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Ethics and the Irish Consumer - Ireland - September 2009

The concept of ethical consumerism is one that has been steadily gathering momentum in Ireland over the past decade, yet the degree to which ethical and green issues influence Irish consumers’ purchasing behaviour and general lifestyle differs markedly across different sectors. While it is approaching mainstream status in the food and drink sector, it is still very much niche in finance, travel and clothing.

Moreover, there is a real danger that its progress could be halted by the current economic climate and there is evidence to suggest that the challenges facing consumers have given rise to a more inward-looking mentality, with issues of self-interest (largely to do with reducing personal expenditure) overtaking environmental and ethical concerns.

Nonetheless, despite the increased level of price-consciousness among consumers, companies do appear to be remaining faithful to ethical and environmental commitments made over the past decade – perhaps identifying such a stance as an opportunity for differentiation in a market increasingly obsessed with price and value. This in itself will ensure that the availability of ethical products and services and the overall profile of the ethical sector continues to increase.

This report assesses how ethical products and services will fare in the current era of increased price-consciousness on the part of consumers both generally and, more specifically across four main sectors: food and drink, clothing, travel and finance. It also assesses the level of concern for ethical and green issues among Irish consumers, and examines the extent to which these concerns are affecting behaviour.

Key themes in the market

  • To what extent will the current economic challenges facing consumers divert their attention from ethical and environmental concerns?

  • Are retailers remaining faithful to past ethical/environmental commitments or cutting corners to offer lower prices to consumers?

  • The varying extent to which ethical and environmental issues are taken into account by consumers across the various sectors examined (ie food and drink, clothing, travel and finance). In which sectors can ‘ethical’ now be considered mainstream?

  • The respective resilience of the various ethical sub-sectors within the food and drink sector (organic produce, fair trade products, local produce and farmers’ markets) to increased price-consciousness on the part of consumers.

  • Whether the burgeoning ethical clothing market will suffer from the renewed interest in cheaper, disposable clothing over quality, durable clothing.

  • How ethical tourism options (tending to be higher-end, more expensive products) will fare in the context of dramatically reduced overseas travel and holidaying by Irish consumers.

  • Whether ethical finance stands to gain from the recent scandals involving financial institutions and the overall financial sector – and, more specifically, how the collapse of equity markets in 2008 might affect consumer interest in ethical equity investment.

  • The ethical and environmental issues that Irish consumers are concerned about, and the extent of this concern.

  • Whether consumers’ stated concerns over ethical and environmental issues are manifesting themselves in consumers’ purchasing behaviour and other lifestyle choices?

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Table of contents

  1. Issues in the Market

      • Key themes in the market
        • Definitions
          • Abbreviations
          • Insights and Opportunities

            • It’s cost, not principles, that drives ethical and environmental behaviour
              • Consumers need help to ‘connect the issues’
                • Could lack of trusted certification be inhibiting growth?
                  • Untapped potential demand for ethical/green financial products
                  • Sector in Brief

                    • Both NI and RoI economies still in recession
                      • Disposable income and consumer spending continuing to decline
                        • Consumer concerns switch from ethical to economic
                          • Increased price-consciousness on account of downturn
                            • Awareness and knowledge of ethical issues increasing
                              • Ethical food and drink sector to experience slowdown in growth
                                • Ethical clothing growing in stature – but obstacles remain
                                  • Preference among consumers for disposable over durable clothing
                                    • Interest in ethical finance still niche, but likely to grow
                                      • Outlook positive for ethical investments
                                        • Eco-tourism to suffer in line with overall tourist sector
                                          • Profile of ethical tourism increasing, but confusion remains
                                            • Irish consumers want more from their holidays, which bodes well for ethical tourism
                                              • More interest in ethical issues among RoI consumers
                                                • Food production issues not a huge worry for Irish consumers
                                                  • Local ethical/environmental issues of greatest concern in NI
                                                    • Global environmental issues of more concern to RoI consumers
                                                      • Human welfare-related issues of concern to all consumers
                                                        • Issues related to corporate behaviour not high on consumers’ agenda
                                                          • Cost-cutting, not ethics, driving ethical behaviour
                                                            • ABC1s and women more ethical than C2DEs and men
                                                              • 71% of RoI consumers and 52% of NI consumers are ethically-minded
                                                              • Fast Forward Trends

