Discounters like Aldi are increasingly offering organic products like milk at cheap prices. Many supermarket customers are wondering: How can that be – especially in times of high inflation?
Organic farmer Reinhard Nagel still remembers the general meeting of the Upländer farmer’s dairy very clearly, at which the management suddenly announced that they wanted to work with Aldi’s own brand “Gut Bio” in the future: “It was very heated, that’s clear. Many were the opinion, it’s against our honor, we can’t do that, it’s against our standards”. That was a few months ago.
The Upländer farmer’s dairy, Hessen’s only organic dairy, is an absolute matter of the heart for Reinhard Nagel. In 1996 he founded it together with 17 other dairy farmers. They wanted to make organic products, achieve fair prices and fair conditions for people and animals. And now this shock: “It was a strange feeling, but in the end the majority decided and the majority says we’ll do it this way and then we’ll see what comes out of it. Of course you shouldn’t make yourself dependent on a group like this ” says Nagel. Since then, it has been said that where Aldi’s own brand “Gut Bio” is on the label, there is often Upländer farm dairy in it – organic milk at a competitive price of 1.25 euros.
Good for the image of Aldi & Co.
But what is behind such cooperation? “The discounters benefit when they can polish their image with topics such as environmental awareness, sustainability, regionality, animal welfare. I believe that such strategic partnerships are often not entered into voluntarily, because the organic dairies currently have the problem of oversupply, which have to bring them to the market,” says Nikos Förster from the Hessen state agricultural enterprise.
Because of the Ukraine war and high inflation, consumers paid more attention to their spending and turned to organic products less. “Demand has fallen sharply as a result, but milk producers are delivering the same quantities as before,” says Förster.
According to experts, the sale of organic milk has fallen by 20 percent compared to the previous year. The excess quantities now have to be accommodated on the market at low cost – a difficult negotiating situation for the dairies. “Of course it can be the case that renegotiations will then take place and that the price pressure will increase at some point, and then you have to be very careful, even as an organic association, that your own products are not sold at cheap prices at some point.”
Burglary at health food stores
The management of the Upländer farm dairy has declined an interview about the cooperation with Aldi. The discounter also only wants to express itself in writing: “Regional items are an important part of the range,” says Aldi. “The cooperation with the Upländer farm dairy currently exists in three regions.”
The fact that cooperation with well-known organic brands helps discounters in particular is also shown by the current figures from the Society for Consumer Research. Sales in organic supermarkets fell by 10.8 percent last year. The numbers are even more dramatic for the health food stores, they even recorded a minus of 37.5 percent. Manufacturers of branded goods in the organic sector lost around 8.9 percent.
The situation is completely different with the retail chains’ own brands such as “Gut Bio”. Bucking the trend, they increased by nine percent.
“Organic must become the new normal”
Jan Plagge, the President of Bioland, the largest organic farming association in Germany, still finds cooperation with discounters sensible. He has been working with Lidl for seven years. “The first reaction was: No, that doesn’t go together. But when I took a closer look, my opinion changed. The production costs are determined by our guidelines, by the standards in animal husbandry, in crop production, in biodiversity. That defines the costs.” That’s why the association announced to Lidl right from the start: “You have to pay fair, reasonable producer prices, otherwise we can’t supply you.”
A total of 10,000 companies are organized at Bioland nationwide. Plagge also welcomes the cooperation between the Upländer farmer’s dairy and Aldi: Such cooperation is important for something like regional organic milk to become an everyday product. “That’s what we’re campaigning for: that organic becomes the norm and not something exclusive for Sunday.” In the end, it was primarily the consumers who benefited from this.