Fairtrade Seminar 2008Birmingham

Martin Hill, Head of Commercial Relations,

The Fairtrade Foundation

20th February 2008

The Fairtrade Foundation’s Vision

“A world in which every person, through their work, can sustain their families and communities

with dignity. ”

Fairtrade - Aims and Objectives

Fairtrade is a strategy for poverty alleviation and sustainable development.

Its purpose is to create opportunities for producers who have been economically disadvantaged or marginalised by the

conventional trading system and it promotes trading partnerships based on dialogue,

transparency and respect that contribute to sustainable development by offering better

trading conditions to producers and workers.

The Scale of Poverty 1 billion people live on less than $1 a day Half the world (about 3 billion) live on less than $2 a day

So what does this actually mean for people in their daily lives ?

1.1 billion (1 in 6) have no access to clean drinking water and 2.6 billion ( nearly half the world ) lack basic sanitation (WHO )

Approx 790 million are chronically undernourished

30,000 children die every day due to poverty ( UNICEF )That is now about 10 million children a year under 5 yrs

Source: Oxfam 2007

Other Effects of Poverty Nearly a billion people entered the 21st century

unable to sign their names or read a book

80 million children receive no education at all

Most of these will be girls and children from rural families

Source: Oxfam 2007

Role of the Fairtrade Foundation

Certify FAIRTRADE Mark products

Expose the injustices of global commodity markets to consumers and engage the public in trade-related issues

Raise awareness of the FAIRTRADE Mark and increase purchases of Fairtrade

Develop relationships with commercial partners to expand product range and extend distribution

Members

A charity set up in 1992 by several groups

6 original (Founder) members: Oxfam, Christian Aid, CAFOD, Traidcraft, World Development Movement, National Federation of Women’s Institutes8 additional members since 2003: Banana Link, Methodist Relief and Development Fund, Nicaragua Solidarity Campaign, People and Planet, Scottish Catholic International Aid Fund (SCIAF), United Reformed Church, Shared Interest Foundation, Tearfund

The case for FairtradeCoffee Price Fluctuations

0.00

40.00

80.00

120.00

160.00

200.00

240.00

280.00

320.00

US

cent

s/lb

Fairtrade

New York

Jan 1989 June 2007Jan 1996 Oct 1999

Frost damage

in Brazil 1994

Drought in Brazil 1999

Drought in Brazil

1997

Collapse of International Coffee Agreement 1989

NB Fairtrade price = Fairtrade minimum price of 121 cents/lb + 10 cents/lb premium*

When the New York price is 121 cents or above, the Fairtrade price = New York price + 10 cents

* Premium was increased from 5 cents/ lb on 1 J une 2007

The NY price is the daily closing price of the second position Coffee 'C ' futures contract at the NY Board of Trade © Fairtrade Foundation

The Arabica Coffee Market 1989-2007: Comparison of Fairtrade and New York Prices

October 2001

30-year low of 45 cents

March 2003

Fairtrade Labelling Organisations International (FLO), unites initiatives across 80 countries

22 consumer countries - Europe, Japan, North America, Mexico and Australia/New Zealand

Producers from 58 developing countries

Worldwide, some 7 million farmers, workers and their families are able to benefit from participating in, and shaping, Fairtrade

Over 400 producer groups.

One Global System

Producer Organisations Supplying the UK Market

How do we do it?

Certification

Inspecting and auditing producer organisations

Auditing other traders in the supply chain

Licensing products for the UK market

Product

Supply

Chain

Producer

LicenseeImporter

(Manufacturer)

Exporter

Monitored by FLO International

Monitored by Fairtrade Foundation

(Processor)

Retailer

Fairtrade Labelling organisation

Working with Producers:

Development and Certification• Standards, pricing & premium levels• Producer support

What do Fairtrade standards cover?

1. Social & gender Avoidance of forced & child labour Freedom of Association Minimum working conditions

2. Economic Access to Fairtrade markets Minimum price & The Fairtrade Premium

3. Environmental Reduction in use of pesticides Development of Integrated Crop

Management Ongoing improvements in the environmental

sustainability of the production

What do Fairtrade standards cover?

Who can be involved?

FLO defines the countries in which it certifies producer organizations as;

Poorer countries

Countries with extreme differences between the poorest and the richest

The difference that Fairtrade is making

There are now 400 producer groups selling to the UK Fairtrade market

More than 7m people in Africa, Asia and Latin America now benefit from Fairtrade (Farmers, workers and their families)

The Fairtrade Premium is being used to;

Build Schools Provide clean drinking water Pay for sickness benefits and build facilities Pilot expensive organic conversion schemes to help farmers

improve their futures

Benefits for the whole communityBenefits for the whole communityFor example in the Windward Islands…Farmers decided to use the Fairtrade Premium to finance:•Farm Improvements

•Roads

•Education Projects

•Community projects

“Confidence has been returned to the farmers through access to the Fairtrade market and continued employment is promoting peace and stability”

Prime Minister Roosevelt Skerrit of Dominica

The things we take for granted..