                                                                  • Trend 1: Customisation
                                                                    • What's it about?
                                                                      • What we've seen
                                                                        • Specifics
                                                                          • What next?
                                                                            • Trend 2: Greenfluencers
                                                                              • What's it about?
                                                                                • What we've seen
                                                                                  • What next?
                                                                                  • Internal Market Environment

                                                                                    • Key points
                                                                                      • Recession-battered consumers more price-focused
                                                                                          • Figure 1: Agreement with selected shopping-related statements, RoI & NI, April 2009
                                                                                        • Value for money the main concern for Irish consumers
                                                                                          • Low-cost doesn’t necessarily mean unethical production
                                                                                            • Some correlation between ethically-minded and cost-cutting consumers
                                                                                                • Figure 2: Correlation between ethically-minded and cost-cutting consumers, by key demographics, RoI, 2008-09
                                                                                                • Figure 3: Correlation between ethically-minded and cost-cutting consumers, by key demographics, NI, 2008-09
                                                                                              • Consumers paying more attention to what they eat
                                                                                                • Strong awareness of ethical issues
                                                                                                  • Food scares likely to sharpen focus further
                                                                                                    • Danger that price wars could force retailers to cut corners
                                                                                                      • When ‘ethical’ isn’t ethical at all
                                                                                                        • Cynicism over recent trend of selling-out by ethical ‘champions’
                                                                                                        • Broader Market Environment

                                                                                                          • Key points
                                                                                                            • All-Ireland economy firmly in recession
                                                                                                              • Figure 4: Economic outlook, RoI & NI, 2008-10
                                                                                                            • RoI
                                                                                                              • NI
                                                                                                                • Rising unemployment in both economies
                                                                                                                  • RoI
                                                                                                                    • NI
                                                                                                                      • Disposable income levels in decline
                                                                                                                        • RoI
                                                                                                                          • NI
                                                                                                                            • Consumer spending set to decline further
                                                                                                                              • RoI
                                                                                                                                • NI
                                                                                                                                  • Consumer confidence close to recent lows
                                                                                                                                    • RoI
                                                                                                                                      • NI
                                                                                                                                        • Economic worries usurping ethical concerns
                                                                                                                                          • Economic over ethical issues
                                                                                                                                            • Irish consumers recognise the seriousness of climate change
                                                                                                                                              • Irish consumers proactive on climate change
                                                                                                                                                • Green Party political meltdown could remove environmental impetus
                                                                                                                                                • Strengths and Weaknesses

                                                                                                                                                  • Strengths
                                                                                                                                                    • Weaknesses
                                                                                                                                                    • Food and Drink

                                                                                                                                                      • Key points
                                                                                                                                                        • Sales performance
                                                                                                                                                          • Slowdown in organic sector growth for 2009-11
                                                                                                                                                            • Figure 5: Estimated value and forecast of the organic market, IoI, RoI & NI, 2003-13
                                                                                                                                                          • Fair Trade sector faring better
                                                                                                                                                            • Opportunity for farmers’ markets to increase sales
                                                                                                                                                              • Local produce to lose out during recession
                                                                                                                                                                • Impact of recession/increased price-consciousness
                                                                                                                                                                  • Likely impact of increasing price-consciousness on organic sales
                                                                                                                                                                    • Is fair trade recession-resilient?
                                                                                                                                                                      • Figure 6: Consumers’ response to ‘Has the economic situation reduced either the number of or the frequency with which you buy Fairtrade Mark products?’, NI & RoI, April 2009
                                                                                                                                                                    • But most consumers remain unconvinced
                                                                                                                                                                      • Sector developments
                                                                                                                                                                        • Difference between organic and non-organic narrowing
                                                                                                                                                                          • Fair trade now mainstream
                                                                                                                                                                            • New product developments prudently emphasizing health benefits
                                                                                                                                                                            • Clothing Retailing

