New Kids on the Block

Organic is nothing unusual for German consumers. Organic products have been on their supermarket shelves for years and this wider availability has had a positive impact on sales.

The sector's growth has been largely driven by supermarket sales, which make up almost half of the total number of organic retail sales in Germany. In 2006 the trade in organic food products in both specialized organic stores and regular supermarkets topped 4.6 billion euros ($6.5 billion).

That growth has prompted many more players to enter the market, including well-established conventional food manufactures and supermarket chains.

This has many of the traditional organic companies, some of whom have been in the business for decades, worried these new players might damage the industry.

Is it really organic?

The Organic Food Industry Association, an umbrella group representing organic farming, retail and traders association, is warning companies wanting to cash in on the organics trade to beware when buying organic raw materials. They said inexperience in recognizing organic products could lead to companies buying fakes.

"The traditional producers know where and how to buy organic raw materials, whereas those who come freshly into the market will have more difficulties," the association's president, Felix Prinz zu Löwenstein, said.

One company with a lot of industry experience is Bio Zentrale -- an all organic company that has been selling organic food products in Germany for over 30 years.

"Conventional companies don't have the experience -- they might just believe the organic certificate. But we analyse it and if we find traces of pesticides then we will send it back," Marc Netten from Bio-Zentrale said.

Shortfall of organic raw materials

Part of the concern over the arrival of new organic products by conventional producers is driven by a shortage of organic raw materials. Currently the organic farming sector is not growing at the same rate as the demand for organic products. A shortage in organic raw materials grown in Germany has meant that producers have begun to look far and wide for new producers to keep up their demand.

"To get organic wheat is very difficult at the moment. Usually we buy our oats in Germany or Austria but at the moment we are also buying them in Australia," Netten said. "While they have a certificate from Australia certifying them as organic, nobody knows what happens on the ship."

For this reason the company analyses the oats it buys in a lab. This takes one to two weeks and is adds to their production costs but Bio-Zentrale said it is only through doing their own tests that they feel confident in certifying it as organic.

Conventional companies claim they're capable

Conventional companies acknowledge the difficulties in purchasing organically grown goods at the moment.

"Our problem is to ensure that you get the quantities of raw materials that you need," said Dominik Ahrer, director marketing and sales of Frenzel Austria Frost. "Our customers say they want organic. The problem is not the price, it is getting the product so you have to make early contact."

Frenzel Austria Frost is a conventional food company that has turned organic. They produce over 100,000 tons of vegetables and ready meals per year, including an organic range of products sold in German supermarkets.

The company denied they are at risk of buying non-organic materials by mistake because they "control the whole process from growing the crop to production to quality control by management," Ahrer said.

Organic standards the same as other food regulations

According to conventional food companies that have gone organic, adhering to the strict organic certification guidelines is no different from the regulations they follow for other food certification schemes and other food standards.

"Our company has been certified with a variety of quality standards for several years already," said Kurt Hassinger from the pretzel-baking company Ditsch. "We have the IFS, BRC and organic certificates. Just to get these certifications we have to ensure that our raw materials, production process, etc. are in order and properly documented."

Major pretzel-producer Ditsch, which sell pretzel products in chain stores and supermarkets throughout Germany, started experimenting with organic products in late 2006. They intend to introduce a range of organic home-bake products, including pretzels, to German supermarkets in mid-2008.

"Since there are only a limited number of pretzel producers in Germany and we've specialized in this area, there are very few competitors that can offer organic products of a similarly high quality. In addition, our retail customers want these products to make their customers happy," Hassinger said.

If you do organic, do it right

The industry doesn't want to discourage new players, nor does it want to stop major conventional food companies from going organic. What it does want to do, according to the Löwenstein, is to make sure that companies do it the right way without ruining it for everyone else.

"Companies participating in the market without experience could spoil the consumer's trust in organic food by not working properly," Löwenstein said. "This is because the consumers will maybe not make a difference between different sectors of the industry."

It's a claim echoed by Bio-Zentrale. "This can damage the whole organic market. The customer doesn’t say one company is okay and one is not -- they just think of them all together," Netten said.

Good partnerships the key

The buying of raw organic materials from unknown growers, especially overseas, does pose problems in guaranteeing the product is organic. For this reason the Association wants to encourage partnerships between companies and growers.

"I think partnership is a very important word because you have to know who you are dealing with," Löwenstein said.

The Association currently has action plans in place to assist conventional producers in going organic. Through the Bund für Lebensmittelrecht und Lebensmittelkunde (BLL), the leading association of the German food sector, and the association of conventional supermarkets, they regularly provide information to companies on how to recognize organic.

They also want to make sure that the current threshold for the organic seal of approval in Germany remains at 0.01 -- meaning that to be certified a product must not contain more than 0.01 percent non-organic ingredients.

"It's not so difficult to sell organic products but it's very difficult to ensure that it’s really organic," Netten said. "Those companies that ensure this will last a really long time."