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Fair Trade Foods - UK - January 2009

Despite its meteoric growth, the Fairtrade market still remains largely niche and it is questionable whether it is likely to remain as such or whether it will reach mass-market status. This report explores whether ethical consumerism is just a marketing buzzword.

Given the current economic climate, it also looks at the depth of consumers’ ethical convictions and whether they are likely to be easily shaken when domestic spending comes under pressure. In other words, will it be a case of value not values?

Key report themes:

  • Is product quality an issue?

  • What are the main drivers behind double-digit growth?

  • Will the market continue to grow at the same rate in the future?

  • Is any confusion over what Fairtrade stands for holding back its development?

  • How is the Fairtrade market affected by the economic downturn?

  • How does Fairtrade compete with emerging ‘rival’ ethical marks?

  • Is Fairtrade a ‘middle class luxury’?

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Table of contents

  1. Issues in the Market

      • Key themes
        • Definition
        • Future Opportunities

          • Taking consumers beyond a fair price
            • Trend: Born green
              • Insights
                • Fairtrade plus
                  • Carbon neutral and Fairtrade can be compatible
                    • Insights
                    • Market in Brief

                      • Showing double-digit growth
                        • Smell the coffee
                          • Is Fairtrade immune from economic pressures?
                            • The Fairtrade consumer
                              • The campaign for Fairtrade
                                • Growing social conscience
                                  • Retailer own-label is big business
                                    • Fairtrade brands too
                                      • Fairtrade plus
                                        • What does the future hold?
                                        • Internal Market Environment

                                          • Key points
                                            • Threats from other initiatives
                                              • Conflicting issue with locally sourced
                                                • Figure 1: Attitudes towards locally-sourced and Fairtrade products, 2004-08
                                                • Figure 2: Consumer attitudes towards ethical and environmental issues when shopping for food, June 2008
                                              • Engendering trust in the relationship
                                                • Complex relationships
                                                  • Consumer confusion
                                                    • Competition between fair trading associations
                                                      • Politics of Fairtrade
                                                        • Raising awareness through campaigns and marketing initiatives
                                                          • Support from foodservice channels
                                                            • Does Fairtrade equal quality?
                                                              • Are changing economics a threat to the principle of Fairtrade?
                                                              • Broader Market Environment

                                                                • Key points
                                                                  • Impact of changing demographics
                                                                    • Figure 3: Implications of changing demographics of the UK population for Fairtrade foods and drinks market, 2008-13
                                                                  • Economic forecast – a focus on GDP
                                                                    • Figure 4: GDP % change, based on GDP at 2008 prices
                                                                  • What does this mean for consumers?
                                                                    • Confidence factors
                                                                      • Fairtrade deflation
                                                                        • Food inflation challenge
                                                                          • Figure 5: Consumer Price Index, percentage of change over 12 months, by sector, November 2008
                                                                        • Can consumers’ ethics survive the downturn?
                                                                          • Figure 6: Ways of saving money when doing grocery shopping in the last 12 months, September 2008
                                                                      • Strengths and Weaknesses

                                                                        • Strengths
                                                                          • Weaknesses
                                                                          • Competitive Context

                                                                            • Key points
                                                                              • Ethical marks compared
                                                                                • Other ethical issues appeal to consumers
                                                                                    • Figure 7: Summary of market strategies in other ethical markets, 2008
                                                                                  • Smaller player but stronger growth
                                                                                    • Figure 8: UK retail value sales of locally-sourced, organic and Fairtrade foods, 2003-07
                                                                                  • Paying the price but no premium?
                                                                                    • Figure 9: Summary of market strategies in the premium market, 2008
                                                                                • Who’s Innovating?

