Customer satisfaction is top priority for organic poultry

There has been much debate about the future of the organic poultry market during the downturn. Ken Randall and Lucy Knowles take a closer look

The autumn saw much debate over the future of organic egg and poultry production, with reports of sales dropping and Noble Foods converting some of its layer units back to conventional free range.

Debate then intensified in November as the downturn tightened its grip on retailers and a Mintel report suggested that half of consumers would either turn their backs on organic or scale back purchases during the downturn. The Soil Association hit back saying it was untrue and that the organic market was still set to grow by 10% in 2008.

So what is the real picture and what can organic producers do to survive the downturn?

Working hard at holding on to existing customers was the highest priority at the moment, specialist organic producers were told at a recent meeting on surviving the credit crunch.

Paul Sykes, an organic chicken producer in Swindon, predicted that over the coming 12-18 months, “not going backwards is going to be far more important than trying to go forward”. He was speaking at a workshop organised by the Better British Organic Poultry Group and the Elm Farm Organic Research Centre.

Retention of customers came at the top of his list of three key strategies for survival, followed by marketing and cost-cutting.

“Existing customers need more attention than chasing new ones,” claimed Mr Sykes, who sells his chicken through a monthly meat box scheme under the name Clare’s Organics.

These are the people buying from you every month. Give them the best. Don’t think, ‘I’ve run out of something, they won’t mind’.

“Are you doing enough to keep them happy? Why do they stay with you? Is it because of the produce, or you, or even their friends? Maybe you should ask yourself, ‘when was the last time I thanked them properly?’

“When did you last you give them something back for buying from you, month in month out? In my case it might be a small pot of spices to put on their chicken.”

Don’t do it all the time, he said, or they just came to expect it. Just once in a while.

“Ask every single customer why they cancel. They might not give you the right answer, but if you don’t ask, you will never know.

“They might not be happy with the packaging, the quantities, or might feel short-changed in some way. If you don’t know, it can happen again and again.”

Once the existing customers were looked after, you could then turn to finding new ones. The only way to do this was to make the time for it, said Mr Sykes.

“You cannot stop marketing. The big companies that you compete with have dedicated departments for it. You have to find the time to do it.”vitthu

It was quite justifiable to spend up to a day a week on marketing, he said, and when done properly it paid off.

“While other organic businesses are static or going backwards, we’ve managed a 75% increase in sales since January 2007,” he maintained.

The first step was to take a hard look at everything that you were, or were not, doing.

A website should be at the top of everyone’s list, and it needed to be clear and concise. If it was a difficult site to load or navigate, people wouldn’t bother.

Important strategies included e-mailing the customer list with news and promotions attending farmers’ markets and summer shows leaflet drops staging open days loyalty schemes and incentives signing delivery vehicles and establishing an attractive brand on all packaging and stationery.

“At farmers’ markets, get customers to sign up for a box, don’t just sell them something.

“On branding, it has taken us three years to get the look that we want.”

Does your brand stand out? He asked. “Are delivery boxes in good condition? Think about using branded tape, not plain.”

Establishing the target market was one of the greatest challenges.

“When I started out I thought that customers would all be middle class ‘yummy mummies’ in their mid-30s. But in fact they come from all walks of life, including the poorest council estates. When I look at the database it really does spread all over.”

The final survival tactic, cutting costs, was the most difficult.

“For smaller producers, it’s quite difficult to cut costs,” he conceded.

“Find time to chase better prices on utilities and phone tariffs, he suggested. Look at your bank charges. And keep your vehicles well serviced and the tyres pumped up.”

Poultry adviser for Abacus, Lois Phillips believed that those who were going to survive were those who said “OK, what am I going to have to do? And then take time out from the business to do it”.

Supermarket sales have been hit harder than local shops and farmers’ markets.

One producer said 90% of customers looked at a website before placing an order, even without online ordering.

Organic egg and vegetables producer Sonia Richardson suggested that getting regular customers on to a weekly debit scheme was good psychology with customers: “It stops bills building up. They don’t notice £11 a week, but if they get a bill for £90-100, they think ‘I can’t afford this’.

She also urged producers get the message across that organic produce need not be expensive. She had costed out the contents of her £11 organic box against similar produce in supermarkets.

The same organic produce in one would have cost £17, she claimed, while the non-organic equivalent in another store would have cost the same as hers.

Patrick Bourns, proprietor of Barrington Park Eggs, felt that a few hours a week spent on marketing wasn’t going to have a serious impact on sales. “I would need someone to look at it for a month,” he said.

The holiday option

The UK’s two main certification bodies admit times are tough, with one even looking into giving producers an organic holiday allowing them to use conventional feed without losing their organic status to help ease the pressure.

Speaking about the recent downturn in the organic poultry market Phil Stocker from the Soil Association said organic sales had taken a downturn since the summer and whereas sales tended to level off at this time while consumers take their summer break, they usually increased again in the autumn. But this hadn’t happened this time, he said.

However, sales were holding where retailers were promoting successfully, he added.

The supermarket end had been hit harder than local stores and farmers’ markets due to the commitment in local trade and consumer shopping patterns being more consistent, said Mr Stocker. Shoppers were less likely to be hit by offers and the range of poultry choices that supermarkets could offer.

These local outlets were more dedicated, with point-of-sale information.

People’s values hadn’t changed about organic produce, but financially they were struggling, he said.

The Soil Association is consulting organic businesses to allow livestock and poultry farmers to take an organic holiday, without losing their organic status. But this had yet to go to DEFRA for approval, said Mr Stocker.

“All businesses have taken a dip, not just organic, and in the long term it has a bright future. There are already competitive prices on certain products and organic food will become more cost effective in the future and local trading is allowing for this.”

Also, the cost of oil-based conventional farming was rising and becoming more expensive, whereas organic took its energy from the sun, he said.

“My advice to organic producers is to stick with it and do anything they can to adjust the business. It is important to maintain what they have and return to full production when possible.”

There were still positive messages coming through and, overall, for the calendar year there was still a 5-7% growth in the sector, said Mr Stocker.

Richard Jacobs, chief executive of Organic Farmers & Growers, said: “There’s no avoiding the fact that there has been some slowdown in organic eggs and poultry, particularly eggs, but we are not seeing a major shift away from organic poultry production.

“While a small number of producers have returned to free range, the vast majority of licensees are pressing on, albeit in very tight circumstances.

“It would be fair to say it’s probably not a good time to enter the sector, unless your market is guaranteed. But consumers are increasingly aware of the reasons why they choose to buy organic and those reasons don’t go away just because the economic circumstances have changed.

“We would encourage all organic farmers to hang on in there so that they can continue to reap the benefits of their efforts when the market improves again.”