The Mainstreaming of Fair Trade

Economics and ethics. As Occupy Wall Street commands more and more attention, the questions being posed by the participants have resonated to a degree many find surprising. But businesses, particularly consumer-oriented companies - have been confronting these issues for years.

This, it should be noted, is not purely in the interest of moral clarity. In a post industrial economy, even one in the throes of a recession, values and associations have influence on customer purchase decisions. Though the recession has pushed cost to the fore more than anytime in the past 20 years, emotion and self-regard continue to exert a powerful influence on consumers. Companies, therefore, embrace Fair Trade for a variety of reasons. For some it is purely a branding decision. Fairness sells to their target demographic. Third party validation provides a reputational boost. For others the reasoning is more complicated: doing the right thing is part of a complex value proposition. And the countries from which raw materials are sourced may be future markets.

But whatever the motivation, the demand is growing. JL

Ariel Schwartz reports in Fast Company:

If you've swigged Honest Tea, eaten a spoonful of Ben and Jerry's, or sipped on a Starbucks drink, chances are that you've consumed a Fair Trade product. And while you may not know exactly what it means for a product to be certified Fair Trade, you probably know that it's a good thing.

You probably also have noticed the proliferation of Fair Trade products recently--there are over 10,000 of them on U.S. store shelves, and in the second quarter of 2011, sales of Fair Trade certified products skyrocketed 63%. After 13 years of existence in the U.S. (it has been around longer in Europe), Fair Trade is going mainstream.
Paul Rice, the CEO of Fair Trade USA (and former Fast Company cover model), believes that it has taken off for two reasons: an increase in consumer awareness and concern around social and environmental issues, and the fact that many people are realizing that the things they consume can have a large ripple effect.

"You see this rapidly growing desire for people to know where their stuff came from," says Rice. "I think this rising consciousness is leading to a phenomenon that we call the Conscious Consumer. Depending on whose data you read, that consumer segment is anywhere from 15% to 40% of American adult shoppers." This is a group that is looking for socially and environmentally responsible products on a daily basis--and they're willing to pay a little bit more (a five to 10 cent premium) for a product that makes them feel good.

On the corporate side, Fair Trade certification has grown because of an awareness of the ramifications of being caught with a supply chain that's reliant on, say, child labor. Companies all see that the Fair Trade label offers a degree of distinction, especially for the ever-growing Conscious Consumer segment. "Companies are increasingly rethinking how they approach global supply chains and looking for more traceability and more transparency, and that's what Fair Trade does," says Rice.

The concept of Fair Trade is simple: Fair Trade USA works with U.S. companies to audit and ensure that their products are compliant with international Fair Trade standards. Farmers who produce Fair Trade certified products receive a fair price for their labor, don't have to deal with middlemen who skim money off the top of transactions, follow stringent environmental standards, and invest premiums from sales in community development.

Consumer awareness of Fair Trade in the U.S. is around 34%--not as high as awareness of organic products, but it's a large number considering that Fair Trade has been around in this country for less than two decades. Organic certification in the U.S. has existed since the early 1970s.

The Fair Trade movement has grown so large that it now has the hallmarks of a successful campaign: celebrity spokespeople. Musicians Grace Potter and Michael Franti both are putting on concerts this month dedicated to Fair Trade awareness--the first time that Fair Trade has had any sort of major celebrity endorsement. "If you look at all the causes out there, sooner or later everyone looks for high-visibility spokespeople to tell their story. We're ready," says Rice.

Both concerts (Franti's concert from earlier this month and Potter's upcoming concert on Thursday) are streaming at Green Mountain Coffee's Facebook page. Green Mountain was the largest purchaser of Fair Trade certified coffee in the world in 2010.

"It's one thing to stand beside a brand and say that it tastes good. We're talking about giving people a better life and providing the stability for these farms and the communities that are creating this coffee," says Potter.

Fair Trade USA has certainly seen more success in some areas than others. A few years ago, Fair Trade started thinking about taking its methodology "from farm to factory," according to Rice--beginning with soccer balls and apparel. The challenge is taking these Fair Trade items from mission-driven retailers to big companies like Wilson, Nike, Gap, and Levi's.

The apparel companies, at least, are all interested. "They're curious about whether or not they can get the consumers to pay a little more to cover the extra cost to have a more sustainable factory," says Rice. "That said, launching Fair Trade apparel in the recession was just bad luck, because no apparel company wanted to raise prices." After crunching the numbers with one jeans company, Fair Trade USA found that a $40 pair of jeans would cost just $4 or $5 more to go Fair Trade--but the apparel companies aren't convinced that customers will pay.

Regardless, Rice predicts that Fair Trade certifications will continue to grow in the coming years. "Our goal is by 2015 to double our volume and impact around the world in every product category we're working in. We'll also definitely be launching new product categories, but we want to go deeper in everything we're doing," he says.