What do Starbucks coffee, Cadbury’s chocolate and bananas from the Windward Islands have in common? They are each stamped with the familiar black, blue and yellow mark that has come to stand for an ethical alternative, a fair return and taking social responsibility.
Fairtrade offers around 7.5 million people in the developing world a more secure future, ensuring a guaranteed minimum price that covers the cost of sustainable production and a premium on top of the agreed price, which is intended for the social, economic and environmental development of farmers, workers and their communities.
Next week, all eyes will be on the movement as the Fairtrade Foundation asks the nation to boast about buying ethically in a campaign named Show Off Your Label, which will form the centrepiece of this year’s promotional fortnight.
This comes after The Co-operative Group set the pace for ethical trading last week when it made a series of groundbreaking pledges as part of a three-year plan that is widely thought to make a renewed commitment to corporate responsibility and act as a catalyst for rival retailers to make moves in the same direction. The initiative promises, among other things, a radical conversion to Fairtrade, with around 90 per cent of the primary commodities sourced from the developing world certified to Fairtrade standards by 2013.
The move is set to boost the category after what has been a challenging 12 months, in which Fairtrade-certified banana sales hovered at the same level and other fresh fruit lines have taken a hit as shoppers rethink their spending and retailers streamline their offer.
A number of stores are scaling back their Fairtrade fruit offer outside bananas to concentrate on core lines. Among the hardest hit are exotics such as mangoes, pineapples and avocados, which have suffered from high price differentials with conventional counterparts on top of the general shift away from lines that are perceived as luxury treats.
At the same time, growers are re-evaluating whether the cost of becoming Fairtrade-certified and the audits involved are worth it when it comes to the volumes they sell and the social premium this generates.
Harriet Lamb, executive director of the Fairtrade Foundation, admits that this year has been a “disappointment” for producers who had worked hard to become certified and hoped for higher volume sales but she calls on growers, suppliers and retailers to work together to increase sales and not “play fast and loose” with prices.
“I think we do need to think of lots of different and imaginative ways that we can work to crack that,” she says. “Some of it is about raising the profile of fresh fruit - Fairtrade pineapple and grapes for example - communicating the stories behind them and getting the retailers to embrace that. The truth of the matter is that we haven’t really done enough - we have done quite a lot on the supply side, for example we’ve had the first Fairtrade melons and blueberries, but we didn’t do enough work - us, the brands, the retailers - to tell that story to the public. That’s really the challenge that we need to take up because we shouldn’t have been surprised that consumers didn’t go on buying through the recession. We have to bring Fairtrade to life for consumers at the point of purchase and make sure they can find Fairtrade in store.
“Bananas are closely associated with Fairtrade and the public has continued to buy them even, I have to say, in the face of some pretty ruthless price cutting,” she continues. “The retailers play a game of cutting the price - it doesn’t increase sales and everyone is committed to match everyone else so I don’t see how it helps competitive positioning either. It is irresponsible for the retailers to play fast and loose with banana prices in the way they do but despite that, Fairtrade banana sales have remained steady.
“However, for other fresh fruit, people don’t know as much about it - it is seasonal, it is much harder to crack for the retailers because sometimes you’ve got South African fruit and then you’re coming from Spain and sometimes you don’t have it at all. I think we have realised that and while bananas are well branded, well positioned in store and people know the story, it’s not the same in fresh fruit and then along comes the recession and it has been in a much more fragile position.
“At the end of the day, the producers go through very hard work to get certified - it doesn’t really work for them if you are only selling a few boxes to one country, they need to be getting the volume to get the premium back to make it worthwhile making those investments.”
It’s a complicated scenario, but growers, suppliers and retailers are all signalling that they are keen to turn it around. So how can the sector get sales of Fairtrade fresh fruit back on track? The Fairtrade Foundation has responded to the sales drop by double checking whether its standards are right for producers and analysing the cost benefits, without diluting its major principles. In some cases, the minimum prices and premiums have been adjusted to allow for Fairtrade to hold its own in an increasingly competitive market.
“It may be that in some cases the minimum prices are too high or the premium is too high, but this is a matter for the producers, the traders and independent experts to get together and think about whether they have got this right,” says Lamb. “We are committed to making sure that our system is doing the best job that it possibly can.”
These adjustments could be key to ensuring that Fairtrade fruit remains an attractive and viable offer up against conventional lines.
Rosemary Lalley, Fairtrade sales manager at Univeg, maintains that the key to making the ethical offer work is to ensure that prices are aligned to conventional alternatives. “The price differential is crucial and where the price gaps have been widening, it has had a negative impact on Fairtrade sales,” she says. “Growers are looking at all the costs involved quite honestly to understand what the certifying costs are and what the social premium is to see where they are, where the conventional market is and what they can do. They have been looking at market prices realistically and what they are pitching and trying to minimise the price difference.”
At the same time, Fairtrade fruit suppliers will be pushing through significant volumes to back retail activities over the next two weeks.
