Starting an Organic Food Franchise is a Healthy Choice. Here’s Why.
The organic food sector holds some of the most exciting investment opportunities around but, so far, no franchises have emerged to capitalise on the gap in the market. Here, we take a look at what’s happening in the sector, who the main competitors are and why franchising with an organic food business could prove highly lucrative.
The organic food sector
Although the organic food movement is a relatively recent phenomenon, it has experienced enormous growth over the last decade and become one of the most promising sectors for investment in the UK. In the last five years alone, the sector has grown by around five percent and, today, it generates approximately £849 million a year in revenue. It employs well over 7,000 people and consists of approximately 550 businesses. As consumers become more and more aware of how their food is grown and sold, the share of the market made up with organic food should continue to increase.
What does organic mean?
Many people know that organic food is supposed to be better for us and for the environment, but what does the term mean exactly?
The term ‘organic’ is attached to food that is produced in an environmentally, socially and economically sustainable way. Organic produce eliminates the use of man-made fertilisers, pesticides, additives, preservatives, colourings and sweeteners, which can pollute the earth and water sources. Genetically modified organisms (GMOs) are also removed from every stage of the food production process; for example, cows that are reared for beef are not fed genetically modified feed.
In addition to this, animals that are raised for their meat live in natural conditions and kept ‘free range’ with the freedom to roam outdoors. They are not given drugs to improve their health.
Organic farmers are able to rival non-organic farmers in the taste, quality and portion size of their food by using alternative techniques, such as crop rotation and hand weeding, whilst using natural manures and pest control methods.
Is organic food officially recognised?
Yes. For food to be labelled as organic, it must be certified by an organic certification body. This is the case across Europe, and all farms and food businesses that profess to be ‘organic’ are inspected at least once a year to ensure they uphold the standards established by European law.
Composite foods, or foods that are made up of both processed plant and animal products, cannot be described as organic unless at least 95 percent of their ingredients are produced organically. When you’re doing your shopping, look out for labels that identify organic products, such as the Soil Association logo.
Is organic better than non-organic?
Many people think that organic foods are better for us because they have more nutrients in them. Unfortunately, experts are divided on whether this is truly the case, but organic food certainly has less of an impact on the environment. The use of artificial fertilisers, pesticides, additives and preservatives can be detrimental to nature, so organic farming means that more wildlife can thrive in the local area. In fact, The Soil Association states that there is up to 50 percent more wildlife on organic farms.
Also, organic farming techniques go hand-in-hand with higher animal welfare standards, so consumers can have the peace of mind that the animals that were involved in the creation of their food were treated well.
The organic trend
Several factors drive the popularity of organic foodstuffs. These include a greater interest in healthy eating, an increased awareness of the importance of making ethical consumer choices and a belief that organic produce is often tastier. As our understanding of how our food is produced and the effect that large-scale consumption is having on the environment increases, organic food is becoming an increasingly attractive prospect.
However, the increase in disposable income among the middle classes has also contributed to the growth of the organic sector. Without this spending power, the sector would not have been able to expand as quickly as it has.
Organic food businesses
The organic food industry has been defined by a move away from traditional large-scale retailers and supermarkets. Companies like Tesco and Asda are losing market share, while organic specialists are picking up customers. However, the organic market remains highly concentrated, with the most significant organic food businesses, Abel & Cole and Whole Foods, dominating the market. Smaller retailers trying to break into the industry often struggle because they can't compete with the prices and purchasing power of the larger companies.
Visit a store or order a delivery box?
A particularly important internal division in the sector splits it into two different types of organic food businesses: the brick and mortar stores and the delivery box specialists. The models for these types of businesses contain significant differences, but they compete for the same market share. For example, whereas Whole Foods offers the archetypal in-store experience, Abel & Cole are the delivery box experts. Anyone hoping to break into the market will have to consider ways in which they can compete on both fronts.
Best organic food stores
Thanks to the healthy eating trend, with veganism and vegetarianism rising in popularity, organic food businesses are becoming ever more prevalent. Here are some of the best organic food stores and healthy food businesses at the moment:
Abel & Cole
Abel & Cole is the pin-up star of the organic delivery box movement. With over 30 years of experience in the industry, they've seen organic food rise from a small, niche market to one of the fastest growing food sectors in the country. With an emphasis on environmentally friendly farming, seasonal fruit and veg, and a low carbon footprint, it practises what it preaches and has earned its place at the top of the organic food sector hierarchy. With a strong brand and intelligent marketing campaigns, it’s one of the key players in the modern organic food industry.
The other big name in the UK organic food sector is Whole Foods. Originally established in the US, Whole Foods made the leap across the Atlantic relatively recently. It has now opened seven stores, all of which are situated in London. Unlike Abel & Cole, it specialises in the in-store, “market” experience. However, it’s also teamed up with online partners to offer a unique delivery service. Whole Food stores often host in-store events, such as lectures and supper clubs, and the company has worked to foster a distinct identity. Consequently, brand loyalty is high, as its brick and mortar business model is respected throughout the industry.
Established in 1995, Planet Organic can consider itself to be one of the most popular organic food chains in the UK. It stocks a wide range of fruit and veg, as well as artisan bread and personal care products. Although the majority of Planet Organic stores are situated in London, there are many other stores in smaller cities around the country. The business has pioneered some significant developments in the organic food sector, including ‘free-from-packaging’ shopping and an official Planet Organic loyalty and payment app.
Is there space for franchises?
With several big brands already operating successfully in the organic sector, it's reasonable to question whether there's room for a new organic food franchise to succeed. However, there is no reason why franchises wouldn’t have a good chance of success too. It is true that the organic sector is mainly based in London and is yet to spread beyond the borders of the capital, but although many people consider London to be an ideal market, there are plenty of opportunities in smaller cities too.
Is it an image problem?
If you choose to set up an organic food franchise business, you’ll have to compete against local independent organic food stores, but their path to success is not clear-cut either. This is mainly because many independent stores suffer from an image problem. The traditional, high-street organic store is modelled on the health food store and typically contains a large amount of unappetising, poorly marketed dried foods. Their brands are neither eye-catching nor exciting, and there's little about them that appeals to the mainstream consumer.
However, if you become a franchisee, you can be sure that you are buying into a business that has already developed an attractive brand identity that captures the imagination of passers-by.
Although there are many organic food businesses already up and running, there is space for an organic franchise to succeed. With clever branding and marketing, and a solid growth strategy, a franchise could exploit the gap in the market that exists between the industry superstars and the less glamourous independents.
Also, the majority of franchises provide their franchisees with training schemes and ongoing support so that they have the tools and skills to successfully develop their business. That means that you can set up a profitable and environmentally friendly business with the security of a tried and tested business model.
Unfortunately, Point Franchise does not currently have any organic food businesses on its books, but there are other franchises in the food industry that are looking for franchisees. Click here to browse opportunities.
Alice Tuffery, Point Franchise ©
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