The UK's economy is highly developed and market-oriented. It is the world's sixth-largest national economy, calculated by nominal gross domestic product (GDP), ninth-largest by purchasing power parity (PPP), and twenty-second-largest by GDP per capita, accounting for 3.3% of world GDP. The UK was the world's tenth-largest exporter of products in 2016 and the fifth-largest importer of goods. It also had the second-largest foreign direct investment abroad, and the third-largest foreign direct investment outward. The United Kingdom is one of the most globalized countries, made up of England, Scotland, Wales and Northern Ireland. The service sector is influential, contributing about 80% to GDP; the financial services industry is especially important, and London is the largest financial center in the world. The aerospace industry in Britain is the second largest aerospace industry in the world. The world's tenth-largest pharmaceutical industry plays an important role in the economy. Of the 500 largest companies in the world, 26 are located in the United Kingdom. Oil and gas production in the North Sea boosts the economy; in 2016, its resources are measured at 2.8 billion barrels, although since 2005 it has been a net oil importer. There are major local wealth disparities, with the wealthiest counties per population being South East England and North East Scotland. London's economy's size makes it Europe's largest city by GDP.
About Organic Food Industry
The Soil Association has reported on how current consumer trends in health and sustainability are rapidly driving the organic sector in the UK — almost £45 million a week is spent on organic products. The newly released 2019 Organic Market Report demonstrates how products branded as organic are becoming the go-to products for the healthy, the environmental and the socially conscious. The last decade has seen a huge increase in the demand for more ethical and environmentally friendly food options such as free-range chicken and eggs due to concerns over chicken welfare in captivity. Now, consumer awareness is extending even further. Customers are now much more aware of the practice of chick culling for instance, where male chicks are routinely killed upon hatching because they can’t lay eggs and it isn’t economically viable to look after them until they are old enough to eat. There are obvious consumer knock-on effects — the first no-kill eggs have just gone on the market in Germany through a process which identifies the sex of the egg before hatching, meaning that only female hens are allowed to hatch to rear chicks. Whilst many products guarantee animal welfare standards, they do not necessarily need to be organic. The Soil Association, which certifies 70% of all organic products in the UK, claims however, that people are veering towards organic standards as the marker for a large array of consumption issues which concern them, not just whether something has been produced organically, by using fewer pesticides and not adding any artificial additives or chemicals.
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The figures are impressive; the 2019 Organic Market Report reveals that the UK organic market continues to grow. The market is now in to its 8th year of steady, loyal growth, growing +5.3% in 2018 and on target to reach £2.5 billion by 2020. Interestingly, it isn’t just food driving the boon. Alcoholic drinks are driving growth, with beers, wines and spirits in hot demand. Beauty products and organic textiles are also showing double digit growth. The Organic Market Report doesn’t break down the figures by individual groups, but it does support the theory that millennials are hugely influential. YouGov data cited in the Financial Times in 2017 reported that the proportion of 18-to-24-year-olds turning to vegetarianism increased from 9 to 19 per cent in just the previous year. A new report from the Soil Association cites a 52% increase in the number of people in the UK who identify as vegetarians and a staggering 104% rise in veganism since 2016. Whilst the organic sector is still only 1.5% of the total food and drink sector this report suggests that the rise of consumers choosing organic might just be kept in place by current food trends.
On an international level, the UK is seventh in the world for organic sales. Whilst the key market is the US, where 83% of families buy some organic products, the market has matured so much that there is little room for growth. Germany and France are second and third respectively (at €10 billion and €8 billion respectively compared to the UK’s €2.6 billion), which suggests large export opportunities for UK producers, once post-Brexit trade issues are ironed out.
PESTEL Model Analysis
One of the fast-growing food markets in the UK is the organic food sector (EUFIC, 2014). The concept of organic food is the product of a system of agriculture that prohibits the use of manmade fertilizers, pesticide growth regulators or feed additives for livestock. However, it focuses on crop rotation, manures from plants and animals, and some hand weeding and monitoring of pests. It is believed that organic farming provides solutions to the problems already under management (EUFIC, 2014). The essay's core goal is to examine the UK's organic food industry and find out about marketing strategy repercussions.
Political Factor
The UK government has already acknowledged the important role played by the demand for organic food in economic development. Consequently, they launched a set of measures to try to improve the UK market for organic food. For instance, the cancelation of the publicly funded, pro-GM misinformation survey of the last administration, and the state has established the Food Standards Agency (SA, 2011). The figures, though, showed that the UK government did not support the trade for organic food. The post-Brexit environment could theoretically prompt a revival of buyers who would like to purchase from UK suppliers. Organic vegetable growers, who can provide alternatives for the high level of imports, could have the greatest opportunity. Changes in agricultural policy post-Brexit may pose an unparalleled incentive for a more environmentally sustainable farming system. The Soil Association urged the UK government to change the Agriculture Act to include “establishing and sustaining agro ecological agricultural programs in their entirety”. They want a system that supports producers with payments due to the public goods which they produce.