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Sales performance
                                                                                                                                                                                  • Ethical clothing may prove more resilient to recession
                                                                                                                                                                                    • Figure 7: Market value and forecast, clothing retailing, Ireland, 2003-13
                                                                                                                                                                                  • Threats and opportunities
                                                                                                                                                                                    • Positive coverage to keep issue on consumer agenda
                                                                                                                                                                                      • Perception that ethical clothing just isn’t cool being addressed
                                                                                                                                                                                        • Mainstream retailers embracing ethical fashion
                                                                                                                                                                                          • Lack of understanding inhibits willingness to pay premium
                                                                                                                                                                                            • Doubts among consumers as to whether ethical is good value
                                                                                                                                                                                              • Doubts as to whether ethical is all it claims to be
                                                                                                                                                                                                • Consumer behaviour
                                                                                                                                                                                                  • Consumer data indicates a preference for disposable over durable clothing
                                                                                                                                                                                                    • Figure 8: Agreement with selected statements on clothing and clothing purchases, NI & RoI, 2008
                                                                                                                                                                                                    • Figure 9: Agreement with selected statements on clothing and clothing retailing, NI & RoI, 2008
                                                                                                                                                                                                  • Trend for cheap, disposable clothing likely to grow during recession
                                                                                                                                                                                                    • …but thrift can – sometimes – be ethical
                                                                                                                                                                                                      • Only a minority of consumers admit to being entirely disinterested
                                                                                                                                                                                                        • … but (consumer) actions speak louder than words…
                                                                                                                                                                                                        • Finance

                                                                                                                                                                                                          • Key points
                                                                                                                                                                                                            • Sector background
                                                                                                                                                                                                              • Growing but limited interest in ethical finance
                                                                                                                                                                                                                • Ethical investment the notable exception…
                                                                                                                                                                                                                  • Growth in ethical finance surpassing other ethical sectors
                                                                                                                                                                                                                    • Recent developments
                                                                                                                                                                                                                      • Green agenda central to global economic recovery
                                                                                                                                                                                                                        • … but danger of bubble forming on back of fiscal stimulus
                                                                                                                                                                                                                          • Cynicism over financial institutions’ claims…
                                                                                                                                                                                                                            • … but ethical commitment could ‘redeem’ financial institutions
                                                                                                                                                                                                                              • Experts anticipate interest in Sharia-compliant investment funds
                                                                                                                                                                                                                                • Outlook for ethical investment
                                                                                                                                                                                                                                  • Performance and security critical in current climate
                                                                                                                                                                                                                                      • Figure 10: Year-to-date performance, ISEQ overall index vs selected ethical/SRI funds, RoI, September 2009
                                                                                                                                                                                                                                    • Perception that ethical investments more vulnerable to volatility
                                                                                                                                                                                                                                      • Liberal use of ‘ethical’ threatens credibility
                                                                                                                                                                                                                                        • Equities could benefit from being ‘the best of a bad lot’
                                                                                                                                                                                                                                          • Outlook for ethical investments seems positive
                                                                                                                                                                                                                                            • Macro developments
                                                                                                                                                                                                                                              • Leadership from the top as RoI government goes ethical
                                                                                                                                                                                                                                                • Global trend towards responsible investment
                                                                                                                                                                                                                                                • Travel

                                                                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                                                                    • Economic downturn will inevitably affect eco-tourism
                                                                                                                                                                                                                                                      • Ambiguity of terms results in consumer confusion
                                                                                                                                                                                                                                                        • Initiatives raising awareness of travel’s impact on environment
                                                                                                                                                                                                                                                          • Declining interest in ‘empty’ holidays
                                                                                                                                                                                                                                                            • Domestic tourism unlikely to gain much from recession
                                                                                                                                                                                                                                                              • … but low-cost domestic holiday options undergoing revival
                                                                                                                                                                                                                                                              • Do Irish Consumers Really Care?

