Megatrend: Woolworths invests $30m in organic food supply chain

Posted by AFN Staff Writers on 17th October 2018

WOOLWORTHS is putting its money where our mouths are, investing $30 million to drive supply chain innovation in the organic produce mega-trend.

The supermarket today launched its Woolworths Organic Growth Fund to help Aussie farmers meet the growing consumer demand for organic fruit and vegetables.

The fund will allocate grants and interest-free loans over the next five years to Australian organic fruit and vegetable growers looking to expand their operations and those keen to become part of the burgeoning organic industry.

Farmers will also have contracted purchase volumes, providing them with the certainty of longer-term supply of organic fruit and vegetables to Woolworths.

Woolworths CEO Brad Banducci in March this year, while presenting at the Global Food Forum in Sydney, declared organic food a  “megatrend”.

Though he also pointed out the lack of innovation in supply chain meant organic was often twice the price of non-organic. The Woolworths health-focused Macro label is worth $600 million a year in sales.

Demand grows 20% Y-O-Y

Today, Woolworths managing director Claire Peters said: “There’s no doubt more Australian customers are choosing to buy organic and are seeking fruit and vegetables that are the product of the best of what Australia’s natural farming resources have to offer.

“In the last five years, demand has been growing at a rate of 20% year on year in the organic produce category.

“Working with Heritage Bank, the Woolworths Organic Growth Fund represents our long-term commitment to satisfying this growing consumer demand, allowing us to continue our partnership with local farmers to make sure we’re ready for future demand.

“With the assistance of the fund’s interest-free loans and grants, we can help farmers adopt innovative approaches that will enable the range of organic fruit and vegetables on offer to grow, making it more readily available and affordable for customers.”

MORE: Australian Organic Market Report 2018 excites new investment

MORE: Organic trend: ALDI joins Coles and Woolworths expanding category

Coles, ALDI

ALDI this month announced it is growing organic product range, offering three exclusive brand lines, one of which is “Just Organic”. The Just Organic range includes organic brie, yoghurt, pastas and baked beans. There’s also kombucha. It’s grew almost 50 per cent in 2017.

Coles offer their own line, Coles Organic. They expanded their Health Foods category with over 250 products earlier this year, with category manager Samuel Griffin confirming there’d been an increased demand for organic and gluten free products in the past 12 months.

Increased demand for organic products inevitably means investment in supply chains, manufacturing and processing that meets stringent industry standards for organic food. The existing standards for food labelled organic are not policed as thoroughly as in America and Europe. This will be the next step.

Fourth generation family-run apple orchardist R&R Smith from Tasmania will be the first farm to benefit from the Woolworths fund.

Owner and manager of R&R Smith, Andrew Smith said: “We continue to see ongoing demand for our organic apples. The support from the Woolworths Organic Growth fund will be instrumental in helping us develop a new organic apple variety and bring it to market – an Australian first.”

MORE: Organic trend: ALDI joins Coles and Woolworths expanding category

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