Fairtrade continues to buck recessionary trends, as shoppers with a heart opt for ethical alternatives – not least when they’re buying chocolate and wine. Vince Bamford reports
The doom-mongers said shoppers would ditch Fairtrade when the financial going got tough. How wrong they were.
Sales of sugar and confectionery have driven a 46.1% year-on-year value growth in the category as a result of Tate & Lyle sugar switching to Fairtrade last February and Nestlé and Cadbury products gaining Fairtrade accreditation.
It's not the only sub-category enjoying strong growth. Alcohol, biscuits and hot beverages are also doing well. "Fairtrade sales are going from strength to strength as customers continue to look for affordable ethical products," confirms Liz Jarman, head of Fairtrade at Sainsbury's, which announced this week that its Fairtrade sales had leapt 27% over the past year.
So how has Fairtrade managed to weather the economic storm so much better than other ethical labels such as organic? And how can its growth be maintained?
One reason for the category's appeal is that it chimes with consumer values, believes Charles Banks, director of consultancy The Food People. "Consumers can relate more easily to Fairtrade than to the wider vision of helping the environment," he says.
"The recession has made consumers more predisposed to buying Fairtrade. As they realise what is important their family and their home they are more in tune with others struggling to provide the best for their own family."
It's a view echoed by retailers keen to point out that many Fairtrade products carry little or no price premium compared with the standard equivalent. And in some cases buying Fairtrade can bring a saving.
"A customer may choose to move away from a branded hot drink to buy lower-priced own label which in our case will be Fairtrade," says Brad Hill, Fairtrade strategy manager at The Co-operative Group. "Those who buy Fairtrade have engaged in their own trading relationship with producers. They will not turn their backs on people for the sake of a few pence."
It could be argued, however, that a sweet tooth, rather than ethics, has made confectionery the fastest-growing part of the Fairtrade market. In the past 12 months, the market has grown 261% to £130m thanks, primarily, to Cadbury's Dairy Milk and Nestlé's Kit Kat carrying the mark since July 2009 and January 2010 respectively. Cadbury has since gained certification for its Dairy Milk Buttons range, and Nestlé for Christmas 2010's Kit Kat Claus bar.
The adoption of the mark strengthens the relationship between the confectionery producers and raw material suppliers particularly relevant today, given concerns over food security and cocoa price surges. "Forward-thinking companies have been re-evaluating their priorities, seeing sustainability as the way forward, building relations with producers," says a Cadbury spokesman.
The combination of increased competition in the chocolate market, soaring ingredients prices and volatile exchange rates made for a challenging year, says Alistair Menzies, head of sales and marketing for Fairtrade chocolate Divine, adding that the brand performed well despite this.
The Fairtrade alcoholic drinks market is also going from strength to strength, and is now worth a healthy £28.7m, up 59% on last year. The Co-operative Group has been busy in this sector, too. "In value terms, wine remains our largest Fairtrade category," says Hill, adding that the group's sales have been boosted by the introduction of Fairtrade wines to the Somerfield stores it acquired in 2009.
Asda, meanwhile, added two new South African wines to its Fairtrade line-up last year Extra Special Chenin and Pinotage while Sainsbury's added four South African lines to its Taste The Difference range.
Non-alcoholic drinks has also been performing well even the tiny (£1.8m) chilled Fairtrade drinks market has grown 73% by value year-on-year. By contrast, hot drinks a goliath of Fairtrade has grown a modest 7.5% by value.
Asda shook up its Fairtrade hot beverages line-up last year, delisting instant coffees from Cafédirect and Clipper. "Fairtrade is hugely important to us, particularly in coffee," says a spokesman. Asda plans to increase its Cafédirect range and has launched an own-label Extra Special Fairtrade instant coffee.
Cadbury is also making its presence felt in this market, having taken most of its hot chocolate range over to Fairtrade last autumn. "Our sales grew 14% in the final 12 weeks of the year [Nielsen] and we are expecting strong growth in the coming months, especially during Fairtrade Fortnight," says a spokesman.
Running from 28 February to 13 March, the theme of this year's Fairtrade Fortnight is Show Off Your Label. Organiser the Fairtrade Foundation is calling on manufacturers, retailers and Fairtrade licensees to push the Fairtrade mark.
The next step, said Fairtrade executive director Harriet Lamb, speaking at Sainsbury's Fairtrade debate this week, is to extend Fairtrade principles beyond ingredients to the whole supply chain and to encourage farmers to take ownership.
"The next stage is to change the nature of Fairtrade so farmers feel it is theirs and they are part of it," she says. "One of the ways forward is to market it in their own countries. It's already taking off in South Africa. They don't have to export it to the other side of the world."
Suppliers and retailers are also getting involved. Two farmers from Kuapa Kokoo (the co-operative that owns 45% of the Divine chocolate brand) are touring the UK over the fortnight to explain how Fairtrade has helped them.
Not every part of the category is doing well, of course. Fresh produce is one of the few sub-sectors to have seen volume sales fall, by 2.6% [Kantar].
The Co-operative Group says this is mainly due to reduced availability, particularly of avocados, grapes, grapefruit, lemons and oranges. "Supply issues arise when crops are poor," says Hill. "In some Fairtrade cases, there are few growers, so there is little room for manoeuvre should problems occur. We are investigating how we can invest in opening up supply."
But generally, the mark is gaining ground. So much so, says Hill, that: "To be honest, the success of the market makes us wonder when it will stop growing."