                                                                                                                                                                                                                                                                • Key points
                                                                                                                                                                                                                                                                    • Figure 11: Percentage of consumers that feel strongly about selected green/ethical issues, NI & RoI, August 2009
                                                                                                                                                                                                                                                                  • More interest in ethical issues among RoI consumers
                                                                                                                                                                                                                                                                    • Food production issues of limited concern to Irish consumers
                                                                                                                                                                                                                                                                        • Figure 12: Percentage of consumers who feel strongly about genetically modified foods, NI & RoI, by gender and age, August 2009
                                                                                                                                                                                                                                                                        • Figure 13: Percentage of consumers who feel strongly about intensive farming methods, by gender and socio-economic group, NI & RoI, August 2009
                                                                                                                                                                                                                                                                      • Charity begins at home for NI consumers
                                                                                                                                                                                                                                                                          • Figure 14: Percentage of consumers who feel strongly about supporting local charities, by gender and age, NI & RoI, August 2009
                                                                                                                                                                                                                                                                        • Drowning in packaging
                                                                                                                                                                                                                                                                            • Figure 15: Percentage of consumers who feel strongly about excessive packaging on groceries, by gender and socio-economic group, NI & RoI, August 2009
                                                                                                                                                                                                                                                                          • Global environmental issues worrying RoI consumers
                                                                                                                                                                                                                                                                              • Figure 16: Percentage of consumers who feel strongly about climate change, by gender and age, NI & RoI, August 2009
                                                                                                                                                                                                                                                                            • Plight of overseas workers and fair trade feature strongly in consumers’ concerns
                                                                                                                                                                                                                                                                                • Figure 17: Percentage of consumers who feel strongly about the exploitation of workers/children in developing countries and fair trade, NI & RoI, August 2009
                                                                                                                                                                                                                                                                              • Corporate behaviour of little concern to Irish consumers
                                                                                                                                                                                                                                                                                  • Figure 18: Percentage of consumers who feel strongly about the responsible advertising of alcohol or unhealthy food, by gender and work status, NI & RoI, August 2009
                                                                                                                                                                                                                                                                                • Impact of multinational chains on local retailers of no concern
                                                                                                                                                                                                                                                                                • Irish Consumers’ Ethical Behaviour

                                                                                                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                                                                                                      • Figure 19: Green or ethical issues that consumers participate in, NI & RoI, August 2009
                                                                                                                                                                                                                                                                                    • Ethical behaviour led by financial prudence more than principles
                                                                                                                                                                                                                                                                                        • Figure 20: Average rates of participation in green/ethical issues according to cost-implications for consumers, NI & RoI, August 2009
                                                                                                                                                                                                                                                                                      • ABC1s most likely to ‘put their money where their mouths are’
                                                                                                                                                                                                                                                                                          • Figure 21: Participation in selected green or ethical issues, by socio-economic group, NI, August 2009
                                                                                                                                                                                                                                                                                          • Figure 22: Participation in selected green or ethical issues, by socio-economic group, RoI, August 2009
                                                                                                                                                                                                                                                                                        • Age of revolutionary students is no more
                                                                                                                                                                                                                                                                                            • Figure 23: Participation in selected green or ethical issues, retired consumers vs. students NI, August 2009
                                                                                                                                                                                                                                                                                            • Figure 24: Participation in selected green or ethical issues, retired consumers vs. students RoI, August 2009
                                                                                                                                                                                                                                                                                          • The fairer sex in all respects
                                                                                                                                                                                                                                                                                            • Mismatch between words and deeds
                                                                                                                                                                                                                                                                                                • Figure 25: Comparative analysis between conviction and action, selected ethical issues, NI & RoI, August 2009
                                                                                                                                                                                                                                                                                            • Consumer Typologies

                                                                                                                                                                                                                                                                                              • Key points
                                                                                                                                                                                                                                                                                                • NI
                                                                                                                                                                                                                                                                                                  • Figure 26: NI consumer typologies, August 2009
                                                                                                                                                                                                                                                                                                • Waste Warriors
                                                                                                                                                                                                                                                                                                  • Not Ethically Minded
                                                                                                                                                                                                                                                                                                    • Eco Advocates
                                                                                                                                                                                                                                                                                                      • All Talk, No Action
                                                                                                                                                                                                                                                                                                        • RoI
                                                                                                                                                                                                                                                                                                          • Figure 27: RoI consumer typologies, August 2009
                                                                                                                                                                                                                                                                                                        • Humanists
                                                                                                                                                                                                                                                                                                          • Sceptical
                                                                                                                                                                                                                                                                                                            • Eco Warriors
                                                                                                                                                                                                                                                                                                              • Ethical Advocates
                                                                                                                                                                                                                                                                                                              • Appendix – Internal Market Environment

