In a bold move, Iceland Group, a U.K. food retailer with 770 stores, announced plans to
convert to organic food at no extra cost to customers. The company is starting by using organic
produce in its frozen food lines and has established long-term supplier contracts amounting to nearly 40 percent of the world’s organic vegetables (US$13.5 million).
The company is donating US$1.5 million to the National Trust, Britain’s largest
landowner and charity, to encourage organic farming there, since only three percent of
Britain’s farms are organic. About 80 percent of its contracts have been sourced outside of the UK for this reason, angering local farmers.
Iceland will absorb the difference in cost between organic and conventional produce to
the tune of US$12 million so that the costs are not passed along to customers. Says
Chairman Malcolm Walker, “It is our aim to stop organics being a niche market and make
it accessible to all income groups.”
According to Russell Ford, Iceland’s managing director, the decision was prompted by
surveys that show three out of four customers would prefer to buy organic goods if they
were competitively priced. Organic food sales are increasing by 40 percent a year in
Britain, but are still only about one percent of total food purchases.
Iceland was the first company to exclude all genetically modified ingredients, and the first to label all its foods with this information. The company plans to eliminate all artificial colors and flavors from its private-label products and sells a line of energy-efficient refrigerators and freezers dubbed Iceland Kyoto. The company’s sales growth is three percent above the industry average. Same store sales growth was 10 percent over the past year.
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