Riverford rides organic boom as UK market hits 20-year high

The UK’s organic food sector is posting its strongest sustained growth in roughly 20 years, and Devon-based veg-box business Riverford has become one of the clearest bellwethers: sales up 6% to £117m in the year to May 2025, while operating profit fell to £3.4m as the firm absorbed cost inflation rather than fully passing it on to customers.

That squeeze-and-grow combination matters far beyond one business. It points to a market where demand is expanding, but supply chains, labour, energy and trade frictions are still punishing margins — precisely the tension now shaping investment and farm-level decisions on whether (and how fast) to expand UK organic production.

What Riverford’s latest numbers really say

Riverford’s performance is notable for three reasons:

• Demand is rising even in a high-cost environment. The company says new customers are coming in and existing customers are spending more, with about 70,000 boxes delivered each week.
• Revenue growth is not translating cleanly into profit. Turnover rose £7m year-on-year, but operating profit fell from £4.7m to £3.4m after the firm chose to shoulder higher costs (wages, energy, inflation and post-Brexit friction).
• Employee ownership is influencing strategy. Riverford paid a £1.1m profit share in the year to May 2025, reinforcing its “hold prices where possible” stance — a competitive differentiator, but one that can compress margins in volatile input markets.

Interpretation: In BI terms, this is a classic “volume/value growth with margin compression” pattern. If costs stay elevated, Riverford (and similar operators) will increasingly need either:

• operational productivity gains (route optimisation, packing efficiencies, lower-cost fulfilment),
• pricing discipline (targeted rises rather than blanket increases), or
• mix shifts (higher-margin categories such as meat/added-value lines, which Riverford says are growing strongly).

The UK organic market backdrop: growth is broad-based

The most robust “anchor” dataset in the public domain remains the Organic Market Report 2025 from Soil Association, which reports:

• The UK organic market grew 7.3% in 2024 to £3.7bn, and is double its 2014 value (£1.86bn).
• Sales through major multiples (food & drink retail) reached £2.43bn in 2024, up 8% year-on-year.
• Organic unit sales growth was 4.7% vs 1.2% for non-organic in major retail (i.e., materially faster growth in volume, not just price).

Where the money is: supermarkets dominate, but “other channels” still matter

While supermarkets account for the largest slice, Riverford’s growth shows why direct-to-consumer and specialist channels remain strategically important.

Based on the reported 2024 totals, major multiples (£2.43bn) represent roughly two-thirds of the total £3.7bn market, leaving about £1.27bn across other channels (including independents, home delivery and foodservice).

What this suggests for the “veg box” model:

• When supermarkets pull organic forward (more lines, sharper pricing, better availability), box schemes must win on trust, provenance, taste, convenience and ethics — and increasingly, on service design (recipe integration, flexible subscriptions, add-ons).
• Conversely, when supermarket ranges are thin or confidence wobbles (standards controversy, supply inconsistency), direct-to-consumer operators can accelerate quickly — particularly among households actively seeking “food you can trust”.

Why the boom is happening now: four demand-side drivers

1) Trust and transparency as a “value proposition”

Consumer narratives around food integrity — pesticide reduction, animal welfare, known supply chains — are becoming decisive purchase criteria, especially for higher-income and health-driven cohorts. Riverford’s chief executive explicitly linked the latest demand to consumers wanting reliable sources of trusted food.

2) Volume growth, not just inflation

The Soil Association summary indicates organic unit sales are rising faster than non-organic in major retail — important because it signals real demand expansion rather than simply higher shelf prices.

3) Changing buyer mix and “organic normalisation”

Sector reporting around the 2025 market release points to younger shoppers and mainstreaming of organic baskets (not just “niche premium”). While individual demographic statistics vary by data partner and are not consistently published in the public summary, the strategic direction is clear: organic is increasingly treated as a default “quality cue” rather than a special occasion purchase.

4) Channel innovation

Home delivery and subscription models reduce the friction of buying organic (availability, decision fatigue, time). Riverford’s ~70,000 weekly boxes quantify the scale such models can reach in the UK.

The supply-side constraint: organic farmland is still stuck

Here’s the economic catch: the market is expanding faster than UK organic production capacity.

The Soil Association summary states organic farming remains stuck on ~3% of UK farmland, leaving the market “heavily reliant on imports.”

For England, this matters because:

• A rising organic market without a commensurate domestic conversion pathway increases import dependence, which can undermine “local provenance” narratives and expose supply to currency/logistics shocks.
• Conversion decisions are still heavily influenced by transition risk (yield uncertainty, agronomy knowledge, certification overheads, and the timing of support payments relative to cashflow).

Policy tension: Demand is pulling in one direction; conversion economics and administrative friction can pull in another.

Margin reality check: why profits can fall in a boom

Riverford’s profit dip is not an anomaly — it is a warning signal.

The firm’s explanation is straightforward: it absorbed higher operational costs (inflation, wages, energy and post-Brexit trading friction) rather than fully passing them on.

BI lens (unit economics):

• If average basket value rises (more add-ons, premium categories), revenue grows.
• If cost per delivery rises faster (fuel, maintenance, labour, packaging, import admin), margin shrinks unless pricing or productivity offsets.
• The “veg box” model is especially sensitive to last-mile efficiency and labour intensity, meaning electrification and routing tech can help, but only if capex and operational deployment are well-managed.

What to watch next (England-focused)

Will 2025/26 organic growth translate into more conversion in England?
The market signal is there, but conversion economics and certainty over future support remain the key levers.

Can the sector expand while holding consumer trust?
The ongoing debate about organic standards in contested categories (e.g., salmon certification scrutiny) shows how reputational risk can spill over into broader organic confidence.

Will retailers “mainstream” organic further, or retreat if margins tighten?
The supermarkets’ £2.43bn organic base gives them outsized influence on farmer signals and supply chain investment.