“Positioning organic food as the greater pleasure”

Interview with retailing expert Prof Dr Stephan Rueschen about the future of retailing and opportunities for organic brands

Organic is becoming quite the colourful sector. Political and economic crises as well as digitisation have caused a change in consumer behaviour that has changed the structure of food retailing. Supermarkets, discounters and drugstores are expanding their organic offerings and adding branded organic product manufacturers. The organic retail segment has to put itself and its product range forward and is being put to the test. But what type of retailer can help advance organic food and how? What opportunities do the new structures bring about for organic brands? In this interview with BIOFACH, Stephan Rueschen, Professor of Organic Food & Food Retailing at the Baden-Württemberg Cooperative State University (DHBW) in Heilbronn, Germany, examines the future of retail.

1. Organic products are booming, particularly in the food retailing and drugstore markets. Is organic “from anyone for anyone” better overall than no organic at all?

Yes, because organic is clearly defined. It really doesn’t matter where organic food is purchased or by whom. The only way to achieve a 30-percent share of organic food by 2030 is if a lot of customers meet a significant amount of their needs with organic products. It makes no difference where they buy organic products (supermarkets, discounters or organic shops). Organic products with a seal of approval (such as Bioland) are certainly better for the environment, but standard organic products (with only an EU organic seal) also help the environment and humankind.

2. Is it true that everyone in Germany is joining forces to achieve 30 percent organic by 2030?

Absolutely! By banding together, all types of retailers can promote organic. For years we’ve been seeing that conventional retail – meaning discounters and traditional full-range providers – has been gaining a significant market share each year, at the expense of the organic retail segment.

But both sides can continue to contribute, with discounters being more price-oriented and the organic retail segment more quality-oriented.

If we want to head more and more in the direction of mass quantities in order to raise the proportion of organic products from almost 7 percent today to a level of 30 percent, we have to focus more on the customers who are hybrid shoppers, those who sometimes buy organic products and sometimes buy conventional foods.

3. The loyalty of manufacturers of branded organic products to retail trade appears to be a thing of the past, although own brands predominate in the organic offerings in food retailing. What opportunities are opening up for organic brands and how can they get their foot in the door?

The doors to conventional food retailing are open to organic brands. In particular, supermarkets like Edeka and Rewe can and want to distinguish themselves from discounters by offering organic brands.

Some organic brands like Rapunzel still enjoy privileged placement in supermarkets. I think organic products should be consistently positioned next to conventional items. Supermarkets serve hybrid customers who meet only some of their needs with organic products. Positioning product groups in this way would make it easier to introduce organic brands to these hybrid customers. I believe that organic departments in supermarkets are counterproductive. Organic brands should also take advantage of drugstores, which have an above-average share of the organic market and offer extremely favourable opportunities for growth. It will be exciting to see to what extent they’re ready to expand their actual core positioning, meaning the sale of drugstore products, and focus more on the food sector.

4. The high demand for own-brand organic products indicates that consumers are currently very sensitive to pricing. Is there still any reason for organic brands to exist alongside retail brands?

That’s a fascinating question. Three years ago, in a comparison of conventional retail brands and brands, the consumer research firm GfK headlined a “Markendämmerung” (“twilight of brands”) – in other words, whether branded products are no longer justified.

Branded organic products have to offer added value because the branded products cost much more than retail brands. One argument that might initially favour organic brands is that they feature the higher-quality organic seals Bioland, Naturland and Demeter. However, this is no longer exclusive to them because today’s retail brands are also using quality seals.

The second argument in favour of organic brands is quality, which isn’t easy to communicate to customers. In this context, flavour could also play a role because it’s actually relevant for customers and might also be something that the retail brands won’t achieve. In my view, the most important criterion is regionality. This is where branded organic products could establish a genuine USP that the retail brands can never achieve because they always have to deal in mass quantities and can’t address the issue of regionality. Ultimately, branded articles that want to be successful must be ubiquitous and omnipresent. Branded organic products must be easily available in all types of retail businesses in order to succeed over the long term.

5. What will it mean for the organic retail segment if organic brands are available everywhere? Will it have meaningful prospects over the long term?

The framework conditions for the organic retail segment remain difficult. The organic retail segment can no longer rely on the loyalty of organic brands and customers’ price consciousness won’t end anytime soon. I think the organic retail segment has to reposition itself. A system like that of EDEKA promises success: Independent organic retailers enter into a large-scale collaboration with the support of a strong brand while also enjoying wide margins in terms of the concrete structuring of their concept. For example, organic shops should consistently adapt to on-site needs (such as the range of products) while also positioning themselves as the region’s number-one place to shop. Organic shops should be part of their local community.

6. The trend is toward the hyper-informed consumer. What do today’s organic shoppers require of retail?

Organic products have to be affordable for consumers. This means that the price difference between them and conventional products can’t be too extreme. For many customers, organic alone isn’t a sufficient reason for purchasing products, so organic and regionality must go hand in hand. Our current study, Attitude-Behavior-Gap im LEH (Attitude Behaviour Gap in Food Retailing), reveals that regionality is more important for customers than organic certification. Unfortunately, we’re also seeing that over the past 3 years, sustainability has generally declined as a purchasing criterion. When asked whether they were ready to sacrifice affluence for sustainability, 44 percent of people still answered yes in 2023. According to our study, the level was at only 30 percent in 2024. That’s a very significant difference. A reduction in purchasing power since the Ukraine conflict has negatively affected sustainability criteria as reasons to buy, whereas price has become much more important. Another fascinating point is that the three purchasing criteria of organic, sustainability and health are mutually complementary. But customers also want to experience pleasure, which means that organic products have to position themselves as offering the greater pleasure. They need a new narrative along the lines of: If I do something good for my health with organic products, it doesn’t mean that I have to suffer. It means, for example, that organic meat simply tastes better and is also good for my health. If this approach succeeds, organic has a real chance of becoming a sure success in retail.