                                                                                  • Key points
                                                                                    • More products made from Fairtrade ingredients
                                                                                      • Supermarket support
                                                                                        • Added-value products
                                                                                          • Celebrity endorsement
                                                                                            • Ways to be fair
                                                                                              • Not just for the well-off
                                                                                                • New channel development
                                                                                                  • Making Fairtrade a prerequisite
                                                                                                  • Market Size and Forecast

                                                                                                    • Key points
                                                                                                      • Healthy growth continues
                                                                                                        • Figure 10: UK estimated retail value sales of Fairtrade foods and drinks, 2003-08
                                                                                                      • Future for Fairtrade
                                                                                                        • Forecast
                                                                                                          • Strong growth set to continue
                                                                                                            • Figure 11: Forecast of retail sales of fairtrade foods and beverages, by value, 2003-13
                                                                                                          • Demographic changes to promote growth
                                                                                                            • Surviving the downturn
                                                                                                            • Segment Performance

                                                                                                              • Key points
                                                                                                                • By type
                                                                                                                  • Figure 12: UK estimated retail value sales of Fairtrade foods and drinks, by type, 2006-08
                                                                                                                • Bananas
                                                                                                                  • Coffee
                                                                                                                    • Tea
                                                                                                                      • Cocoa (including chocolate and hot chocolate)
                                                                                                                        • Honey
                                                                                                                          • Other foodstuffs
                                                                                                                          • Companies and Brands

                                                                                                                            • Coffee
                                                                                                                              • Percol
                                                                                                                                • Cafédirect
                                                                                                                                  • Tea
                                                                                                                                    • Clipper
                                                                                                                                      • Taylors of Harrogate
                                                                                                                                        • Sugar
                                                                                                                                          • Tate & Lyle
                                                                                                                                            • Chocolate
                                                                                                                                              • Divine Chocolate Ltd (formerly The Day Chocolate Company)
                                                                                                                                                • Retailers
                                                                                                                                                  • The Co-operative Group
                                                                                                                                                    • Waitrose
                                                                                                                                                      • Marks & Spencer Plc
                                                                                                                                                        • Sainsbury’s Plc
                                                                                                                                                          • Trade body
                                                                                                                                                            • The Fairtrade Foundation
                                                                                                                                                            • Brand Elements

                                                                                                                                                                • Brand map
                                                                                                                                                                  • Figure 13: Attitudes and usage of Fairtrade food brands, December 2008
                                                                                                                                                                • Divine
                                                                                                                                                                  • What the brand is trying to achieve
                                                                                                                                                                    • What the consumer thinks
                                                                                                                                                                      • Figure 14: Attitudes towards the Divine brand, December 2008
                                                                                                                                                                    • Cafédirect
                                                                                                                                                                      • What the brand is trying to achieve
                                                                                                                                                                        • What the consumer thinks
                                                                                                                                                                          • Figure 15: Attitudes towards the Cafédirect brand, December 2008
                                                                                                                                                                        • Percol Fairtrade
                                                                                                                                                                          • What the brand is trying to achieve
                                                                                                                                                                            • What the consumer thinks
                                                                                                                                                                              • Figure 16: Attitudes towards the Percol Fairtrade brand, December 2008
                                                                                                                                                                            • The Co-operative Fairtrade
                                                                                                                                                                              • What the brand is trying to achieve
                                                                                                                                                                                • What the consumer thinks
                                                                                                                                                                                  • Figure 17: Attitudes towards The Co-operative Fairtrade brand, December 2008
                                                                                                                                                                                • Sainsbury’s Fairtrade
                                                                                                                                                                                  • What the brand is trying to achieve
                                                                                                                                                                                    • What the consumer thinks
                                                                                                                                                                                      • Figure 18: Attitudes towards the Sainsbury’s Fairtrade brand, December 2008
                                                                                                                                                                                    • Brand qualities of Fairtrade food brands
                                                                                                                                                                                      • Traidcraft most ethical, profits taking a back seat
                                                                                                                                                                                        • Figure 19: Personalities of various Fairtrade food brands, December 2008
                                                                                                                                                                                      • Experience of Fairtrade food brands
                                                                                                                                                                                        • Awareness low for many brands
                                                                                                                                                                                          • Figure 20: Consumer usage of various Fairtrade food brands, December 2008
                                                                                                                                                                                        • Brand intentions for Fairtrade food brands
                                                                                                                                                                                          • Divine in retention – a case of the chocoholic?
                                                                                                                                                                                            • Figure 21: Consideration of various Fairtrade food brands, December 2008
                                                                                                                                                                                          • Brand momentum for Fairtrade food brands
                                                                                                                                                                                            • Co-operative and Divine gaining most ground, Taylors standing still
                                                                                                                                                                                              • Figure 22: Momentum of various Fairtrade food brands, December 2008
                                                                                                                                                                                            • Brand satisfaction for Fairtrade food brands
                                                                                                                                                                                              • Divine most excellent
                                                                                                                                                                                                • Figure 23: Satisfaction with various Fairtrade food brands, December 2008
                                                                                                                                                                                              • Brand commitment to Fairtrade food brands
                                                                                                                                                                                                • Divine most worth paying more for, Percol lacks recommendation
                                                                                                                                                                                                  • Figure 24: Commitment to various Fairtrade food brands, January 2009
                                                                                                                                                                                                • Round up
                                                                                                                                                                                                • Communication and Promotional Activities

