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UK: Ethical Consumerism: Mass Appeal

March 1st, 2005

The Fairtrade Foundation's latest figures highlight the potential profits to be made by corporations capitalizing on the growth of ethical consumption. With a high proportion of consumers indicating a willingness to pay a premium for such goods, there is further evidence that ethical consumerism can generate mass market appeal, something that the Consumer and Packaged Goods (CPG) industry can no longer ignore.

According to Fairtrade figures, UK shoppers spent GBP140 million on goods bearing the Fairtrade logo last year. Coffee is the best seller, with Fairtrade beans used at many high street cafes, including Starbucks [SBUX], Costa Coffee and Pret a Manger.

One important factor in the growth has been the proliferation of products sporting the Fairtrade label. More than 800 Fairtrade retail and catering products are currently available in the UK, up considerably from 2003 when around 150 such products were available.

Although ethical consumerism is not a new trend, it has become more sophisticated and influential than ever before. Originally, the trend centered on a few high profile issues, but consumers are now far better informed about the complex and interconnected ethical concerns which affect food, drinks and personal care along the entire value chain.

Fairtrade has had its greatest successes in a few niche categories purchased by more affluent consumers who are more naturally willing to pay extra for products that are generally perceived to be of superior quality and which reflect altruistic values. The next step for the movement will surely be to convince mass market consumers to pay the premium too.

The signs are positive: consumers are not only increasingly aware of ethical matters, they are also more likely to act in line with their beliefs, and this goes beyond simple product choice. Overall, 68% of consumers in the US and Europe claim to have boycotted a food, drinks or personal care company's goods on ethical grounds.

Historically it has been tempting to dismiss ethical consumerism as a passing phenomenon of limited lasting impact, but this would be a mistake. For companies that ignore the expectations of the growing number of ethical consumers there are immediate as well as more long-term risks. As this week's figures highlight, the Fairtrade bandwagon is gathering speed, and the movement's logo should soon become an everyday sight in UK shops. The mass market CPG players need to get on board.

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