Dutch Organic Food Market Offers All-

The Dutch market for organic foods stands poised for growth as consumers are increasingly drawn to the environmental and health allure of organic foods. Supermarkets are taking a serious look at expanding their organic food sections, including two major supermarket chains in the Netherlands, Albert Heijn and Konmar.

The Dutch Government actively supports the organic food industry, aiming to advance market share from less than 1 percent of total food consumption to as much as 6-10 percent. In February 1997, the Dutch Government implemented a roughly $33-million action plan to stimulate production, distribution and sales of organics.

Health food stores and reform shops are the primary outlets for organic foods in the Netherlands, accounting for an estimated 75 percent of total sales, followed by supermarkets at 20 percent, and other outlets at 5 percent. Fresh products, such as dairy, produce and meat, account for roughly 40 percent of total organic food sales. The price premium on these products varies but is estimated at between 15 and 20 percent. The premium on processed organic foods is considerably higher, ranging from an estimated 25 to 50 percent, depending on the item.

There are approximately 700 health food stores and reform shops in the Netherlands. Health food stores carry a wide assortment of both fresh and processed organic and natural foods, while reform shops tend to specialize in dry groceries, therapeutic products and food supplements.

Fresh product is particularly important for health food stores, where it accounts for nearly 50 percent of total turnover. Although most of the reform and health food stores in the Netherlands are independently run, there are two major franchise organizations: Gimsel and Naturwinkel. Together, these organizations account for roughly 70 stores.

Although growing, organic food sales in the Netherlands have not kept pace with those of other European Union (EU) markets, especially Denmark, Austria and Germany; the Dutch consumer is evidently not yet willing to pay a premium for organic foods. However, the Dutch consumer attitude toward organic foods is changing. Sales through farmers markets, vegetable home delivery services and specialty shops are on the way up. Supermarkets are responding with consumer information campaigns and expanded selections of organic products, particularly in the produce, dairy and meat sections.

The future of organic food sales in the Netherlands appears to hinge on supermarkets and the extent to which they stock organic foods on their shelves. Already accounting for 71 percent of total food sales, supermarkets will likely continue to gain market share at the expense of specialty shops, given the consumer trend toward one-stop shopping.

Dutch supermarkets, unlike some of their counterparts in other European markets, have been reluctant to carry organic foods, citing problems with supply, quality and price. However, this too seems to be changing. Supermarkets such as Albert Heijn, Konmar, Nieuwe Weme and Coöp are expanding both the number and type of organic foods they carry. Natural and environmentally friendly foods are also showing up on supermarket shelves.

According to a spokesperson for Albert Heijn, the largest supermarket chain in the Netherlands, with 650 outlets, the time is ripe for introducing organic foods. It offers an assortment of approximately 20 organic items, including fresh vegetables, ice cream and dairy products.

Although Albert Heijn carries only a handful of organic processed foods, consumer demand for these types of products seems to be growing as well. Konmar, in particular, seems to be taking advantage of this trend and is reportedly striving to have an organic or environmentally friendly alternative in virtually every product group, from applesauce to wine.

Konmar and Albert Heijn follow different merchandising strategies: Albert Heijn usually groups organic foods together in a separate section, while Konmar places the organic alternative on the shelf next to the "regular" products with a shelf card indicating that this is an organic or environmentally friendly alternative.

Supermarkets reportedly have more flexible policies when it comes to organic foods. For instance, if organic products do not meet sales turnover targets, Konmar will give the product an "extra chance" and not drop it immediately from the store shelves. To stimulate sales, one Albert Heijn franchise limits the price differential between organic and non-organic products to 50 percent.

Along with supermarket willingness to carry organic foods, supply availability is an important factor that will determine the growth of organic food sales. Konmar reportedly experienced difficulty in obtaining supply agreements with some of the larger organic and natural food suppliers because they already had exclusive supply arrangements with their customers. To solve the problem, Konmar developed their own brands.

Price also influences sales growth -- the Dutch consumer is notoriously price-conscious. Industry analysts believe that high-volume sales through supermarkets are the only way to pare down the price premium on organic foods. Because the distribution channels for health food/reform shops and supermarkets are different, the rate of growth of organic food sales in the Netherlands will most likely depend on the extent to which the major supermarket suppliers broaden their assortment of organic foods.

Every U.S. organic company targeting the European market needs to know about organic certification. In the European Union, the production, marketing and labeling of organic foods (from plant origin) are governed by EU regulation 2092/91. Adopted in June 1991, this regulation defines uniform rules governing organic production and processing for all EU member states. It requires that imported organic products be produced, processed and labeled under conditions "equivalent" to those in the EU. This means that any organic food product imported from the United States must meet EU production, processing and labeling standards.

The Dutch Government has designated Skal Inspection and Certification, a private international inspection organization, to monitor and approve the use of organic labeling on food products, including imported foods. Skal Inspection and Certification is the only organization permited to grant the EKO Quality symbol -- the organic symbol recognized by the Dutch consumer -- in the Netherlands.