“Fairtrade has put money into the hands of women to meet our children’s needs. We can buy pens and notebooks so they can go to school. We have bought seeds and fertiliser to grow vegetables and improve our family’s diet.”

Sira Souko, Batimakana

Issues of equality…

“Women now join in the decision making. The women are now involved in the harvest and decisions about production and conservation. We were part of the decision to build a new school.”

Bamakan Souko,Dougourakoroni.

The strong perception of Fairtrade as an effective and trustworthy way of tackling poverty suggests significant potential for growth

1. “Which of the following do you think are the most effective and achievable ways for you to improve the lives of poor people around the world? (Select up to 3 items)”

2. “Which of the following brands do you MOST trust to deliver against any ethical promise? (Choose maximum of five)”

63%

46%

44%

26%

18%

17%

16%

16%

70%

34%

30%

27%

23%

21%

19%

13%

10%

7%

5%

5%

4%

3%

2%

2%

13%

Fairtrade Mark

Soil Association

Green & Black's

Co-op

Marks and Spencer

Innocent Drinks

Waitrose

Tesco

Sainsbury

Kenco

Cadbury's

Pret a Manger

Starbucks

Tetley

Nestlé

McDonalds

None of these

Accreditation Mark

Retailer

FMCG Brand

Most Effective and Manageable Way to Help Poor People1

% of Respondents (n=503)

Brands Most Trusted to Deliver on Ethical Promise2

% of Respondents (n=503)

49% of Respondents disagreed with the

statement “It’s better to give money to charity than to buy Fairtrade products”

(vs 7% agreeing)

Buying Fairtrade products

Giving money to charities whosupport long-term development

Recycling

Reducing carbon emissions

Lobbying my MP or Government(eg on aid, third world debt etc)

Sponsoring a child

Avoiding buyingbig global brands

Giving money toemergency relief charities

• A positive opportunity for consumers to help reduce global inequality

• About sustainable food production & trade

• A commercial proposition for suppliers and retailers

Distinct & complementary to ethical trading

At its most effective when embedded as a springboard for overall CSR strategy

The British Fairtrade Market

Fairtrade and The FAIRTRADE Mark:

Demand Generation and Brand Development

Getting Involved…Mark Varney

Commercial Manager

The Fairtrade Foundation

1999 200220012000 20042003 20062005

UK Sales of Fairtrade Products 1999 - 2006

Extensive Availability of Products

Existing Fairtrade standards

Fairtrade Standards are available for:

• Bananas  

• Cane Sugar

• Cocoa

• Coffee

• Cut Flowers

• Dried Fruit

• Fresh Fruit  

• Herbs and Spices

• Honey  

• Juices  

• Nuts & Oil seeds  

• Quinoa

• Rice

• Seed Cotton

• Sports Balls

• Tea  

• Wine Grapes

As well as single ingredient products, many of these appear in composite products such as chocolate bars, confectionary, biscuits and cakes, snack bars, spreads, jams and chutneys

Overall awareness- The FAIRTRADE Mark

0%

10%

20%

30%

40%

50%

60%

1 2 3 4 5 6 7 8 9

Recognition & Understanding of the FAIRTRADE Mark 1999 - 2007

Source: MORI /TNS Omnibus studies

Recognition

Understanding

= % of people w ho recognize the Fairtrade symbol

= % of people w ho correctly associate the Fairtrade symbol w ith the phrase "Guarantees a better deal for Third World farmers".

1999

11% 12%

2004

39% 42%

2003

25% 33%

2002

20% 24%

2001

20% 19%

2000

12% 16%

2005

50% 51%

2006 2007

51%52% 57% 53%

High recognition of FAIRTRADE Mark versus other schemes

54%

18%13%

4%

19%

17%

14%

11%

3% 3% 3% 2% 3%

17%

16%

20%

19%

14% 13% 11% 11% 4%

11%

49% 53%

66%

83% 83% 85% 87% 91%99%

1%

FairtradeFoundation

Red TractorScheme

SoilAssociation

ForestStewardship

Council

RainforestAlliance

WaitroseFoundation

MarineStewardship

Council

Ethical TeaPartnership

Product(RED)

UTZCertified

Seen a Lot

Seen a Bit

Seen Once or Twice

Never Seen

Respondent Brand Recognition1

% of Respondents (n=503)

Source: OC&C Online Consumer Survey May 2007, OC&C analysis

1. “How familiar are you with the following organisations (and their logos)?”

