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US market has ‘barely scratched the surface’ of Fair Trade market potential

By Elaine Watson , 13-Apr-2011

The North American food industry has “barely scratched the surface” when it comes to the growth potential of Fair Trade certification for food ingredients, with double-digit growth in groceries likely to continue for some time to come, according to Fair Trade USA.

The leading third-party certifier of Fair Trade products in the US, Fair Trade USA audits transactions between US companies and their suppliers to guarantee that producers are paid a fair wage, work in safe conditions and protect the environment.

Speaking to FoodNavigator-USA.com following a recent report from Spins revealing US sales of Fair Trade certified groceries surged 24 percent in 2010, Fair Trade USA director of business development, grocery and ingredients Cate Baril said she expected double-digit growth to continue for at least the next two to three years.

“Bear in mind we’re working from a low base, but there is a lot of activity going on so I can definitely see double digit growth being sustained. We’ve barely scratched the surface if you look at the potential range of ingredients that are supplied from developing countries, from new oils, nuts and grains to dried fruits, lentils and chickpeas,” added Baril, who predicts a steady stream of new certified foods and ingredients will hit the market later this year.

“We’re also looking at coconut milk, coconut water and other coconut-based ingredients and processed banana. With that you can then see baby food, yogurts, smoothies and ice creams containing the processed banana following suit.”

Composite products

As more of these ingredients became available, more composite products would start carrying the label, she predicted. “You can carry the label if all the ingredients that could be Fair Trade certified in your product are from certified sources.

“But we are also talking to companies about how they can communicate with consumers that they are in transition, that is, working towards a commitment to use Fair Trade across the board. As long as they are transparent about what they are doing, that’s OK, as we recognize that they can’t do it overnight, as they typically have [staggered] contracts in place for raw materials and there is a lot of planning to do.”

Typically, Fair Trade USA identified producers it could work with and then approached US manufacturers it believed producers could work with to develop new Fair Trade certified products, said Baril.

As for who was driving the growth in Fair Trade groceries, smaller brands were still leading the field, although industry giants such as Walmart and Costco had also developed private-label Fair Trade coffee and other products accounting for large volumes of raw materials, she noted.

And multinational manufacturers such as Unilever and Coca-Cola were also getting more involved, although this was frequently via subsidiaries such as Ben & Jerry’s and Honest Tea, she said.

Logistical and commercial hurdles

This was in part because converting major brands to Fair Trade presented significant financial and logistical challenges owing to the sheer quantity of raw materials required and the commercial risks of increasing costs for mainstream grocery products.

But there were also issues of credibility to consider given that some shoppers were skeptical about big brands’ commitment to Fairtrade, she said.

However, initiatives from brands such as Cadbury – which has now secured Fairtrade certification for its Dairy Milk chocolate in multiple markets - did show that it was possible for the big boys to embrace Fair Trade provided they did their logistical spadework, she said.

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