The EKO symbol guarantees that a minimum of 95 percent of a product's ingredients come from inspected, organic farms that comply with EU regulation 2092/91. Because this regulation applies only to plant- and plant-derived products, Skal has developed its own standards for animal- and animal-derived products.

Although the EKO symbol is not mandatory, many Dutch organic food importers and retailers believe it is an important marketing tool for organic food products. An estimated 5 percent of Dutch consumers purchase organic foods on a regular basis and there is plenty of room to grow. Studies show that an additional 40 percent of Dutch consumers are familiar with the EKO quality symbol and can be regarded as potential customers.

Interested in exporting organic food products to the Netherlands? The first step is for your importer to apply for an import authorization from LAZER -- the division within the Dutch Ministry of Agriculture responsible for granting import authorizations for organic foods. Under EU regulation 2092/91, U.S. exporters are not permitted to apply for an import authorization directly. The application must come from a Dutch importer registered with Skal.

LAZER requires fairly extensive information. The importer must provide documentation on the organic production standards and inspection system of the country of origin as well as information regarding the processor and the exporter. Typically, Skal collects this information on a fee-for-service basis for the Dutch importer. Skal, in turn, works with many of the U.S. organic inspection organizations to obtain the required information.

LAZER grants import authorizations on a product-by-product basis. Once received, a particular authorization is valid for a specific product, inspected by a specified U.S. inspection organization and exported by a specified exporter. These authorizations are valid until the year 2002. If a U.S. company wants to export an additional product with different ingredients, a separate import authorization must be obtained. If either the U.S. inspection organization or the U.S. exporter of the product changes, the Dutch importer must apply for a new import authorization. Every year, Skal reviews import records and checks labels to ensure that they are in compliance with Dutch import regulations.

Skal charges an annual fee of roughly $825 to use the EKO symbol on a product label. In addition, it assesses a levy on sales turnover. Depending on total sales, the levy ranges from 0.2 and 0.9 percent of sales.

Organic food imports must be accompanied by a certificate of inspection issued by an approved inspection body in the United States. The inspection certificate must guarantee that the production and processing methods used comply with EU regulation 2092/91.

Last fall, the Dutch Government invested approximately $32 million in a plan to stimulate production, distribution and sales of organic foods. An important goal of the plan is to improve the sales and distribution network for organic foods and increase the number and type of retail outlets that offer organic foods.

A significant share of the funding (approximately $5.5 million) will be used for consumer education campaigns, television advertising, restaurant promotions and generic supermarket promotions. Under EU legislation, the Dutch Government is prohibited from using any of this funding to support promotions of branded items. U.S. companies can piggy-back on this generic promotion campaign by doing their own branded promotions. Funding to offset the cost of international promotional activities is available from the U.S. Department of Agriculture under the Market Access Program.

Although organic export statistics are not available, the Dutch appetite for U.S. organic foods continues to grow. In 1996, 34 percent of the 82 import authorizations issued were for U.S. products. Many are imported in bulk and repacked in the Netherlands, while others are imported for use as inputs in the Dutch food processing industry. A representative sampling: wheat, lentils, navy beans, adzuki beans, mung beans, glutenous and basmati rice, wild rice, soybeans, amaranth, buckwheat, millet, tomato concentrate, dried fruits (raisins, prunes, apples), popcorn, almonds, sunflower seeds, alfalfa seeds, flax seed, animal feed and maple syrup.

U.S. brands of organic and natural foods that can be found on Dutch retail food shelves include: dehydrated soups, tortilla chips, rice milk and salad dressings. Easy-to-prepare foods that minimize time spent in the kitchen, but are still perceived as healthy, should also do well in the Dutch market.

There’s a hidden bonus in exports to the Netherlands -- it typically means access to other EU markets as well. Dutch traders are important suppliers of organic products to other growing markets in Europe. In 1995, reportedly 28 percent of the 459 EU import authorizations for organic foods were issued in the Netherlands.

