Rewind 12 months and ethical products were seen to be the next big thing.
Barely a week seemed to pass without the launch of a new sustainably produced, environmentally friendly, or Fairly Traded product.
Ethical shopping has not lost momentum, a report from international food and grocery expert, IGD claims.
According to the Shopper Trends 2009 survey, 25% of British consumers have purchased foods that support Fairtrade in the last month, almost three times more than 2006.
The number of shoppers buying locally produced food has also almost doubled in the last three years to 27%.
Meanwhile, the number of shoppers who look for a product's country of origin has increased to 23%, from 16% in 2006.
For the first time in 13 years the R word has crept back into our vocabularies, and the chill of the recession is now being felt by consumers. A recent study by research company Gfk NOP revealed that 44% of shoppers said they could no longer afford to pay a price premium for ethical products and, according to retail director Helen Roberts, things will only get worse.
“Through 2006 and 2007 all the talk was of the growth of the ethical market and demand,” she says. “We saw big increases in consumers’ claimed levels of commitment to buying ethical and we saw growth in ethical sales across many categories. However, alongside this we also saw growth of low-cost retail; consumers were still buying cheap clothes, despite the bad publicity surrounding working conditions in the factories producing them.
“Now, as the economic situation worsens and consumers become more aware of the amount they are spending, it seems that the claimed resolve to buy ethical is slipping. Willingness and ability to pay a price premium is certainly reducing.” Roberts predicts a ‘levelling out’ of demand for ethical goods in the coming months as the number of people who are truly committed to ethical values reaches its limit.
“The rest of the population is worrying more about how they are going to pay the bills, than how their potato was grown or how far their peas have travelled,” Roberts adds. And she isn’t alone in believing that saving money is fast becoming a bigger priority than saving the planet. A recent study by Mintel found that as a result of the current economic climate, 48% of all organic shoppers planned to reduce or even give up buying organic in 2009.
So with the credit crunch already taking its toll on some of the biggest names in retail, is it time for c-store retailers to edit out ethical? Independent retailer Steve Denham thinks so. Steve owns a small post office and Londis convenience store in the Sussex village of West Chiltington, and his sales have taken a battering. Steve used to sell a variety of Fairtrade hot drinks, but no longer. “No one is asking me for ethical products at the moment,” he says. “All people want are items that offer them value for money, and as a result I’m planning to increase the number of promotions I offer and introduce a new value range. I’m certainly not planning on introducing any new ethical products this year.”
Independent retailer Guy Warner, who owns a number of Budgens-branded stores in Gloucestershire, says his is taking his cue from the supermarkets. “Shoppers’ desire to buy ethical won’t diminish in the credit crunch, but their ability to do so probably will,” he says. “I find it quite interesting that after spending so many months and millions of pounds shouting about their ethical credentials in 2007, the supermarkets are now focusing solely on value. I think that this is a pretty good indicator of things to come.” But not everyone agrees with this more pessimistic outlook.
Debbie Robinson, director of food marketing for the Co-operative Group, is adamant that sales of ethical products at its stores will not be crunched. “People won’t give up their values just because of a recession,” she argues. “It costs just a few extra pennies and I would defy anyone to deny the good that they can achieve. “In any case, consumers’ emotional attachment to many ethical products such as tea, coffee and chocolate is now well embedded, and we would argue that these areas will have an advantage over other markets in a downturn, particularly where the premium for the ethical choice is relatively low, as with Fairtrade.”
Barry Clavin of the Co-operative Bank adds that some ethical products, such as energy-saving light bulbs, can help people on a budget. One company which has no qualms about the future is ethical water brand Icelandic Glacial. The world’s first carbon neutral-certified bottled water brand has so much faith in the ethical market that it has opened a vast 100% naturally powered bottling facility in Iceland. The facility runs on geothermal and hydroelectric power, which means that it has a considerably smaller operational carbon footprint compared with other players in the soft drinks industry.
And UK sales director Simon Hilliar believes that ethical brands like Icelandic Glacial, which have a clear point of difference from their run-of-the-mill counterparts, will in fact do well in the years to come. “It is our view that consumers will place a greater focus on value as the recession bites, but that value will be judged in the context of any impact on the environment.”
Hilliar believes that awareness, not the credit crunch, is the biggest hurdle that ethical brands have to overcome in the coming years, and the industry should be shouting about the sector, he says.
The UK’s Fairtrade Foundation is doing just that, and is putting the final touches to what it says will be the biggest Fairtrade Fortnight yet. The event kicks off on February 23. The Foundation’s Mark Varney believes that c-stores are best placed to spread the word about ethical trading because of their community ties. “The relationships that they have with their customers mean that they are able to convey the message far more efficiently than some of their larger competitors,” he says.
And with Fairtrade now expanding into the snacks sector as well as the staple chocolate, fruit and hot drinks, there’s no shortage of convenience products to shout about.