Germany: The Customer-Competitor Duality
By Dietmar Achilles
If you want to go for the gold in Germany, youll need to withstand the heat of domestic competition. This country is not only one of the worlds largest organic markets, but also one of the biggest producers of organic food products.
In recent years, demand for organically produced food products has been a veritable market phenomenon in Germany, growing by 5 to 10 percent annually.
Still, organics account for only about 2 percent of sales, a fact thats greatly attributed to a lack of uniform labeling. Many organic products simply are not identified as such; for example, significant amounts of organic milk and meat lack the organic designation (and price mark-up) that U.S. consumers have come to expect, yet are sold through traditional channels.
Total organic food sales in Germany were estimated at roughly $2 billion in 1998.
Surveys indicate that consumers are primarily motivated by health concerns; organics are perceived to be free of chemical residues and food additives. The current debate about the role of genetically modified food products has also boosted demand.
During the past 20 years, organic marketing has come a long way in Germany, from small neighborhood organic stores to todays variety of venues:
* Direct Marketing by Farmers. This chain of farmers markets is active in sales of fruits, vegetables and poultry.
* Specialized organic stores. Nearly 5,000 specialized organic and health food stores sell fruits, vegetables, dairy, meats and fresh food preparations.
* Organic discount stores. These recently established stores report great success, proving that some organic customers also demand low prices.
* Internet and mail-order. A major German mail-order service recently announced that it may expand into the food mail-order business.
Studies report that the average organic buyer is between the ages of 35 and 50. Affluent, educated professionals increasingly outnumber lower income organic customers. Most purchases are made by women.
A word to the wise: Its best to focus on American-style products that are already competitive in the traditional food market segment, such as dried fruit and nuts, wine, rice and sports food supplements.
U.S. Agricultural Trade Office
20354 Hamburg, Germany
Tel.: (+49-40) 414 6070
Tel.: (+49-40) 414 0720
The author is an agricultural specialist at the U.S. Embassy, Hamburg.