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Fairtrade sales fall for first time in foundation's 20-year existence

Ethical trading scheme’s drop of nearly 4% reflects consumers’ reluctance to pay extra as cheaper alternatives are presented by chains such as Aldi and Lidl

Fairtrade works to protect farmers in developing countries but as the price of commodities such as sugar drop, its products seem more expensive by comparison. Photograph: Alamy

Sarah Butler

Sunday 22 February 2015 19.01 EST
Last modified on Monday 23 February 2015
03.31 EST

Sales of Fairtrade goods have fallen for the first time since the ethical trading scheme was founded 20 years ago as cash-strapped consumers tighten their belts.

The slide of almost 4%, after years of double-digit growth, reflects wider troubles in the grocery market as shoppers put less in their baskets and turn to cheaper chains such as Aldi and Lidl in a bid to save money. While the discount supermarket chains do stock some Fairtrade goods, these make up a much smaller proportion of their sales than in some of the more mainstream supermarkets.

The retail sales value of products overseen by Fairtrade, which aims to protect farmers in developing countries by promising them a minimum price and a premium to invest in community projects, fell by 3.7% last year to £1.67bn.

Michael Gidney, chief executive of the Fairtrade foundation, said: “Our main concern now is that increasingly aggressive competitive behaviour in the grocery sector could undermine the volumes farmers and workers are able to sell on Fairtrade terms. This will result in real losses to hardworking families and communities in some of the poorest countries in the world.”

Aldi and Lidl now control more than 10% of the grocery market, according to data from Nielsen, as they continue to enjoy double-digit sales growth while their bigger supermarket rivals shrink.

Analysts said Fairtrade was likely to have been hit as overall sales have fallen at Sainsbury’s and The Co-op. Both are important outlets for the ethical brand having recently switched their own-label bananas, coffee, tea and chocolate to Fairtrade products. Marks & Spencer, one of the major backers of Fairtrade cotton when it was first launched, has also cut back its use in favour of less expensive, easier-to-manage ethical systems such as the Better Cotton Initiative.

Fairtrade tea and sugar sales have also been affected by a drop in all sales of both British staples. Sales of sugar fell by 5% and cotton by 38% while the amount of Fairtrade tea and cocoa, both major products for the ethical brand, fell by 1% and 2% respectively. As the price of ordinary sugar has been falling dramatically, the Fairtrade alternative looks much more expensive in comparison.

Bryan Roberts, of the retail analysis firm Kantar Retail, said: “Some of this is a story about certain food categories. Sales of tea are in decline and there are a lot of anti-sugar messages out there. People are replacing it with alternatives like Stevia. Fairtrade is also a bit of a luxury for people and they are feeling hesitant about buying into that at the moment.”

He suggested that drops in the prices of food commodities meant that Fairtrade had become relatively more expensive as it protected the price paid to farmers. Many retailers choose not to pass those higher costs on to shoppers – but that makes their Fairtrade goods less profitable and so they are less inclined to give them prominence in stores.

Fairtrade is also facing rising competition from rival ethical labelling systems, such as the Rainforest Alliance.

The foundation – which begins its annual fortnight of promotional events on Monday – is responding with new partnerships which change the way it works with brands and retailers. 

Last week it announced a partnership in which only the cocoa in British and Irish Mars bars will be certified by Fairtade

In the past every aspect of a chocolate bar, such as sugar or vanilla, would have to be Fairtrade in order to work with the foundation. In another bid to extend its influence, Fairtrade is also working with Waitrose to oversee the supermarket’s own ethical trading scheme.

It will also ramp up campaigning action. Sales of Fairtrade bananas and coffee both rose last year as the foundation launched major campaigns in their support.

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