Fairtrade action, how to progress?

- Last updated on GMT

Related tags: Marketing, Fair trade, Fairtrade, Datamonitor, Us

Fairtrade foods, schemes that seek to guarantee farmers in
developing nations a fair deal, are making inroads into the
mainstream, thanks to support from the major supermarkets and
changing consumer concerns, reports market research company
Datamonitor. But despite this, high prices mean that their market
share has remained tiny. Fairtrade products promoting tangible
benefits for the consumer may be the only route to success.

Fairtrade foods, schemes that seek to guarantee farmers in developing nations a fair deal, are making inroads into the mainstream, thanks to support from the major supermarkets and changing consumer concerns, reports market research company Datamonitor. But despite this, high prices mean that their market share has remained tiny.

Years of campaigning have raised awareness of the issues, at least in some countries in Europe, but the market analysts maintain that for most consumers the deciding issues continue to be price and personal benefit.

UK supermarket the Co-op, an undisputed leader in promoting equitable trade, last week​ said it will switch all its own brand chocolate to Fairtrade. The Co-op said sales in a wide range of ethical products are growing at an impressive 19 per cent per year.

Despite this, the consumer clearly has a hankering for lower prices, leaving ideologies to take the back seat. The Co-op admits that while 30 per cent of consumers say they shop ethically, few ethical products take more than a 3 per cent market share.

And what about competition? The Fairtrade Label organisation's stringent rules ensure that food producers buy raw commodities at prices that give growers a secure future. However, these are as much as 80 per cent higher than those routinely paid by multinationals such as Nestle or Cadbury-Schweppes.

According to Datamonitor, consumers are prepared to pay higher prices if they see a benefit. Fairtrade products now account for 12 per cent of the US roast and ground coffee market, free range eggs account for around 35 per cent of the UK market, organic baby foods are popular, and organic fruit and vegetables are moving further into the mainstream in both the UK and US.

Of note, the selling points of these products are their benefits to the consumer, not​ to the farmer or the environment. Organic food and free-range eggs are regarded as healthier, and Fairtrade coffee demands a premium for its perceived quality.

Datamonitor​ concludes that the choice for both producers and retailers is stark but clear: show consumers a tangible benefit, or find a way to make prices competitive.

Related topics: Retail & Shopper Insights

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