Fairtrade Fortnight is currently encouraging shoppers to fork out a little extra for Fairtrade products in categories like chocolate, coffee and bananas, but retailers are scaling back on promotional activity around Fairtrade.
As a fortnight of activity (29 February-13 March) kicked off this week, the Fairtrade Foundation revealed sales volumes were up in four out of five major categories last year: coffee (+12%), tea (+3%), cocoa (+6%) and bananas (+5%). Wine saw double-digit growth.
But data from Brand View shows the big four cut back on Fairtrade promotions over that same 12-month period. In 2015, 446 deals were run on 321 Fairtrade products across chocolate, fresh fruit, sugar wine, coffee and tea, compared with 612 promotions in 2014.
Retailers have cut back further this year, the data shows, with 104 Fairtrade promotions in the big four across those key categories since 1 January 2016, compared with 117 in the same period last year [Brand View, 1 January 2016-1 March 2016].
If the trend continues, this could grow into a concern for producers because it could depress volumes of Fairtrade products. “When consumers purchase a Fairtrade product they are directly contributing to improving the livelihoods of farmers and workers who benefit from increased sales volumes, regardless of the price the consumer pays for the product,” says James Bennett, head of brand and out-of-home accounts at Fairtrade Foundation.
Average shelf prices for Fairtrade products have remained relatively flat over the past year, so the reduction in deals could be sign that retailers are switching from promotions to lower everyday prices on Fairtrade, as they have in other categories. This is not problematic for Fairtrade as such, although Bennett warns price wars could erode margins. “In some cases such as bananas and tea the price paid is below the cost of production, meaning that longer term the market is unsustainable as it does not reflect the real value.”
Taking the last month as a snapshot, there were 55 Fairtrade products on promotion, compared with 69 last year [Brand View: 2 February 2016- 2 March 2016]. Sainsbury’s accounted for 42% of all activity, followed by Tesco (15), Asda (12) and Morrisons (5).
The majority (60%) of promotional activity on Fairtrade products last month was ‘save amount’ deals, followed by ‘rollback’ (12.7%) and ‘buy 2 for discounts’ (10.9%). In contrast, during the same period in 2015, the majority of deals were ‘buy 2 for discounts’ (31.9%), followed by ‘save amounts’(31.9%) and ’price cuts’ (10.1%).
Coffee was the most promoted Fairtrade product last month, accounting for 33 promotions. Tea followed with 13 promotions. Meanwhile, there were just a few promotions on Fairtrade chocolate, fresh fruit and wine.
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