Clive Marriott, commercial manager of AgroFair UK, insists that there are opportunities for retailers that make a commitment to the cause. He maintains that retailers should step up with “more category conversions, maybe not across the estate, but in particular store formats for example where retailers may not be price-matching” and “commitment to listing more products in stores where shoppers fit the profile of those that like to buy Fairtrade products”.
“Our aim is to actively help retailers to understand the benefits to their brand of shifting categories or SKUs to Fairtrade products,” he continues.“There are few real opportunities in certifying new products, so the focus is on maximising sales and broadening the availability of Fairtrade produce to increase positive impact for our producer owners.”
The good news is that as a whole, Fairtrade is building its reputation and going from strength to strength even at a time when the economic downturn is making consumers reconsider their weekly shop.
“I think it’s fabulous to see the depth of public commitment to Fairtrade and overall, they have gone on putting it in their shopping baskets and asking for more,” says Lamb. “If anything, we really fit with the mood of the times for going back to your core values and caring for other people, waking up with a hangover from all the bling and the bankers’ bonuses and what really matters now is that we play fair by others including farmers and workers in developing countries.
“Our ambition is to get half of all the bananas that we eat to be Fairtrade. That’s the position that Switzerland is already in - if you go there, half of all bananas are Fairtrade and I think that gives us a good target to get 51 per cent. Obviously, that’s much bigger volumes and a much bigger challenge, but nonetheless Britain does lead the world on Fairtrade and we should lead the world on Fairtrade banana sales too.”
However, it is clear that not all retailers are in the position to make like The Co-operative, Sainsbury’s and Waitrose and make all-out commitments to sourcing ethically. Fairtrade suppliers are pushing for more engagement across the big five retailers in order to keep growing sales and market share.
“We appreciate that not every retailer can get there overnight and we would call on those such as Asda, Morrisons and Tesco perhaps to at least make sure there’s a substantial offer because of the scale of public commitment,” says Lamb. “At the minimum, make sure the product is always available because if I was a retailer, I would not want to be too far behind the ethical leaders.
“Nine out of 10 people bought a Fairtrade product last year and many say they would buy more Fairtrade products if they were available. It’s not a great act of charity, it’s about meeting customer demand. We would say that there is an untapped customer demand for more Fairtrade bananas and definitely for the wider fruit bowl.”
As this year’s promotional efforts kick off, the Fairtrade Foundation will be looking for this kind of collaboration across the supply chain to make a difference not just in the next two weeks but in the long term. A shake-up of sorts is needed if the wider fruit category can hope to reach the level of sales set by Fairtrade bananas.
SAINSBURY’S GETS READY FOR PROMOTIONAL DRIVE
Sainsbury’s is the largest Fairtrade retailer in the world. Here, a spokesperson tells FPJ what the UK’s number-three supermarket has planned for its ethical offer.
What are the main Fairtrade fruit and vegetable lines available at Sainsbury’s?
Bananas are the biggest line by far as ours are 100 per cent Fairtrade, but Fairtrade oranges, beans, melons, grapes, pears, pineapples and mangoes also sell very well.
How have Fairtrade fruit and vegetables fared at Sainsbury’s in the last 12 months?
Fairtrade fruit and vegetable lines combined have grown 14.8 per cent in volume so we are outpacing the market, as according to Kantar Worldpanel, volume of produce sold has decreased by 2.6 per cent.
The banana price wars have been well documented but what has switching to Fairtrade meant in terms of remaining competitive?
Our bananas will always be priced competitively, and they will always be Fairtrade too. This means that by shopping with us, customers will not only pay a fair price, they will also make a real contribution to improving the livelihoods of workers in the developing world.
Sainsbury’s is the largest Fairtrade retailer in the world. How do you work to maintain this position?
By converting lines like bananas, tea, sugar and roasted and ground coffee to 100 per cent Fairtrade, we make an enormous impact on the Fairtrade market and the livelihoods of thousands of producers in the developing world.
We are continuously establishing new supply chains and working with new producer groups to introduce new Fairtrade own label products to build on the work we have already done. We currently sell more than 800 products.
Since 2007, the Sainsbury’s Fair Development Fund has been helping farmers and growers in the developing world benefit from Fairtrade, by setting up international partnerships between producer groups, NGOs and retailers. It supports small producers to increase their competitiveness and improve their sustainability and to raise their revenues by bringing new products to market. The Fair Development Fund is managed by Comic Relief and was launched with an investment of £1 million. We launched new Christmas nut lines produced by Fair Development Fund farmers last year, and their dried fruit was used in bars sold to raise money for Sport Relief 2010. We have also helped fund the development of new Fairtrade standards for pulses and vegetables, with Fairtrade green beans launching in store last year.
What is Sainsbury’s doing to support Fairtrade Fortnight?
Fairtrade Fortnight will be supported in store, drawing attention to our Fairtrade ranges and newly converted products.
Our colleagues will be visiting schools and local community groups during the fortnight to talk about the importance of Fairtrade and what it means to the suppliers and communities whom it affects.
We will also be having fun and supporting the Fairtrade Foundation in their Show Off Your Label campaign, which will run from 28 February, encouraging people to engage in Fairtrade games and activities.
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