Supermarket launches price war on organic food

The supermarket chain Iceland gave Britain's organic food industry a huge boost yesterday when it announced it was to convert all own-label frozen vegetable lines to organic, and sell them at the same price as conventional produce.

The supermarket chain Iceland gave Britain's organic food industry a huge boost yesterday when it announced it was to convert all own-label frozen vegetable lines to organic, and sell them at the same price as conventional produce.

Its initiative, which removes at a stroke the principal consumer objection to organic food - that it costs a lot more - puts the rest of Britain's supermarket chains, many of which sell organics at very high mark-ups, on the defensive and under pressure to follow suit.

The move is likely to give significant further impetus to the booming organic food market, which is growing at 40 per cent a year in Britain and is likely to be worth £1bn annually by 2001. Iceland says it will still pay organic farmers for the higher costs of production incurred in agriculture without pesticides or artificial fertilisers, but will itself absorb the cost of levelling its organic prices, which it estimates will be £8m a year.

In October the company will start replacing its 40-or-so own-label lines of conventional frozen vegetables, such as sweetcorn, cauliflower, peas and green beans, which represent 15 per cent of the total UK frozen vegetable market, with organic equivalents.

The new items will cost no more, it says, than the conventional vegetables that will still be on sale in it supermarkets from brands such as Findus or Birds Eye. Iceland already sells some organic bread, milk, cheese and yoghurt, and is considering switching over other lines, including meat and fresh produce. The rapidly expanding company, which has 760 stores in Britain and a turnover of £1.9bn, has warmly embraced the green philosophy as good for its business. It has introduced a range of environmentally friendly fridges and freezers that have been endorsed by Greenpeace, and made headlines last year when it was the first food group to go GM-free.

Iceland's latest move is an equally shrewd mix of environmental action and aggressive marketing and its significance was recognised at once by both the green movement and the grocery trade. Patrick Holden, the director of the Soil Association, the principal lobby group for organic food and farming, said: "Iceland have made a bold move today to make organic food a realistic price option for millions of consumers who did not have access to it before."

Sandra Bell, real food campaigner at Friends of the Earth, said: "Once again, Iceland has grasped the initiative. The public want real food, produced without GMOs and pesticides, at affordable prices. This is what Iceland is now going to do and it's now up to the other supermarkets to do the same."

The company said yesterday that its move was prompted by a survey suggesting that three out of four customers would prefer to buy organic goods if they were cheaper than current prices. Iceland's chairman and chief executive, Malcolm Walker, said that the decision made good sense from a number of standpoints. He said: "Ethically and morally we are happy to be fighting for better food. Commercially it makes sense as well. The market is expected to grow at 40 per cent over the next five years.

"We are giving customers a choice of buying natural organic food at affordable prices."

The company is even thinking about converting the whole of its own-label product range to organic, although that will depend on the ease of sourcing the produce.

Because Britain itself currently produces so little organic food, Iceland says it will have to bring in about 80 per cent of its new requirements from abroad. It claims to have bought up nearly 40 per cent of the world's 100,000-ton organic vegetable crop.

For many years, John Jones has been using organic methods on his farm close to the Welsh border in Herefordshire. He supplies Iceland with organic milk and said yesterday he thought the firm's expansion of its organic lines could help many organic farmers and would be good for Britain's countryside. He said: "We look after the land. We're not killing wildlife with pesticides."