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Tesco Predicts Organic Food Bonanza

Tesco Plc, the British food retailer, yesterday predicted its sales of organic food could reach a billion pounds annually in a few years as customers increasingly get a taste for "green" produce. Read More

Tesco Plc, the British food retailer, yesterday predicted its sales of organic food could reach a billion pounds annually in a few years as customers increasingly get a taste for “green” produce.

The UK’s largest food store chain, which started selling organically grown products in 1992 with just five items, said it will now increase the number of organic lines to 750. Tesco is also spending five million pounds to slash the prices of its organic ranges, making them more affordable.

It expects sales to reach one billion pounds by 2005, up from 33 million pounds in 1998.

UK consumers have become increasingly fussy about what they eat after a series of major food scares, including mad cow disease. Shoppers are also getting “greener” and keen to avoid food sprayed with pesticides.

“Demand is going through the roof,” said Tesco Marketing Director Tim Mason, “this year will be remembered as the time when organic became mainstream,” he said in a statement.

Tesco’s move seems to point to organic food as the latest battleground in cut-throat competition between the UK’s top supermarkets, including J.Sainsbury and ASDA .

Earlier this month, rival chain Iceland stole a march on rivals by vowing to sell organic products at the same price as conventionally grown foods. Organic fruit and vegetables can cost at least 20% more than conventional equivalents.

Pro-environment lobbyists such as Friends of the Earth have criticised the big UK food retailers in the past for failing to provide organic food at a fair price.

But there are also worries that an organic price war between the supermarkets could hurt farmers.

Tesco said organic baby food was one of the main drivers of the explosion in demand. This has gone up by 100% in the last nine months.

Mason said one in four Tesco customers were now buying at least one item of organic food each month, showing that organic shopping was no longer the exclusive preserve of high income, environmentally-aware customers.

Until now organic goods were only in selected Tesco stores, but from this week 100 organic lines will appear in each of the retailer’s 659 UK stores.

From September, Tesco will sell more than 745 organic lines, expected to generate sales of more than 250 million pounds this year. The organic range includes, fresh produce, meat and poultry, ready prepared meals, dairy products, bakery, dried groceries, frozen food, baby food, pet food and wine and alcohol.

Tesco used data from its loyalty card Clubcard to track demand for organic goods.

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