                                                                                                                                                                                                                                                                                                                • Health awareness among consumers
                                                                                                                                                                                                                                                                                                                  • Figure 28: Agreement with statement, ‘I don’t pay sufficient attention to what I eat’, NI & RoI, 2007 and 2008
                                                                                                                                                                                                                                                                                                                • Consumer awareness of food labels
                                                                                                                                                                                                                                                                                                                  • Figure 29: Consumer awareness of food labels, RoI, 2008
                                                                                                                                                                                                                                                                                                              • Appendix – Broader Market Environment

                                                                                                                                                                                                                                                                                                                • Consumer confidence
                                                                                                                                                                                                                                                                                                                  • Figure 30: Consumer confidence, RoI, June 2008-June 2009
                                                                                                                                                                                                                                                                                                                  • Figure 31: Consumer confidence (seasonally adjusted), UK (incl. NI), June 2008-June 2009
                                                                                                                                                                                                                                                                                                                  • Figure 32: Present situation index, UK (incl. NI), June 2008-June 2009
                                                                                                                                                                                                                                                                                                                  • Figure 33: Consumer confidence (3-month moving average), RoI, June 2004- June 2009
                                                                                                                                                                                                                                                                                                                • Consumer concerns over environment: Ireland, UK and Europe
                                                                                                                                                                                                                                                                                                                  • Figure 34: Issue deemed to be “the most serious problem currently facing the world as a whole”, EU27, 2008 and 2009
                                                                                                                                                                                                                                                                                                                  • Figure 35: Issue deemed to be “the most serious problem currently facing the world as a whole”, EU27, UK & RoI, Spring 2009
                                                                                                                                                                                                                                                                                                                  • Figure 36: Agreement with “There is too much concern for the environment”, NI & RoI, 2003-08
                                                                                                                                                                                                                                                                                                                  • Figure 37: Response to “how serious a problem do you think climate change is at the moment?” EU27, RoI & UK, Spring 2009
                                                                                                                                                                                                                                                                                                                  • Figure 38: Consumers who personally have taken actions aimed at helping to fight climate change, EU27, UK & RoI, Spring 2009
                                                                                                                                                                                                                                                                                                                • Green Party election results: RoI
                                                                                                                                                                                                                                                                                                                  • Figure 39: Local election results, RoI, 2004 and 2009
                                                                                                                                                                                                                                                                                                              • Appendix – Food and drink

                                                                                                                                                                                                                                                                                                                • Organic produce
                                                                                                                                                                                                                                                                                                                  • Figure 40: Estimated value and forecast of the organic market, IoI, RoI & NI, 2003-13
                                                                                                                                                                                                                                                                                                                  • Figure 41: Typical supermarket price difference between organic and standard produce, 2008
                                                                                                                                                                                                                                                                                                                  • Figure 42: Agreement with “It’s worth paying more for organic food”, NI & RoI, 2003-08
                                                                                                                                                                                                                                                                                                                • Fair trade products
                                                                                                                                                                                                                                                                                                                  • Figure 43: Fair trade retail sales market value and forecast, RoI, 2003-13
                                                                                                                                                                                                                                                                                                                  • Figure 44: Agreement with “I buy fair trade products when available,” NI & RoI, 2003-08
                                                                                                                                                                                                                                                                                                                • Local produce
                                                                                                                                                                                                                                                                                                                  • Figure 45: Agreement with selected statements related to local produce, NI & RoI, 2008
                                                                                                                                                                                                                                                                                                                • New product launches
                                                                                                                                                                                                                                                                                                                  • Figure 46: Number of ethical new product launches, by top ten claims, food and drink (incl. alcohol), UK and RoI, 2003-09
                                                                                                                                                                                                                                                                                                              • Appendix – Clothing Retailing

