Rising costs of energy, among other things, have hit consumers hard and have had a severe impact on sales of organic meat. Friland, Danish Crown’s sales company for organic products, has felt a strong impact. During the first six months of the 2022/23 financial year, Friland’s revenue fell by 13% from DKK 549 million in 2021/22 to DKK 478 million.
- It is always unsatisfactory to lose ground but given the market conditions we had in fact feared developments would be even worse. Through targeted efforts, we have managed to navigate the market fairly successfully so that our organic products remain as attractive as possible despite the challenges, says Claus Hein, the CEO of Friland.
The same trend is seen in overall sales of organic meat in Denmark in 2022 with figures from Statistics Denmark showing that sales of organic beef, pork and chicken meat fell by 26%, 27% and 20%, respectively, relative to the year before. Developments have not changed during the first three months of 2023, and the situation is clearly untenable.
- If we are to maintain a broad range of organic products from Friland in most supermarkets, we need Danish consumers to support organic products. It is paramount for us to lift sales to ensure that organic animal husbandry becomes financially viable again. We are approaching a point where many of our producers need to choose whether to continue their organic production, says Claus Hein.
Friland’s average settlement prices for organic pig suppliers fell by 3 Danish kroner from DKK 25.76 to DKK 22.40 per kilo during the first half of the 2022/23 financial year relative to the year-earlier period. This corresponds to a 13% decrease. During the same period, the total average payment to suppliers of organic beef has risen slightly from DKK 29.56 per kilo to DKK 30.39 per kilo, driven by a low supply of beef in Europe. Finally, suppliers of conventional free-range pigs received a settlement price of DKK 15.12 per kilo in the first half of 2022/23, against DKK 12.30 per kilo in the same period of 2021/22, but despite the increase this group of producers are also challenged in financial terms.
- The ambition is for settlement prices, which reflect the market conditions, to enable farmers to make a living from producing meat for our concepts, but for more than a year that has not been the case for the cooperative owners supplying pigs because they have incurred very high costs of especially feed and energy, says Claus Hein.
Danish Crown, the owner of Friland, continues to believe Danish consumers will buy organic products. However, according to Jais Valeur, Group CEO of Danish Crown, the continued development of the organic sector in Denmark is subject to Danish consumers buying Friland’s products in order to maintain production of organic pork and beef in Denmark.
- At Danish Crown, we believe in organic products and see Friland as one of the Group’s flagships. That is the reason why we invest in branding and positioning organic products through Friland. In the long run, however, we depend on consumers choosing organic products in the supermarkets if we are to maintain an overweight of Danish products in the market, says Jais Valeur, Group CEO of Danish Crown.