Discounters such as Aldi are increasingly offering organic products such as milk at reduced prices. Customers want to know: How come food produced by traditional methods tends to be more expensive?
Organic farmer Reinhard Nagel still clearly remembers the shareholder meeting of Upländer farmer’s dairy, at which the management suddenly announced that they would cooperate with Aldi’s own brand “Gut Bio” in the future: “It was very warm and clear. A lot of opinions, which is contrary to To our honor, we can’t do that, it’s against our standards.” That was a few months ago.
Upländer farmer’s dairy is the only organic dairy in Hessen and it is definitely a favorite of Reinhard Nagel. He founded it with 17 other dairy farmers in 1996. They want to produce organic products that achieve fair prices and fair conditions for people and animals. Now this shock: “It’s a weird feeling, but in the end the majority decides, the majority says we’ll do it, and then we’ll see how it turns out. Of course you shouldn’t make yourself dependent on groups like that”, Nagel said. Since then, Upländer farm dairy – organic milk at a very competitive price of €1.25 – is said to be regularly available wherever Aldi’s own brand “Gut Bio” is said to be on the label.
Good for Aldi & Co.’s image.
But what’s behind this collaboration? “Discounters benefit when they can enhance their image with topics like environmental awareness, sustainability, regionalism, animal welfare. I believe that these strategic partnerships are often not voluntary because organic dairy There is currently an oversupply problem, which has pushed them to the market,” says Nikos Förster from the state-owned agricultural enterprise in Hesse.
Due to the war in Ukraine and high inflation, consumers have become more consumer-conscious and have reduced their purchases of organic produce. “As a result the demand has fallen sharply, but the milk producers are delivering the same volumes as before,” says Förster.
According to experts, sales of organic milk have dropped by 20% compared to the previous year. The excess volume must now be supplied on the market at low cost – a difficult negotiating position for the dairy. “Of course, renegotiations can happen, price pressures will build up at some point, and then you have to be very careful that even organic associations don’t sell your own product at a low price at a certain point.”
Health food store burglary
The management of the Upländer farm dairy declined to be interviewed about the partnership with Aldi. The discounter also only wants to express itself in writing: “Regional merchandise is a big part of the range,” says Aldi. “The cooperation with Upländer Farm Dairy currently exists in three regions.”
New data from the Institute for Consumer Research also shows that partnerships with well-known organic brands are especially helpful for discounters. Sales at organic supermarkets fell by 10.8 per cent last year. The numbers for health food stores were even more striking, even recording a negative 37.5%. Manufacturers of branded goods in the organic space lost about 8.9 percent.
This situation is quite different from a retail chain’s own brand (such as “Gut Bio”). Bucking the trend, they added nine percent.
‘Organic must become the new normal’
Jan Plagge, chairman of Bioland, Germany’s largest organic farming association, still thinks it is wise to cooperate with discounters. He has been with Lidl for seven years. “The first reaction was: no, that doesn’t match. But when I looked closer, my opinion changed. Production costs are determined by our Guidelines, Livestock Standards, Crop Production Standards and Biodiversity Standards. This determines the cost. ’ That’s why the association declared to Lidl from the start: ‘You have to pay a fair and reasonable producer price or we can’t supply you. “
A total of 10,000 companies nationwide are organized in Bioland. Plagge also welcomes the collaboration between Upländer farmer’s dairy and Aldi: this collaboration is important for something like regional organic milk to become an everyday product. “That’s what we’re campaigning for: to make organic the norm, not a Sunday exclusive.” Ultimately, it’s the consumers who benefit most.