                                                                                                                                                                                                                                                                                                                  • Figure 47: Market value and forecast, clothing retailing, Ireland, 2003-13
                                                                                                                                                                                                                                                                                                                  • Figure 48: Selected attitudes to ethical clothing, UK, November 2008
                                                                                                                                                                                                                                                                                                              • Appendix – Finance

                                                                                                                                                                                                                                                                                                                  • Figure 49: Top five most important factors when choosing a current account, NI and RoI, 2008
                                                                                                                                                                                                                                                                                                                  • Figure 50: Top five most important factors when choosing a savings account, NI and RoI, 2008
                                                                                                                                                                                                                                                                                                                  • Figure 51: Percentage increase in consumer spend on ethical products, UK, 2007-08
                                                                                                                                                                                                                                                                                                                  • Figure 52: Comparative performance, FTSE4Good Global Index vs. FTSE Developed Index, July 2009
                                                                                                                                                                                                                                                                                                                  • Figure 53: Comparative industry weights, %, FTSE4Good Global Index Vs. FTSE Developed Index, July 2009
                                                                                                                                                                                                                                                                                                                  • Figure 54: Comparative volatility, FTSE4Good Global Index vs. FTSE Developed Index, July 2009
                                                                                                                                                                                                                                                                                                                  • Figure 55: Key drivers for SRI demand over coming three years, Europe, 2008
                                                                                                                                                                                                                                                                                                              • Appendix – Ethical Tourism

                                                                                                                                                                                                                                                                                                                  • Figure 56: Agreement with ‘When on holiday, I only want to eat, drink and sunbathe’, NI & RoI, 2003 and 2008
                                                                                                                                                                                                                                                                                                                • Green or ethical issues that consumers participate in
                                                                                                                                                                                                                                                                                                                • Appendix – Consumer Typologies

                                                                                                                                                                                                                                                                                                                    • Figure 57: Consumer typologies, by demographic breakdown, NI, July 2009
                                                                                                                                                                                                                                                                                                                    • Figure 58: Consumer typologies relating to green or ethical issues respondents feel most passionately about, and green or ethical activities respondents personally participate in, NI, July 2009
                                                                                                                                                                                                                                                                                                                    • Figure 59: Consumer typologies, by demographic breakdown, RoI, July 2009
                                                                                                                                                                                                                                                                                                                  • Millward Brown tables
                                                                                                                                                                                                                                                                                                                    • Figure 60: Consumer typologies relating to green or ethical issues respondents feel most passionately about, and green or ethical activities respondents personally participate in, RoI, July 2009
                                                                                                                                                                                                                                                                                                                    • Figure 61: Green or ethical issues respondents feel most passionately about, NI, August 2009
                                                                                                                                                                                                                                                                                                                    • Figure 62: Green or ethical issues respondents actively participate in, NI, August 2009
                                                                                                                                                                                                                                                                                                                    • Figure 63: Green or ethical issues respondents feel most passionately about, NI, August 2009
                                                                                                                                                                                                                                                                                                                    • Figure 64: Green or ethical issues respondents feel most passionately about, NI, August 2009
                                                                                                                                                                                                                                                                                                                    • Figure 65: Green or ethical issues respondents actively participate in, NI, August 2009
                                                                                                                                                                                                                                                                                                                    • Figure 66: Green or ethical issues respondents actively participate in, NI, August 2009
                                                                                                                                                                                                                                                                                                                    • Figure 67: Green or ethical issues respondents actively participate in, NI, August 2009
                                                                                                                                                                                                                                                                                                                    • Figure 68: Green or ethical issues respondents feel most passionately about, RoI, August 2009
                                                                                                                                                                                                                                                                                                                    • Figure 69: Green or ethical issues respondents feel most passionately about, RoI, August 2009
                                                                                                                                                                                                                                                                                                                    • Figure 70: Green or ethical issues respondents actively participate in, RoI, August 2009
                                                                                                                                                                                                                                                                                                                    • Figure 71: Green or ethical issues respondents actively participate in, RoI, August 2009

                                                                                                                                                                                                                                                                                                                Companies Covered

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                                                                                                                                                                                                                                                                                                                Ethics and the Irish Consumer - Ireland - September 2009

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