Focus On Fairtrade
The doom-mongers said shoppers would ditch Fairtrade when the financial going got tough. How wrong they were.
Sales of sugar and confectionery have driven a 46.1% year-on-year value growth in the category as a result of Tate & Lyle sugar switching to Fairtrade last February and Nestlé and Cadbury products gaining Fairtrade accreditation.
It's not the only sub-category enjoying strong growth. Alcohol, biscuits and hot beverages are also doing well. "Fairtrade sales are going from strength to strength as customers continue to look for affordable ethical products," confirms Liz Jarman, head of Fairtrade at Sainsbury's, which announced this week that its Fairtrade sales had leapt 27% over the past year.
So how has Fairtrade managed to weather the economic storm so much better than other ethical labels such as organic? And how can its growth be maintained?
One reason for the category's appeal is that it chimes with consumer values, believes Charles Banks, director of consultancy The Food People. "Consumers can relate more easily to Fairtrade than to the wider vision of helping the environment," he says.
"The recession has made consumers more predisposed to buying Fairtrade. As they realise what is important their family and their home they are more in tune with others struggling to provide the best for their own family."
It's a view echoed by retailers keen to point out that many Fairtrade products carry little or no price premium compared with the standard equivalent. And in some cases buying Fairtrade can bring a saving.
"A customer may choose to move away from a branded hot drink to buy lower-priced own label which in our case will be Fairtrade," says Brad Hill, Fairtrade strategy manager at The Co-operative Group. "Those who buy Fairtrade have engaged in their own trading relationship with producers. They will not turn their backs on people for the sake of a few pence."
It could be argued, however, that a sweet tooth, rather than ethics, has made confectionery the fastest-growing part of the Fairtrade market. In the past 12 months, the market has grown 261% to £130m thanks, primarily, to Cadbury's Dairy Milk and Nestlé's Kit Kat carrying the mark since July 2009 and January 2010 respectively. Cadbury has since gained certification for its Dairy Milk Buttons range, and Nestlé for Christmas 2010's Kit Kat Claus bar.
The adoption of the mark strengthens the relationship between the confectionery producers and raw material suppliers particularly relevant today, given concerns over food security and cocoa price surges. "Forward-thinking companies have been re-evaluating their priorities, seeing sustainability as the way forward, building relations with producers," says a Cadbury spokesman.
The combination of increased competition in the chocolate market, soaring ingredients prices and volatile exchange rates made for a challenging year, says Alistair Menzies, head of sales and marketing for Fairtrade chocolate Divine, adding that the brand performed well despite this.
The Fairtrade alcoholic drinks market is also going from strength to strength, and is now worth a healthy £28.7m, up 59% on last year. The Co-operative Group has been busy in this sector, too. "In value terms, wine remains our largest Fairtrade category," says Hill, adding that the group's sales have been boosted by the introduction of Fairtrade wines to the Somerfield stores it acquired in 2009.
Asda, meanwhile, added two new South African wines to its Fairtrade line-up last year Extra Special Chenin and Pinotage while Sainsbury's added four South African lines to its Taste The Difference range.
Non-alcoholic drinks has also been performing well even the tiny (£1.8m) chilled Fairtrade drinks market has grown 73% by value year-on-year. By contrast, hot drinks a goliath of Fairtrade has grown a modest 7.5% by value.
Asda shook up its Fairtrade hot beverages line-up last year, delisting instant coffees from Cafédirect and Clipper. "Fairtrade is hugely important to us, particularly in coffee," says a spokesman. Asda plans to increase its Cafédirect range and has launched an own-label Extra Special Fairtrade instant coffee.
Cadbury is also making its presence felt in this market, having taken most of its hot chocolate range over to Fairtrade last autumn. "Our sales grew 14% in the final 12 weeks of the year [Nielsen] and we are expecting strong growth in the coming months, especially during Fairtrade Fortnight," says a spokesman.
Running from 28 February to 13 March, the theme of this year's Fairtrade Fortnight is Show Off Your Label. Organiser the Fairtrade Foundation is calling on manufacturers, retailers and Fairtrade licensees to push the Fairtrade mark.
The next step, said Fairtrade executive director Harriet Lamb, speaking at Sainsbury's Fairtrade debate this week, is to extend Fairtrade principles beyond ingredients to the whole supply chain and to encourage farmers to take ownership.
"The next stage is to change the nature of Fairtrade so farmers feel it is theirs and they are part of it," she says. "One of the ways forward is to market it in their own countries. It's already taking off in South Africa. They don't have to export it to the other side of the world."
Suppliers and retailers are also getting involved. Two farmers from Kuapa Kokoo (the co-operative that owns 45% of the Divine chocolate brand) are touring the UK over the fortnight to explain how Fairtrade has helped them.
Not every part of the category is doing well, of course. Fresh produce is one of the few sub-sectors to have seen volume sales fall, by 2.6% [Kantar].
The Co-operative Group says this is mainly due to reduced availability, particularly of avocados, grapes, grapefruit, lemons and oranges. "Supply issues arise when crops are poor," says Hill. "In some Fairtrade cases, there are few growers, so there is little room for manoeuvre should problems occur. We are investigating how we can invest in opening up supply."
But generally, the mark is gaining ground. So much so, says Hill, that: "To be honest, the success of the market makes us wonder when it will stop growing."
Focus On Fairtrade
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