Organic food producers feeling impact of decline in purchasing power

The effects of the decrease in consumers' purchasing power have extended to Estonian producers and retailers of organic food as well, many of which have even had to downsize operations as a result.
Estonian bakery Pagar Võtaks has been producing eco-certified organic rye bread for 12 years. This spring, they shut down their storefront on Vana-Lõuna tänav, and with inflation sapping their turnover, they moved their operations to the back rooms of the Biomarket store at Baltic Station Market in order to save on production costs.
"Our organic product sales are down around 10-15 percent compared with last year," said Pagar Võtaks CEO Reet Rum. "Then we moved here to cut costs a bit. We've somewhat reduced our range [of products], our staff as well as other production costs. Currently we offer three different types of bread."
According to Rum, the closure of their storefront has affected turnover as well, which has decreased by nearly one third over the past year.
A loaf of their organic bread goes for €5.50 at Biomarket.
"Our bread is absolutely artisanal; everything is done by hand, and the ingredients are exclusively organic; I think we're the only ones on the market right now," she explained, adding that their current solution is sustainable for the company in the long term.
Biomarket itself, which sells only organic products, has had to close two of its locations over the past two years as well, continuing operations at eight. A representative of the chain said they've weathered the worst of the downturn by now, and the past couple of months have even shown some signs of recovery.
Andrus, a regular customer at the store, hasn't given up buying organic due to rising prices; rather the opposite.
"I'm such a creative shopper that I can pull together a meal from non-organic and organic items by looking at prices," Andrus explained. "My dry goods at home are all organic, and then I'll come and occasionally see what's fresh, and fruits."
At Coop stores, which include Maksimarket and Konsum supermarkets, organic product sales have fallen by around 5 percent on year, however the range of products available at their stores hasn't been curbed as a result.
On average, however, increases in price for organic products have been even smaller than for conventional ones, as the margin for price hikes is narrower for more expensive goods.
"There are indeed a handful of producers that have gone out of business," acknowledged Martin Miido, communications manager at Coop. "In one case, we even had to stop working with [a producer] solely because their prices have gone up so much that we knew that customers just wouldn't accept it, and there's no point in keeping it in stock [if it doesn't sell]."
He added that their chain has received signals that there are producers facing such difficulties that it's currently hard to say whether they'll remain in business or not.
Selver, meanwhile, hasn't registered any decrease in organic product sales.
"On the whole, the range [of products available] at Selver has doubled within the past few years," said Pille Raaliste, the supermarket chain's purchasing director. She noted that organic products account for slightly less than 2 percent of Selver's total turnover.
"2021 and 2022 were the year where we saw more of a boom in organic product sales," Raaliste recalled. "2023 and the beginning of this year – you could say it's remained steady at that level."
One shopper at Selver, Kaidi, said that she has a preference for organic when it comes to certain products, and at that point a higher price doesn't matter.
"Like with eggs, it's always free-range eggs; I don't buy based on price there," Kaidi explained. "During summer when I can go to the market often, I might buy more vegetables at the market. Maybe that's more organic too."
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Editor: Merili Nael, Aili Vahtla