Fair trade coffee sales grow in the US

- Last updated on GMT

Related tags: Fair trade, Us

The last two years have seen a significant increase in businesses
using fair trade coffee, but Philippa Nuttall asks whether
the US is really serious about ethical food ingredients.

The $100 million fair trade coffee market is the fastest-growing sector of the coffee industry, according to trade reports, and TransFair USA estimates that 30 million pounds of fair trade coffee will be imported into the US this year, nearly double the 18.7 million pounds that entered the country in 2003.

These figures though are tiny compared to the mainstream market - coffee sales in the US are worth over $19 billion - and product launch figures are hardly earth-shattering. In total sixty-nine new fair trade products, including a large number of fair trade coffees, were introduced over the past two years in the US and Canada. This is most definitely an increase on the last couple of years - just 15 products were launched in 2002 and only six in 2001, according to Productscan Online - but in terms of the market as a whole, these products are a mere drop in the ocean.

"Fair trade with its emphasis on a fair price for agricultural products is making waves on both sides of the Atlantic Ocean,"​ said Productscan, but in the US especially, ripples would be more appropriate. Tom Vierhile, executive editor of Productscan Online, agrees that fair trade is very much in an "embryonic phase"​ in the States.

The small size of the market seems to be at least partly due to poor marketing, meaning that only a minority of people in and outside the food industry actually know what fair trade means.

"You see fair trade labels in the natural food products area, but even most natural food consumers don't know what fair trade means,"​ Vierhile told FoodNavigatorUSA.com​.

He does believe, however, that there has been definite growth in the fair trade sector and sees lots of potential for coffee and chocolate.

Last year, Procter & Gamble, for example, introducted Millstone Mountain Moonlight fair trade coffee and Dunkin' Donuts added a line of espresso beverages made with fair trade coffee. However, whether they decide to extend these ranges remains to be seen. Vierhile suggested that many companies are introducing fair trade products as a defensive move in an attempt to show their good will towards the initiative.

In the UK, the charity Oxfam recently opened Britain's first fair trade coffee shop in Covent Garden, London. Progreso Café, selling fair trade coffees, cakes and biscuits, is a collaboration between Oxfam and coffee co-operatives in Ethiopia, Honduras and Indonesia.

In the US, though, as Vierhile points out, there is no Oxfam to fly the free trade flag. Instead he suggests Starbucks as being a likely candidate to take up the free trade cause. The coffee house recently formed a partnership with the US Agency for International Development (USAID) and Washington-based Conservation International to provide economic incentives for high-quality coffee growers that minimise their environmental impact.

Under the alliance, Starbucks will pay higher prices to suppliers that can demonstrate that money gets to farmers without being diverted, who comply with environmental practices outlined by Conservation International and who meet humanitarian standards of the home country or international authorities. In return, the company will receive a guaranteed high-quality supply of coffee.

Starbucks said its goal is to buy 60 percent of its coffee under these standards by 2007.

Another problem to be addressed is whether Americans are really ready to pay more for their food and Vierhile wondered whether in a country with no history of social welfare, unlike Europe, the trend will really catch on.

Vierhile suggested that one way in which companies could get consumers interested in the fair trade movement would be to link it to the living wage movement in the US which wants the minimum wage to be increased.

The IEG Sponsorship Report, a Chicago trade publication, projected last week that companies will spend $991 million on cause marketing in 2004, up 57 percent from 1999.

Fair Trade, which guarantees $1.21 a pound plus 5 cents for social projects, is doubling in size every two years, though at present its share of the worldwide market is just 0.4 percent.

The modern fair trade movement began in Europe where a Dutch company began marketing fair trade coffee in the late-1980s. The movement has since gathered momentum, spurred on by a disastrous price decline in coffee - prices have decreased by 70 percent since the late 1990s, according to Productscan. This drop is blamed on the overproduction of low-end coffee beans from countries like Vietnam and Brazil.

More than 100 million families are estimated to depend on coffee, and since prices began falling precipitously in 1998, the earnings of the 50-plus producer countries in Africa, Asia and Latin America have halved from $10 billion a year to $5.5 billion, according to the International Coffee Organisation​.

Related topics: Suppliers

Related news

Show more

Follow us

Products

View more

Webinars