Preliminary Highlights(Ⅰ)

PRELIMINARY MARKET HIGHLIGHTS

Since 2001, the global organic cotton market has undergone tremendous growth. Consumer awareness of and demand for products made with organic cotton, wool, linen, and other fibers has increased dramatically. As a result, demand for organic fiber has increased significantly. Farmers around the world have responded by planting more cotton on certified organic fields, and expanding the amount of land undergoing conversion from chemical farming to organic cultivation.

While growth has brought significant benefits to consumers, businesses and farmers, continued innovation is essential if we are to create a market where the promise of organic farming can be realized. In this new market:

     ·Farmers are known and celebrated

     ·Product identity is preserved

     ·Great design, wonderful products and stewardship of the land go hand in hand

       ·Healthy and fair returns are shared by everyone in the chain----from farmers to brands and the manufacturing partners to consumers

In the eighteen months since the release of the Organic Exchange’s 2006 Global Organic Cotton Market Report, many important steps have been taken by companies and farmers to expand the production and use of organic cotton and build new models of fair, sustainable, transparent, and committed supply chains to make the apparel, home products, and personal care items purchased by consumers around the globe. Significant market changes occurring in 2006 and 2007 are highlighted in the pages that follow.

Information presented in this document is based on primary and secondary research gathered by Organic Exchange about the demand for organic cotton fiber by more than 50 companies with significant organic cotton programs, approximately 1,500 small and medium sized brands and retailers participating in the global organic cotton market and 67 certified organic cotton farming products.  

1. Key Factors Driving Organic Market Development

There are many factors driving the continued and rapid development of the global organic products market. Just of few of these factors are:

      ·Consumers seeking an organic and sustainable lifestyle

      ·Companies aligning their business, sustainability, and organic strategies

      ·Increased access to knowledge about organic program development

Increasing consumer demand for organic cotton products

Consumers in many major markets want more green product choices. A recent study of US consumers conducted by Hartman Group found that 50% of women want mass retailers to carry more green goods. 11% of these consumers see themselves as “extremely green” today, and 43% say that they will be “extremely green” in five years.

Consumer demand continues to grow for a wide range of products containing organic ingredients including food, cosmetics, home textiles and apparel products. The organic food, fiber and personal care-markets in the United States and Europe continue to grow at double digit rates. For example, a recent report by the Soil Association shows retail sales of organic product sales at over $4 billion in 2007, with an average annual growth rate of 22%. In 2006 and 2007, companies including C&A, Eileen Fisher, and H&M report having stronger than expected sales of organic cotton apparel products in US and European markets. Similarly, in the U.S., the overall organic sector grew 21 percent to reach $17.7 billion in 2007.

Alignment between company business, sustainability and organic development strategies

In 2006 and 2007, a growing number of retailers and brands presented integrated business strategies which aligned sustainability objectives and organic program development goals with business goals. These included Marks & Spencer’s “Plan A”, Woolworths South Africa’s Good Business Journey, Wal-mart’s Sustainability Plan, C&A’s “ We Care” Program, and Carrefour’s Sustainable Development Program.

Growing support for organic program development

During this same time period, non-profit organizations such as Organic Exchange, Organic Trade Association, Made-By/Solidaridad, Helvetas, Soil Association, Oxfam, Fair Trade Foundation, Technoserve, Roots Capital, Triodos Bank, and Rabobank Foundation as well as development agencies and foundations including ICCO and Shell Foundation have developed new information, tools, and business models for helping companies develop and implement organic cotton programs.

2. Market Growth Continues at Rapid Pace in 2006 and 2007

Retail sales grow significantly

2006 and 2007 retail sales figures for the organic cotton apparel, home textiles, and personal care products segments reflect continued strong growth. Market highlights include:

· 2006 retail sales of organic cotton products reached $1.1 billion globally, and initial estimates project 2007 retail sales of nearly $2.0 billion. The initial 2007 retail sales estimates are 3% higher than those projected by Organic Exchange in the 2006 Market Report.

· 2006 retail sales were 85% higher than 2005 sales, and initial estimates show an 83% increase in sales from 2006 to 2007.

· Apparel currently accounts for 85% of total market demand; home textiles represent 10%; and personal care is 5%.

· The apparel and home textile product mix expanded during 2006 and 2007 to  include a greater diversity of knitwear products, a broadening supply of woven products such as men’s dress shirts and women’s career wear, and the development of new products such as organic cotton canvas shoes.