salt. Hemp bread is popular in German organic markets. German consumers typically purchase fresh bread several times per week (Euromonitor, 2021). Germany has a large bread market, with sales of packaged bread in 2021 totalling US$12.2 billion, of which 8.1% was organic.

Organic Cooking Ingredients and Meals

In 2021, spreads was the largest category of organic cooking ingredients and meals, with US$224.5 million in sales, of which US$146.8 million were honey while US$77.7 million were other spreads. From 2016 to 2021, edible oils saw the fastest growth, growing at a CAGR of 12.4%, lead by vegetable and seed oils, which grew at a CAGR of 13.1% and grew 25.0% in the 2020-2021 year. From 2021 to 2026, organic sauces dressings and condiments are expected to see the fastest growth, growing at a CAGR of 12.2%. In the 2021-2022 year spreads are expected to see the fastest year over year growth with an increase of 15.1%.

Organic Dairy

In 2021, organic dairy saw total retail sales of US$1.3 billion, accounting for 5.2% of total dairy sales and having grown at a CAGR of 7.9% from 2016 to 2021. Within the dairy subsector, organic milk was the largest subcategory, as well as the subcategory which saw the fastest growth from 2016 to 2021. Organic milk sales were US$495.4 million in 2021 and grew at a CAGR of 10.6% from 2016 to 2021. Organic cheese and organic yoghurt were also popular, with 2021 sales of US$302.9 million and US$167.0 million respectively.

From 2021 to 2026, organic cheese is the subcategory expected to see the fastest growth. Organic cheese sales are forecast to expand at a CAGR of 4.3% from 2021 to 2026, reaching US$374.0 million in 2026. Organic milk is also expected to see relatively fast growth, rising at a CAGR of 3.8% and reaching US$596.9 million in 2026.

Demand for organic dairy products is driven in large part by consumer desire for greater sustainability and animal welfare. However, this also comes at a time of increasing interest in alternatives to dairy products, with many consumers viewing dairy as harmful whether organic or not. Many consumers in Germany are opting to reduce their consumption of dairy, and dairy sales are expected to fall in 2022 (Euromonitor, 2021).

The market for organic dairy was relatively fragmented in 2021, with the largest player holding a 6.9% market share. The second largest player held 2.6% of the market in 2021, while private labels accounted for 58.5% of the market.

Organic processed meat, seafood, fruits and vegetable

In 2021, organic chilled meat and seafood had the largest retail sales, with sales totalling US$788.4 million, compared with US$225.1 million for organic frozen meat, seafood, fruit and vegetables, and US$253.5 million for organic shelf stable meat, seafood, fruit and vegetables.

The German processed meat market is suffering from an increasing number of Germans seeking to cut back on meat consumption or give it up entirely. German consumers are concerned with both the environmental and health impacts of excessive meat consumption, and pork is perceived as the least healthy type of meat, with demand expected to fall, while poultry enjoys perceptions of health. Nevertheless, sales growth of organic processed meat is expected to remain strong in coming years.

From 2016 to 2021, organic frozen meat, seafood, fruit and vegetables saw the fastest growth, growing at a CAGR of 8.5%, followed closely by organic chilled processed meat and seafood at a CAGR of 8.3%. Organic chilled processed meat and seafood saw the fastest growth in the 2020-2021 year, however organic shelf stable meat, seafood, fruit and vegetables is expected to see the fastest growth during the 2021-2022 period, as well as from 2021 to 2026.

Organic rice and pasta

Sales of organic pasta saw very strong growth of 9.8% in the 2020-2021, however growth is forecast to slow to 5.3% from 2021 to 2022 and continue at a CAGR of 4.3% over the 2021-2026 period. Sales of organic rice are forecast to grow 10.0% from 2021 to 2022, before slowing to a CAGR of 4.6% from 2021 to 2026.

Organic Snacks

The organic snacks category was dominated by organic confectionery in 2021, and especially organic chocolate confectionery. Organic chocolate confectionery recorded total retail sales of US$323.1 million in 2021, accounting for 65.5% of total snack sales.

Consumers of premium chocolate confectionery are becoming increasingly concerned with health, and sellers are responding by offering lower sugar options, while vegan chocolate is becoming more popular. Meanwhile, German consumers of chocolate confectionery often purchase less frequently, leading to a shift towards larger pack sizes (Euromonitor, 2021).

Growth from 2016 to 2021 was led by organic savoury snacks, which grew at a CAGR of 7.8%, however growth from 2021 to 2026 is expected to be led by organic confectionery. Organic confectionery is expected to grow at a CAGR of 3.0% from 2021 to 2026, while organic chocolate confectionery grows at a CAGR of 3.9%. Organic chocolate confectionery is expected to see the fastest growth in the 2021-2022 year, growing 4.4%.

New product launch analysis

From 2017 to 2021, a total of 14,422 organic products were launched in the German market. The top claim on newly launched organic products from 2017 to 2021 was to be vegan or free of animal ingredients, with 5,922 total organic products bearing this claim, or 41.1% of all organic products. A claim of low/no/reduced allergen applied to 4,097 launches (28.4%), gluten free applied to 4,097 (28.4%), and claims of sustainability (habitat/resources) to 3,247 (22.5%). 2,753 products claimed to be environmentally friendly (19.1%) and 2,375 claimed to come in environmentally friendly packaging (16.5%).

Flexible packaging was the most popular type of packaging with 5,571 launches (38.6%), followed by jar with 2,507 (17.4%), and carton with 976 (6.8%). Unflavoured/Plain was by far the most popular flavour, with 5,046 launches (35.0%), followed by chocolate with 231 (1.6%). Top ingredients included sea salt with 3,938 launches (27.3%), waters with 3,163 (21.9%) and sunflower seed oil with 2,934 (20.3%).

Examples of new products

Organic Labelling

In Germany, organic food that meet standards set by the European Union can display the Biosiegel label, including imported products. There are also other labels that have stricter requirements. Associations that offer such labels include Bioland, Biopark (in German only), Naturland and Demeter.

The European Union and Canada have an organic equivalency agreement which allows for Canadian products to be exported to Germany and certified as organic, provided they meet organic standards as defined by the Canadian Food Inspection Agency and bear a certificate from one if its accredited certification bodies. A list of certification bodies accredited by the Canadian Food Inspection Agency can be found on the List of certification bodies under the Canada Organic Regime page.

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Resources

• Canadian Food Inspection Agency, European Union - Canada Organic Equivalency Arrangement (EUCOEA) overview
• Euromonitor International
  • Baked Goods in Germany (December 2021)
  • Chocolate Confectionery in Germany (July 2021)
  • Dairy Products and Alternatives in Germany (October 2021)
  • Economy, Finance, and Trade: Germany (January 2022)
  • Health and Wellness in Germany (June 2022)
  • Organic Packaged Food in Germany (June 2022)
  • Processed Meat, Seafood and Alternatives to Meat in Germany (December 2021)
• Euro News. Germany could cope with Russian oil embargo by end of year, says minister, accessed June 28, 2022.
• Tiergarten Nürnberg. Organic Label, accessed June 28, 2022.
• Research Institute of Organic Agriculture. Organic Export Info: Germany, accessed June 28, 2022.

Health and Wellness Series – Organic packaged food trends in Germany
Global Analysis Report

Prepared by: Brendan Dwyer, Student

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