Eosta Fresh Produce Postbus 132 3980 CC Bunnik Tel.: (31) 30-656-6000 Fax: (31) 35-541-7578	Natudis Importer/wholesaler of processed foods Postbus 376 3840 AJ Harderwijk Tel.: (31) 341-46-4211 Fax: (31) 341-42-5704	De Nieuwe Band Processed Foods Noorderringweg 12 9363 TC Marum Tel.: (31) 59-464-3355 Fax: (31) 59-464-3385
De Morgenstond B.V. Pulses Postbus 30202 6374 AG Landgraaf Tel.: (31) 45- 532-3700 Fax: (31) 45-532-3480	Natuproducts B.V. Full Range of Products Postbus 376 3840 AJ Harderwijk Tel.: (31) 34-146-4211 Fax: (31) 34-142-5704	Horizon Natuurvoeding B.V. Processed Food Postbus 77 3400 AB Ijsselstein Tel.: (31) 30-688-7730 Fax: (31) 30-688-7142
Trouw B.V. Grain Products Piekstraat 63-65 3071 EL Rotterdam Tel.: (31) 10-486-6332 Fax: (31) 10-486-0928	Sandoz Nutrition B.V. Full Range of Products Postbus 39 3900 AA Veenendaal Tel.: (31) 31-856-7400 Fax: (31) 31-852-7963	TerraSana Natuurvoeding European Distributor P.O. Box 70 2450 AB Leimuiden Tel.: (31) 172-503333 Fax: (31) 172-503355 web: http://www.terrasana.nl email: info@terrasana.nl
Simon Levelt Koffie and Theehandel Coffee and Tea A. Hofmanweg 3 2031 BH Haarlem Tel.: (31) 23-512-2522 Fax: (31) 23-512-2525	DO IT Grains, Nuts, Fats & Oils Prins Hendrikweg 19 3771 AK Barneveld Tel.: (31) 34-242-3119 Fax: (31) 34-242-3571 web: http://www.organic.nl email: info@organic.nl	Fair Trade Organization Processed Food Postbus Postbus 115 4100 AC Culemborg Tel.: (31) 34-551-3744 Fax: (31) 34-552-1423
Spack Chemie B.V. Vegetable Oils Moriaanseweg 96 3223 AK Hellevoetsluis Tel.: (31) 181-31-8379 Fax: (31) 181-31-2219	Euro Herb Bio b.v. Spices Dynamostraat 12 3903 LK Veenendaal Tel.: (31) 318-54-3288 Fax: (31) 318-54-2458	Odin Holland v.c. Fresh Produce, Dairy Products Postbus 225 4190 CE Geldermalsen Tel.: (31) 345-57-7133 Fax: (31) 34 5-57-6848
C&C Fine Foods Candy, Chips, Pasta Postbus 240 1850 AE Heiloo Tel.: (31) 725-33-6738 Fax: (31) 725-33-8371	Kernpharm B.V. Full Range of Products Postbus 26 8200 AA Veghel Tel.: (31-41) 334-1492 Fax: (31-41) 336-4919	Urtha B.V. Full Range of Products Postbus 112 1850 AC Heiloo Tel.: (31) 72-533-0481 Fax: (31) 72-533-8371
Masteco B.V. Essential Oils Koelemei 2 4816 JD Breda Tel.: (31) 76-571-9199 Fax: (31) 76-581-0260	Roskam Wijnkopers Wines Torenstraat 4 5341 BA Oss Tel.: (31) 41-265-0033 Fax: (31) 41-262-5331	Koffiebranderij G.Peeze B.V. Coffee Ringoven 36 6826 TR Arnhem Tel.: (31) 26-362-2422 Fax: (31) 26-361-3380
Tradin Organic Agriculture BV Grains and Pulses Latexweg 12 1047 BJ Amsterdam Tel.: (31) 20-407-4457 Fax: (31) 20-497-2100	Golden Temple Natural Products Teas Den Texstraat 46 1017 ZC Amsterdam Tel.: (31) 20-420-7734 Fax: (31) 20-624-2253	Good Food Foundation Nuts,Seeds,Grains and Pulses Postbus 219 3850 AE Ermelo Tel.: (31) 34-156-0210 Fax: (31) 34-156-2913
Fleur Products Candy Moesdijk 9 6004 AX Weert Tel.: (31) 49-553-0200 Fax: (31) 49-552-1900	Zonnatura Importer/manufacturer of processed foods Postbus 1 2700 MA Zoetermeer Tel.: (31) 79-353-9953 Fax: (31) 79-353-9784

Van der Harst-Collaris is a Marketing Assistant and Gabel Scandurra is an Attache with the FAS Office of Agricultural Affairs, American Embassy, The Hague, the Netherlands. Tel. (011-31-70) 310-9299; fax. (011-31-70) 365-7681.

Ministry of Agriculture Bezuidenhoutseweg 73 P.O. Box 20401 2500 EK The Hague Tel.: (31) 70-379-2727 Fax: (31) 70-347-6809	LAZER, Ministry of Agriculture Slachthuisstraat 71 P.O.Box 965 6040 AZ Roermond Tel.: (31)-475-355-444 Fax: (31)-475-318-939
LEI-Agricultural Economics Research Institute Burgemeester Patijnlaan 19 P.O.Box 29703 2502 LS The Hague Tel.: (31) 70-330-8185 Fax: (31) 70-361-5624	SKAL Stationsplein 5 P.O.Box 384 8000 AJ Zwolle Tel.: (31) 38 422-6866 Fax: (31) 38 421-3063
Stichting Biologica (Organic Food Association) P.O.Box 12048 3501 AA Utrecht Tel.: (31) 30-230-0713 Fax: (31) 30-230-4423