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Organic Products
Finding a Ready Market on Taiwan
By Chiou Mey Perng
Annual sales of organic foods on Taiwan are expected to double in the next three years to nearly $20 million (all in U.S. dollars) as consumers there join the ranks of their health-conscious, label-reading, natural-loving counterparts worldwide.
The Current Profile
Taiwan’s current imports of organic products are approximately $9.7 million. Most of these foods are sold in specialty stores and some supermarkets located in department stores and upscale communities in northern Taiwan. However, demand and sales are likely to spread south as supermarkets in central and southern Taiwan adopt the trend.
About 1,000 specialty stores on Taiwan carry organic foods. On average, these stores are the size of convenience stores, stocking from 1,000 to 2,000 items. The 50 largest of these stores have average individual annual sales of only $32,000.
Due to the limited supply of organic foods from both foreign and domestic sources, organic foods account for only about a third of these stores’ inventory. The remaining items include domestic and foreign organically grown rice, fruit, vegetables, nutritional supplements, herbal teas and naturally grown products. The stores also carry enzyme powders, vitamins and other food supplements.
Organics customers have gone mainstream. In the past, most consumers were people with special health needs or members of religious groups. Today, consumers of organic foods are much broader based. The new target group is consumers in their 30's and 40's with higher educations.
Organic Foods That Top the List
The most popular organic foods on Taiwan are vegetables, rice, beans and lentils. Rice, with the exception of glutinous rice, and vegetables are generally grown on Taiwan. Beans, lentils and other products are imported. Popular organic food imports include dry goods such as tree nuts, dried fruit, black glutinous rice, wheat flour, soybeans, grains, beans and lentils.
Popular organic beverages include herbal teas, apple cider vinegar, apple juice, vegetable juices, low-salt tomato juice, drinks made from wheat grass and other fiber powders and organic red wine.
Commonly imported processed organic foods include pasta and canned soups. Vegetable oils imported include olive oil, sunflower oil, pumpkin seed oil, avocado oil, tea seed oil and sesame oil. Some of these are advertised as naturally grown and cold-pressed. Organic sauce imports include soy sauce, miso and salad dressings. Fresh organic produce imports--carrots, peppers, broccoli, onions, potatoes, apples, grapes and oranges–are also popular.
Some new-to-market imported organic products include malt drinks from Germany, yoghurt powder from Canada and organic raisins from the United States.
Imported fresh produce is usually not available in the market on a regular basis because foreign supplies are limited, perishable and seasonal. On average, imported organic fresh produce is priced about four times higher than conventional products.
Importers
Share and Share Alike
The number of importers of organic products has doubled in the past two years to around 20. These importers are often owners of specialty stores and distributors at the same time.
The community of organic food importers and distributors is small and its members operate more like partners than competitors. For example, an importer who locates and orders a shipment of organic U.S. Fuji apples usually makes part of the shipment available to other specialty stores in order to increase turnover.
Other stores are eager to take advantage of such opportunities because they increase the number of products that they can make available to clients.
One typical shop specializing in organic foods reports that 43 percent of the imported organic foods in his store are from Germany; 40 percent from the United States; 3 percent from Italy; and the rest from several other countries.
Sales Opportunities for U.S. Suppliers
In 1999, two stores specializing in organic
foods opened in the Hsinchu Science Park (Taiwan’s Silicon
Valley), where most of the employees belong to the organic food
target group. One of these two stores is currently the largest of
its kind on Taiwan, with annual sales of $3.2 million.
The store is about six to seven times larger than the average one that sells organic products. It also includes a restaurant that offers organic and natural meals. To meet the increased demand for healthier and safer foods, the Taiwan Semiconductor Manufacturing Corporation, one of the leading semiconductor manufacturers in the world, plans to contract with these businesses to set up three new organic food outlets in Hsinchu Science Park.
In February 1999, a new organic food retailer, Uni-President Organics, was established. This new company was formed by President Enterprises, Taiwan’s largest food company, in partnership with Santa Cruz International, Taiwan’s largest organic food importer/distributor, which distributes organic products in about 300 specialty stores throughout Taiwan.
President Enterprises is the owner of the over 2000 7-Eleven convenience stores on Taiwan. Uni-President Organics plans to establish a chain of specialty organic food stores throughout Taiwan.
A Snapshot of Taiwan’s Organic Output
Currently, organic products in Taiwan are produced on about 1,240 hectares, twice the production level of only two years ago. Major products include tea, guavas, oranges, pineapples, rice, taro root, sweet potatoes and specialty crops like ashitaba tea and yams that are believed to confer health benefits.
Processed organic foods. The first processed organic food products manufactured on Taiwan were tofu and soymilk, both made from imported U.S. organic soybeans. These products appeared on the market in 1999 after Taiwan imported approximately 200 metric tons of U.S. organic soybeans. Since the appearance of organic soymilk and tofu, food processors have also begun to manufacture cereal powder from imported grains, beans and lentils and soy sauce from organic U.S. black beans.
One company plans to produce organic noodles and steamed breads from wheat flour obtained by milling organic wheat. It is likely that more domestically processed organic products made from imported and domestic inputs will appear on the market in the near future.
Developing
Marketing Channels 
The Internet. E-commerce and home delivery are becoming increasingly popular on Taiwan so home delivery via this channel is not far off. Marketers of organic products will no doubt make use of this technology to expand their sales. Taiwan’s department of agriculture recently established a web site where consumers can order products advertised by farmers as well as a homepage to promote organic production and consumption to the general public, the food industry and academics.
Vegetarian Restaurants. Organic food restaurants affiliated with organic and health food specialty stores are becoming more prevalent. Some offer training to the public on the preparation of high-fiber, high-calcium, low-salt and low-fat dishes.
Taiwan’s Import Policy for Organics
Taiwan does not have specific import regulations for organic foods. All import regulations for conventional foods also apply to organic products. Fresh fruit and vegetable imports must meet Taiwan's phytosanitary and pesticide residue standards. Meat and fish products must meet Taiwan's quarantine/food health requirements. Processed foods must meet labeling and food additive requirements.
In August 1999, Taiwan’s legislature passed the Health Food Control Act. All foods, including organic foods, that make biological or medical claims for humans must apply to the Food Sanitation Bureau of the Department of Health (FSB/DOH) for a product license before they can be distributed.
Import requirements and the enforcement of rules covering Customs clearance of imported food products are frequently modified. U.S. exporters should contact their Taiwan importers directly to ensure that product specifications and labeling meet Taiwan’s regulations.
The author is an agricultural marketing specialist with the American Institute in Taiwan, Taipei. Tel. 011-886-2-2709-2000, Ext. 2316. Fax. 011-886-2-2709-2054
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