Consumer Interest in Fair Trade, Ethical Consumerism

In recent years, concerns over planetary health have led many consumers to become increasingly conscious of the impact of their personal consumption behavior. This trend is widely reflected in consumers attitudes and behaviors captured in both Natural Marketing Institutes (NMI) Lifestyles of Health and Sustainability (LOHAS) and Health and Wellness Trends databases, the latter of which projected 2007 sales of organic foods and beverages at $19 billion, a 14-percent increase over 2005. While perhaps more subtle than beliefs about the importance of organic, attitudes regarding a related dimension of ethical consumerismFair Tradeare also strong. Issues such as maintaining fair pricing for products and ingredients harvested by laborers in third world countries to help them become more economically self sufficient, to the protection of land and the environment via support of local production and consumption are regarded as important to U.S. consumers (chart 1).

According to the Fairtrade Foundation, in 2007, Fair Trade certified sales were approximately $3.6 billion worldwide, a 47-percent increase over 2006. This increase is attributed to the expansion within existing Fair Trade markets, such as Fair Trade flowers now available in the United States and the emergence of completely new markets. The United States is one of the biggest Fair Trade markets, and NMI research has found slightly more than half (51 percent) of American adults are concerned about fair labor practices, up 21 percent from the previous year. Despite this growth, the glass could still be considered nearly half empty, with plenty of room for further growth. In fact, one-fifth of the worlds coffee is consumed by Americans, many of whom fail to realize that scores of agricultural workers in this industry and many others are subject to extremely poor working conditions and wages so low that they are forced into poverty.

Interestingly, while concerns over Fair Trade practices have mounted, recognition of the Fair Trade Certified seal has declined. While this is similar to the downward trend in the recognition of many other seals and certifications, such as the Marine Stewardship Council seal and even the Recycled logo, the Fair Trade Certified seal experienced the largest decrease, a drop of 14 percent (CAG), from 2005 to 2007 (chart 2). With the hundreds of seals and certificates flooding the market, consumers have become overwhelmed. In addition to communicating the importance of Fair Trade practices in general, Fair Trade manufacturers must also determine a way to effectively compete for consumers share of mind in a marketplace that is proliferated with seals and certifications.

Companies that tout local, organic and Fair Trade must not only gain consumers understanding and recognition, but also gain their trust. More than one-third of consumers indicated when given a choice to buy a product or service, they will choose products from sustainable sources over other conventional products. Slightly more than half indicated they look for proof when a company makes a claim about being socially or environmentally responsible (chart 3).

Despite this, only 15 percent of consumers indicated the Fair Trade Logo would make them more likely to buy. Opportunities are clearly evident for the Fair Trade Certified label. Companies may want to consider exploring other avenues for bolstering awareness, recognition and trust in their Fair Trade offerings such as endorsements from someone outside the company.

In todays world, environmental sustainability is an ever-growing concept being explored or adopted by the smallest to the largest corporations. When asked if the talk about the environment is a fad or is here to stay, one-quarter (26 percent) of the general population think it is definitely here to stay. With consumers spending billions on organic and Fair Trade products, its not surprising so many companies are jumping on the bandwagon, hoping to cash in on the trend. Hence, its also understandable many consumers question the credibility of Fair Trade products and are demanding more proof, especially considering their premium price tag.

Currently, 1.5 million producers and workers in 58 developing countries benefit from Fair Trade sales. Companies that can support this interest in ethical consumption while at the same time effectively communicate their values and trustworthiness are likely to continue to appeal to consumers in todays increasingly proliferated and judicious ethical consumerism marketplace.

Steve French is managing partner at The Natural Marketing Institute (NMI), a strategic consulting, market research, and business development firm specializing in the health, wellness and sustainability marketplace. For more information on NMIs services or proprietary research tools, contact French at [email protected] or visit NMIsolutions.com .