                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                    • Top advertisers
                                                                                                                                                                                                      • Figure 25: Main monitored media advertising spend on Fairtrade foods and drinks, 2006-08
                                                                                                                                                                                                    • Campaigns – Fairtrade fortnight
                                                                                                                                                                                                      • Local Fairtrade campaigns
                                                                                                                                                                                                      • Channels to Market

                                                                                                                                                                                                        • Key points
                                                                                                                                                                                                          • Fairtrade market share
                                                                                                                                                                                                            • Figure 26: UK estimated retail value sales of Fairtrade food, by retailer, 2007
                                                                                                                                                                                                          • Supermarkets
                                                                                                                                                                                                            • Specialist retailers
                                                                                                                                                                                                              • Charity shops
                                                                                                                                                                                                                • Online
                                                                                                                                                                                                                • The Consumer – Important Factors Considered When Buying Food and Drink

                                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                                    • My health, their health
                                                                                                                                                                                                                        • Figure 27: Important factors considered when buying food and drink, November 2008
                                                                                                                                                                                                                      • Appealing to the older generation
                                                                                                                                                                                                                        • It’s not just about price
                                                                                                                                                                                                                          • Issues affecting Fairtrade enthusiasts
                                                                                                                                                                                                                            • Figure 28: Important factors when deciding what food and drink products to buy at the supermarket/local store, Fairtrade enthusiasts vs all shoppers, November 2008
                                                                                                                                                                                                                          • Other social issues – conflict of compatibility
                                                                                                                                                                                                                            • Who are the Fairtrade enthusiasts?
                                                                                                                                                                                                                              • Figure 29: Consumers who cite fairtrade as a consideration when buying food and drink, November 2008
                                                                                                                                                                                                                          • The Consumer – Fairtrade Products Repertoire

                                                                                                                                                                                                                            • Key points
                                                                                                                                                                                                                              • Coffee continues to lead the way
                                                                                                                                                                                                                                  • Figure 30: Purchasing of selected Fairtrade food and drink products, November 2008
                                                                                                                                                                                                                                • Is it really Fairtrade?
                                                                                                                                                                                                                                  • Socio-demographic features divide
                                                                                                                                                                                                                                    • Chocolate have youth appeal
                                                                                                                                                                                                                                        • Figure 31: Purchasing of selected Fairtrade food and drink products, by lifestage, November 2008
                                                                                                                                                                                                                                      • Strong local appeal
                                                                                                                                                                                                                                        • If you sell it, they buy it
                                                                                                                                                                                                                                          • Who is buying Fairtrade?
                                                                                                                                                                                                                                            • Figure 32: Purchasing of Fairtrade food and drink products at the supermarket/local store, November 2008
                                                                                                                                                                                                                                          • How many products do they buy?
                                                                                                                                                                                                                                              • Figure 33: Number of types of Fairtrade food and drink products purchased at the supermarket/local store, November 2008
                                                                                                                                                                                                                                              • Figure 34: Number of types of Fairtrade food and drink products purchased at the supermarket/local store by products purchased, November 2008
                                                                                                                                                                                                                                          • The Consumer – Attitudes Towards Fairtrade Food and Drinks