Economic Factor
Decreased consumer confidence in the economy may affect sales of all foods and drinks, even organics, but it remains at a similar level to estimates from early 2018. December 2018 GFK Consumer Trust Index figures show a one-point fall in consumer trust. This represents fears for future EU talk’s deflation and instability. Yet, as it did during the 2008 crisis, the number has not dropped significantly.
Social Factor
The company needs to focus on consumer psychology, behavior and principles when it is related to the organic food market in the UK. There is a very popular saying, ‘Earned in the United States, lived in the United Kingdom’, implying that the United States is a good place to earn money; lovely Britain is a good place to enjoy life. In contrast to its beautiful environment and fresh air, it is largely thanks from generation to generation for British environmental protection practices and health awareness. In every English brain, the focus on health and environmental existence is deeply rooted. That's why the prices of organic food in the UK can be strong in the EU with relatively long-term growth. Most specifically, the younger generation is growing as a new trend in the buying of organic food. According to the data monitor, consumers under 35 significantly increased their average spending on organic products in 2012, pointing to a healthy future for the organic market. Second, it is the problem of aging in the UK: older people may have less spending than younger generations. Based on an increasing problem of aging in the United Kingdom, the percentage of the elderly continues to increase. Nevertheless, many elderly people have a conventional and healthy eating routine that is a slice of standard additive meat. On the other hand, while most elderly people have savings, they are still worried about the cost, while most organic food is more expensive than normal market food.
Technological Factor
Digital innovation provides more incentives for customers to buy organic food directly through various specific outlets, such as pharmacies, online purchases and transactions from organic farms. Next, internet shopping is driven by technological changes. Technological breakthroughs have a profound impact on industries. Innovation is not the only driving force of globalization, but also the competitive advantage of the business in the marketplace. Similar to other countries, the UK has a well-rounded agricultural industry system that covers manufacture, manufacturing, storage, transportation, sales, etc. In fact, the engineering ecosystem in the UK is one of the best in the world of innovative academic research foundation and planting techniques. The recent development in e-commerce is what should also be remembered. In the UK, online sales of organic food and related products rose to £ 4.1 million a week. A growing number of supermarkets were recorded to choose more accessible digital outlets to sell organic food. The UK organic market's distribution shares are various supermarkets: package schemes/home; delivery/mail orders, and other independent supermarkets from 2004 to 2012, respectively. Several retailers, between them, fell in 8 years from 75.3% to 70.7%, while other independent retailers grew volatile. Nevertheless, from 2004 to 2012, package systems, home delivery, and mail order have increased dramatically from 2.6% to 10.6%. There is a substantial increase in online purchases compared to traditional field transactions. The accompanying data shows the 2012 net organic sales of 5 supermarkets.
Legal Factor
In 2007, EU introduced the Organic Agriculture Ordinance that puts forward strict standards on the plant cultivation, animal husbandry, aquaculture, wine brewing organic food production and import of organic products from third countries. Strict laws and regulations on organic food and its processing have been implemented by both the EU and the UK meaning that whether a corporation can meet the rules can be a fundamental requirement on the sector. Therefore, legal norms play a major role in this industry's growth, guarantee and oversight. In contrast to social and economic change, corporations are becoming increasingly complicated and consequently facing potential legal problems. Furthermore, when legal issues are not detected in time, they can suffer losses.
Environmental Factor
It is illegal to use poisons, fertilizers and other chemical materials in the production process owing to the basic requirements for organic food. This particular feature will make full use of biological or physical pest control approaches to discourage the use of chemical pesticides to destroy most beneficial insects, beneficial birds, beneficial animals, preserve the original ecological balance; the fair use of organic fertilizers and crop waste, fertilizers and other chemical compounds to avoid the loss of agricultural products. Organic food production may conserve ecosystems, monitor agricultural non-point source emissions, and preserve local ecological equilibrium. Organic food is an evolving green sector from the viewpoint of preserving the rural environment. It's a country's green production system. As a consequence, organic food has inherent advantages concerning the environmental factor, which will be highly influential for its long-standing growth.
Conclusion
From the study of PESTLE, it can be seen that the UK's new organic food market needs further UK government aid. To match inflation, it requires a more dynamic economic policy and a forecast of inflation. This requires an advanced market segment from the social variable research to meet the demands of consumers. A UK organic food distributor should have a clear marketing strategy for innovation transition to gain maximum profit and incorporate the expertise of organic food production in London. In contrast to government support, UK organic food companies must control their activities based on UK organic food legislation. Secondly, this paper describes the definition of organic food and explains the features of organic food and UK organic food production past. And then, with PESTLE software, it analyses the condition of the UK organic food market based on accurate data.
References
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