Fairtrade Foundation Commercial Conference Report 2010

Edited Highlights

23rd September, Kensington Town Hall

1. Adam Pikett, Associate Partner, OC&C Consulting

Over the last year

  • Food has proved one of the most resilient categories of consumer expenditure during the recession
  • Food suppliers margins have eroded slightly, reaching a 10 year low
  • Sources of premiumisation are increasingly important (Customer trends: Added convenience, added health, provenance + ethics)

For the Fairtrade Foundation over the last year

  • Number of certified producers has grown, average sales per producer are increasing (currently around £1m per producer)
  • Recognition of the Fairtrade mark has dramatically increased since2007 – last year 90% of consumers bought a Fairtrade product, 74% are aware of the mark (awareness of Fairtrade mark is around 40%)
  • Addition of new licencees has slowed slightly, but we have added household names such as Sainsbury’s Tate & Lyle, Cadbury’s , Kitkat and Ben & Jerry’s
  • Sales growth of Fairtrade products from 2007 – 2009 has been 30% per year
  • OC&C estimates for value of Fairtrade at UK retail now exceeds £1billion
  • Strong sales growth expected to continue at an increasingly rpaid rate as awareness of mark grows – still room to grow eg bananas could double
  • The Fairtrade Foundation needs to be enhanced in three ways: Collaboration (especially supply chain sustainability), Focus on Growth (innovation, targeted marketing), Transparency (how is money being spent?)

2. Harriet Lamb, Executive Director,  Fairtrade Foundation

  • Nielsen estimate growth in Fairtrade Food and Drink to end of June 2010 as +26% year-on-year
  • IGD research suggests 31% of consumers expect to buy more Firtrade products in the future
  • Public understanding of the Fairtrade mark has climbed to 65%, in line with the % of consumers regularly purchasing Fairtrade products
  • Total Fairtrade Foundation expenditure for the last year was £9.6m
  • Of this Certification and Licensing accounted for £1.5m (including 17% more audits, new QMS system, Licencee workshops)

3. Sean Toal, Commercial Director, The Co-operative

  • The addition of Somerfield has created a £50m per annum opportunity for Fairtrade at the Co-op
  • Consumer research with 100,000 customers has shown that Fair and Ethical is the number 1 stated concern
  • ICAM bars used as case history + 62% year-on-year growth for own-label Fairtrade chocolate bars (Ghana now origin for premium bars, Dominican Republic origin for Everyday)

4. Wouter van Tol, Head of Sustainability Marketing, Nestle

  • Sustainability comes about number 5 on consumers list of concerns. However having the Fairtrade mark on KitKat makes consumers feel better about eating it
  • 25% of cocoa needed for KitKat in the UK is available as Fairtrade from the Cote d’Ivoire. Challenge is to develop the other 75% (major technical and quality problems)
  • Currently Nestle can only source enough Fairtrade cocoa ex-Cote d’Ivoire for 4-finger KitKat – as soon as more is available they will introduce to 2 finger, 1 finger and Chunky
  • Quality improvement is critical for success, cocoa below these standards is unacceptable even if Fairtrade
  • Need to go beyond compliance – higher income via yield, better quality and Fairtrade premum.
  • Nestle also need to share this story better with trade and consumers

SW 24.09.10