                                                                                                                                                                                                                                            • Key points
                                                                                                                                                                                                                                                • Figure 35: Attitudes towards Fairtrade food and drink products, November 2008
                                                                                                                                                                                                                                              • Fairtrade support has a cost
                                                                                                                                                                                                                                                • Support is growing
                                                                                                                                                                                                                                                  • Quality, taste not an issue
                                                                                                                                                                                                                                                    • Understanding = support
                                                                                                                                                                                                                                                      • School could be an important resource
                                                                                                                                                                                                                                                        • Sainsbury’s – a quiet revolution
                                                                                                                                                                                                                                                          • Gaps in the market?
                                                                                                                                                                                                                                                            • Buyers have a lack of trust
                                                                                                                                                                                                                                                              • Promotion hits its target
                                                                                                                                                                                                                                                              • Target Groups

                                                                                                                                                                                                                                                                • Key points
                                                                                                                                                                                                                                                                  • Figure 36: Target groups by attitudes towards Fairtrade products, November 2008
                                                                                                                                                                                                                                                                • Fairtrade enthusiasts (31% of respondents)
                                                                                                                                                                                                                                                                  • Apathetic (28% of respondents)
                                                                                                                                                                                                                                                                    • Local Produce Supporters (25% of respondents)
                                                                                                                                                                                                                                                                      • Offer motivated (16% of respondents)
                                                                                                                                                                                                                                                                          • Figure 37: Target groups by important factors when buying food and drink products at the supermarket/local store, November 2008
                                                                                                                                                                                                                                                                          • Figure 38: Target groups by type of Fairtrade food and drink products purchased, November 2008
                                                                                                                                                                                                                                                                          • Figure 39: Target groups by number of types of Fairtrade food and drink products purchased, November 2008
                                                                                                                                                                                                                                                                      • Appendix

                                                                                                                                                                                                                                                                        • Abbreviations
                                                                                                                                                                                                                                                                        • Appendix – Internal Market Environment

                                                                                                                                                                                                                                                                            • Figure 40: Agreement with selected lifestyle statements on ethical consumerism, 2008
                                                                                                                                                                                                                                                                        • Appendix – Broader Market Environment

                                                                                                                                                                                                                                                                            • Figure 41: Trends and projections in UK population, by socio-economic group, 2003-13
                                                                                                                                                                                                                                                                            • Figure 42: Trends and projections in UK population, by age, 2003-13
                                                                                                                                                                                                                                                                            • Figure 43: Trends and projections in UK household size, 2003-13
                                                                                                                                                                                                                                                                        • Appendix – Important Factors Considered When Buying Food and Drink Products

                                                                                                                                                                                                                                                                            • Figure 44: Important factors considered when buying food and drink products, by demographics, November 2008
                                                                                                                                                                                                                                                                            • Figure 45: Important factors considered when buying food and drink products, by demographics, November 2008
                                                                                                                                                                                                                                                                        • Appendix: The Consumer – Fairtrade Products Repertoire

                                                                                                                                                                                                                                                                            • Figure 46: Purchasing of selected Fairtrade food and drink products, by demographics, November 2008
                                                                                                                                                                                                                                                                            • Figure 47: Purchasing of selected Fairtrade food and drink products, by demographics, November 2008
                                                                                                                                                                                                                                                                            • Figure 48: Purchasing of selected Fairtrade food and drink products, by demographics, November 2008
                                                                                                                                                                                                                                                                            • Figure 49: Purchasing of selected Fairtrade food and drink products, by demographics, November 2008
                                                                                                                                                                                                                                                                            • Figure 50: Purchasing of Fairtrade food and drink products at the supermarket/local store by demographics
                                                                                                                                                                                                                                                                            • Figure 51: Number of types of Fairtrade food and drink products purchased at the supermarket/local store by demographics
                                                                                                                                                                                                                                                                        • Appendix: The Consumer – Attitudes towards Fairtrade Food and Drink Products

