The market for organic liquid milk in Ireland.

Abstract

The key research question was ”what is the market potential in Ireland for organic liquid milk and related products up to 2006”? Denmark and Austria are among the most developed organic food markets in the world. Using the Diamond Model of factors contributing to competitiveness, detailed case studies of these countries were undertaken to identify the drivers in the growth of consumption of organic food and milk products. Market share for organic liquid milk in Ireland is less than 0.1% compared with 20% in Denmark and 9% in Austria. All the factors of the Diamond Model worked to grow the organic food market in Denmark and Austria. The Austrian and Danish Governments were the first in Europe to introduce legislation on organic farming and also subsidised farmers to bridge conversion to organic farming. The conventional milk sector in Ireland is very competitive but has not shown an interest in organics, whereas in Denmark the largest conventional milk processor is the main player. The small size of the Irish organic milk market means it is not a major area of rivalry at retail level. This contrasts with Denmark and Austria where retailers have driven the market. In Denmark, following approaches in 1993 from farmers’ representatives, the major retail group, FDB, lowered organic milk prices to entice consumers to switch from conventional milk. The main Danish milk processor successfully launched the ‘Harmonie’ organic brand and moved the market from niche to mainstream. In Austria, Billa, a major retailer, set market targets and introduced a high quality organic own-label brand. They encouraged farmers to switch and increase organic production by offering them five year contracts at fixed prices.