Consumer demand for fair trade coffee still to be proved

Related tags Fair trade

Seven months after the launch of P&G's fair trade coffees, the
company seems unlikely to extend its range unless consumer demand
becomes more vocal, reports Philippa Nuttall.

Tonia Elrod in P&G's external relations department told that: "We launched the [fair trade] Signature collection for a variety of reasons including that consumers were increasingly interested in sustainable coffee products"​.

She added that the company's Millstone coffee range "is about excellence and variety and the Signature collection builds on that equity."​. "We worked in partnership with NGOs, shareholders and the certifying agencies to develop this line of product and they helped us see the need for it."

However, Elrod said that inital consumer research by P&G showed that there wasn't enough interest from consumers to launch the fair trade coffee directly in retail stores.

"So we launched the product online and built awareness and consumer interest,"​ she said.

She wouldn't reveal sales figures - "we don't do that for any of our brands"​ and refused to be drawn on whether the company planned to launch any other fair trade products, saying "the consumer will decide if we launch any more fair trade or Rainforest Alliance products"​.

Simon Billenness, senior policy adviser for corporate engagement for Oxfam America, worked with P&G on the introduction of their fair trade coffee, encouraging their supporters to persuade P&G that there was real consumer demand for the product.

"We asked 1000s of our supporters in the US to write letters asking when they would be able to buy fairtrade coffee from P&G,"​ he said. The charity also worked with the company's shareholders to encourage them to see the need for fair trade alternatives to bring some benefit to the coffee farmers.

"P&G is now putting its toes in the water,"​ said Billenness.

Since working with P&G, Oxfam, according to Billenness, has shifted its attention away from the roasters and towards the supermarkets. The charity recently graded the supermarkets on how well they stock and promote fairtrade products.

Wild Oats, perhaps unsurprisingly was awarded an A, while most supermarkets, excluding Ahold which receved a B, were down in the doldrums with a D.

Oxfam would also like to get companies to disclose exactly how much fair trade coffee they are selling as Starbucks does, announcing for all to see how many pounds of the ingredient it has sold. This figure has doubled each year, according to Billenness.

"Starbucks aims over the next year to sell 10 million pounds of fair trade coffee,"​ he said.

Billenness believes that the fair trade scheme is the best one for companies who seriously want to help the coffee farmers because they have to be a member of a cooperative to join the scheme and the farmers then decide how the extra money is spent rather than the manager of a plantation, for example, deciding.

Coffee generally costs around $1.26 a pound, increasing to $1.41 a pound for organic beans, to which a fair trade premium is addded.

Fair trade coffee is often high quality coffee and therfore no more expensive than other speciality coffees, though obviously higher priced than bog-standard Kenco, for example.

Elrod said regarding costs at P&G that two years ago "fair trade coffee was significantly more than coffee sold on the NY "C" - almost double, but this year, the NY "C" is almost the same price as fair trade".

"Fair trade coffee makes sense from a business standpoint. I think there will be a gradual blending of speciality and fair trade meaning that by definintion speciality will be fair trade,"​ concluded Billenness.

Transfair reported last November that the last two years had seen a significant increase in businesses using fair trade coffee. Indeed the $100 million fair trade coffee market is the fastest-growing sector of the coffee industry, according to trade reports. However, these figures remain tiny compared to the mainstream market.

In total 69 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, 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.

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.

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