                                                                                                                                                                                                                                                                            • Figure 52: Attitudes towards Fairtrade food and drink products, by demographics, November 2008
                                                                                                                                                                                                                                                                            • Figure 53: Attitudes towards Fairtrade food and drink products, by demographics, November 2008
                                                                                                                                                                                                                                                                            • Figure 54: Attitudes towards Fairtrade food and drink products, by demographics, November 2008
                                                                                                                                                                                                                                                                        • Appendix: Target Groups

                                                                                                                                                                                                                                                                            • Figure 55: Target groups on attitudes towards Fairtrade products, by demographics
                                                                                                                                                                                                                                                                            • Figure 56: Target groups on attitudes towards Fairtrade products, by the attitude statements

                                                                                                                                                                                                                                                                        Companies Covered

                                                                                                                                                                                                                                                                        • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                                                                                                                                                        • Asda Group Ltd
                                                                                                                                                                                                                                                                        • British Association for Fair Trade Shops (BAFTS)
                                                                                                                                                                                                                                                                        • British Market Research Bureau (BMRB)
                                                                                                                                                                                                                                                                        • Cafédirect Ltd
                                                                                                                                                                                                                                                                        • Christian Aid
                                                                                                                                                                                                                                                                        • Clipper Teas
                                                                                                                                                                                                                                                                        • Co-operative Group
                                                                                                                                                                                                                                                                        • Cocoa Marketing Company
                                                                                                                                                                                                                                                                        • Comic Relief UK
                                                                                                                                                                                                                                                                        • Department of Health
                                                                                                                                                                                                                                                                        • Divine Chocolate Ltd
                                                                                                                                                                                                                                                                        • Fairtrade Foundation (The)
                                                                                                                                                                                                                                                                        • Food Brands Group
                                                                                                                                                                                                                                                                        • Food Standards Agency
                                                                                                                                                                                                                                                                        • Government Actuary's Department (GAD)
                                                                                                                                                                                                                                                                        • Green & Black's Ltd
                                                                                                                                                                                                                                                                        • Holland & Barrett Retail Ltd
                                                                                                                                                                                                                                                                        • J. Sainsbury
                                                                                                                                                                                                                                                                        • John Lewis Partnership
                                                                                                                                                                                                                                                                        • Lidl (UK)
                                                                                                                                                                                                                                                                        • Marine Stewardship Council
                                                                                                                                                                                                                                                                        • Marks & Spencer
                                                                                                                                                                                                                                                                        • Office for National Statistics
                                                                                                                                                                                                                                                                        • Procter & Gamble UK & Ireland
                                                                                                                                                                                                                                                                        • Rainforest Alliance
                                                                                                                                                                                                                                                                        • Safeway Stores
                                                                                                                                                                                                                                                                        • Somerfield
                                                                                                                                                                                                                                                                        • Starbucks Coffee Company UK Ltd
                                                                                                                                                                                                                                                                        • Tate & Lyle
                                                                                                                                                                                                                                                                        • Tchibo coffee
                                                                                                                                                                                                                                                                        • Tesco Plc
                                                                                                                                                                                                                                                                        • The Body Shop - Retail Sales
                                                                                                                                                                                                                                                                        • The Day Chocolate Company
                                                                                                                                                                                                                                                                        • The National Federation of Women's Institutes
                                                                                                                                                                                                                                                                        • Traidcraft PLC
                                                                                                                                                                                                                                                                        • Unilever Plc
                                                                                                                                                                                                                                                                        • Waitrose
                                                                                                                                                                                                                                                                        • Wm Morrison Supermarkets

                                                                                                                                                                                                                                                                        Fair Trade Foods - UK - January 2009

                                                                                                                                                                                                                                                                        £1,995.00 (Excl.Tax)