Why ethical equals profitable

What's the story with fair trade products?: The caring consumer is growing increasingly vocal in demanding fairly traded, eco…

What's the story with fair trade products?: The caring consumer is growing increasingly vocal in demanding fairly traded, eco-friendly, organically grown produce from businesses more accustomed to turning a quick buck than a new leaf. Supermarkets and multinationals have been quick to pick up on the trend and are responding to this demand for ethical produce with an almost evangelical zeal.

Just how big ethical shopping has become was highlighted when French cosmetics giant L'Oreal announced in March that it was buying the standard-bearers of conscience consumption, the Body Shop, for nearly €1 billion. Since its birth 30 years ago, the Body Shop has represented an ethical alternative to cosmetics manufacture. Despite criticism from some quarters, founder Anita Roddick insisted the store's ethics would not change.

Weeks earlier, ethics was again centre stage, this time at the World Economic Forum in Davos in Switzerland, when Bono announced the establishment of Red, a global business initiative to channel funds from the sale of branded products into the fight against Aids, TB and malaria in Africa. Businesses backing the venture include American Express, Converse, Gap and Giorgio Armani.

"People see a world out of whack. They see the greatest health crisis in 600 years and they want to do the right thing, but they're not sure what that is," said Bono. "Red is about doing what you enjoy and doing good at the same time."

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Sainsbury's in Britain confirmed the influence of ethical shopping when it reported in February fair trade sales of more than £1 million (€1.43 million) a week, up 70 per cent on the previous year.

Peter Gaynor, director of Fairtrade Ireland, says awareness of the brand has grown steadily over the last two years. "The Make Poverty History campaign significantly changed many people's perceptions and helped move this forward last year," he says.

According to Gaynor, one of the big changes is that multinational companies are putting more fair trade products on the shelves. "It's a good first step. We recognise that the larger the company, the larger the responsibility. A company like Nestlé's bringing out fair trade products will lead to more people buying fair trade," Gaynor adds.

A spokeswoman for Tesco Ireland says that its customers are increasingly buying into the concept of fair trade. Traditional fair trade items such as tea, coffee and bananas are selling "extremely well" while newer ranges, such as biscuits and cut roses from Africa, have also caught the attention of the buying public.

In Marks & Spencer outlets all the coffee and tea is now fair trade.

THE BUSINESS OF ethics has brought about some odd partnerships: a car manufacturer is running ads in Ireland now plugging its green credentials and promising to plant a tree for every car it sells.

"Bubbling beneath the surface of all advertising briefs now is the notion that consumers are much more savvy. People are looking for products that make statements about their lifestyles," one Dublin-based advertising executive told PriceWatch. "Smart brands are aligning themselves with some notion of ethical consumption."

Tanja Raab, who lives in Thomastown, Co Kilkenny, has favoured ethically sound goods for nearly her entire adult life. She says the main reason she tries to avoid shopping in major outlets that sell clothes for buttons is "because you have to wonder how they can afford to produce and sell them for so little. I don't feel comfortable buying products that might have had a negative impact on someone else." Raab says, "We should be prepared to pay more for organic, ethically traded food. It costs more to produce so it makes sense that it is going to cost us more. Of course I'd like to see prices come down but until that happens, then I am prepared to pay a premium."

So how much more does shopping ethically cost? You can expect to pay up to 30 per cent more if you choose organic-only products; fair trade coffee, for its part, is less than 10 per cent dearer than other coffees in Tesco outlets in the Republic.

The narrowing of the gap in the price for such products and increased awareness of the fair trade concept is grounds for optimism, Raab says. "At least most people now know what fair trade means. Ten years ago if you asked if the coffee in a restaurant was fair trade, they wouldn't have had a clue what you were talking about."

Trading fair: the square deal

  • Fairtrade Mark Ireland was established in 1992
  • Ireland imported its first two tonnes of Fairtrade coffee beans in 1996; last year volume reached 155 tonnes
  • Coffee, tea, bananas, cocoa and chocolate are the best-selling fair trade products
  • The minimum market price for Fairtrade coffee is just in excess of €1 per pound (0.45kg), more than double the average price
  • The annual retail value of fair trade products in Europe in 2005 was more than €660 million
  • Retail sales of fair trade products in Ireland last year amounted to €7.5 million
Conor Pope

Conor Pope

Conor Pope is Consumer Affairs Correspondent, Pricewatch Editor