Why don’t consumers buy more Fairtrade products

2007 2006

Availability/visibility in store 29% 34%

Habit 23% 19%

Price 19% 18%

Brand loyalty 9% 11%

Awareness of products 8% 11%

Quality 4% 3%

Don’t support / not convinced 2% 2%

Not the main shopper 14% 13%

The Consumer challenge

KNOWLEDGENEEDS

PURCHASING INVOLVEMENT

NEW -Aware, Interested

NON-Buyers

OCCASIONALBuyers –

Rationally engaged

REGULAR / FREQUENT

Buyers

engageddevotees

ENTRY-LEVEL

Awareness, some familiarity but no emotional buy-in OCCASIONAL

Buyers –

Emotionally engaged

Basic rationalInformation: products,

producer benefits

Reinforcement of producer benefits

Detailed understanding

Current Size of Segment

Current Status Short-term Goal Longer-term Goal

Source: Diagnostics Social & Market Research Ltd, August 2006

GROWING AWARENESS, ENGAGEMENT AND DEMAND

Campaigners

• Word of Mouth key for Fairtrade• 70-80 000 supporters• 10 000 “Multiplier”

Campaigners

• 300+ Fairtrade Towns, cities and boroughs

• 60 Fairtrade Universities • Over 3 000 Faith Groups

Campaigner Events

Fairtrade Schools

Officially launched Autumn 2007

Target: 2,000 primary and 500 secondary by March 2009

Images copyright Simon RawlesImages copyright Simon RawlesImages copyright Simon Rawles

On-line

On-line

•Developing presence on Facebook, MySpace

•Extensive peer-to-peer communication via Fairtrade YahooGroups

On-line- new Fairtrade Foundation website

Fairtrade Fortnight

What is Fairtrade Fortnight?

• Our biggest annual promotional campaign (and one of the biggest in the UK)

• 2008 will be 13th year• Purpose: to unite all stakeholders:

•Grassroots supporters to licensees, media partners and NGO members

• A simultaneous promotion to maximise impact, awareness and sales of Fairtrade.

Fairtrade Fortnight- 2008

Retailer Activity ‘07: Product display

Retailer Activity ‘07: Indoor displays

Retailer Activity ‘07: Window/Car park display

Retailer Activity ‘07: Shelf POS

Sales Impact

Role of The FAIRTRADE Mark in brand and product development

Brand development

• The producer, farmer and worker and the Fairtrade standards are critical:

• Fair price, community development; environmental sustainability

• Democracy, engagement, involvement

• From a brand and new product development point of view, you can approach The FAIRTRADE Mark like an “ingredient brand”

Producer ownership / mission focussed brands

Fairtrade & FAIRTRADE Mark is a core contributor to reason to believe

FAIRTRADE Mark is a contributor to equity and customer communication

FAIRTRADE Mark and provenance

Private Label Brand Development- Fairtrade as core reason to believe

Private Label Brand Development-Fairtrade as part of other sub-brands

Private Label Brand Development-Fairtrade as part of other sub-brands

Private Label Brand Development-Fairtrade as part of core category

Other Branded Product Development

Launching FAIRTRADE Mark Products on the UK Market- the

“nuts and bolts”

Product

Supply

Chain

Producer

LicenseeImporter

(Manufacturer)

Exporter

Monitored by FLO International

Monitored by Fairtrade Foundation

(Processor)

Retailer

Composite Products

• All ingredients that can be Fairtrade, must be Fairtrade.

• In order to comply, the product must consist of either: - At least 20% of ONE Fairtrade ingredientOR- 50% of combined Fairtrade ingredients

The FAIRTRADE Mark

• An independent consumer label which appears on products as a guarantee.

• The FAIRTRADE Mark is a registered trademark and a certification mark – not a brand.

• Each piece of promotional and product packaging material needs to be signed off prior to printing

®

Licensee Responsibilities

• Every stage of a supply chain processing Fairtrade certified products must submit quarterly ‘flow of goods’ reports to FLO-Cert.

• Every licensee must submit quarterly reports on the number of finished products that come into the market

• License fee of 1.8 % of net wholesale price is charged for permission to use the FAIRTRADE Mark, this funds both the work of the Foundation and FLO

• Reports are required no later than 45 days following the end of the calendar quarter send to : certification@fairtrade.org.uk

So you are consideringThe FAIRTRADE Mark as part of your Brand / Innovation / Product

Development Plans?...

First- contact The Fairtrade Foundation

• commercial@fairtrade.org.uk

• mark.varney@fairtrade.org.uk

• www.fairtrade.org.uk

What role could Fairtrade have in your business?

• How could The FAIRTRADE Mark add value to your brand or business?

• What messages, emotions, etc. are you trying to communicate to your customers?

• What role does sourcing have in bringing your brand to life?

What role could Fairtrade have in your business?

• How will this initiative grow the Fairtrade market for producers?

• New product types? New consumers? New business channels? New useage or purchase occasions?

• How can existing Fairtrade producers contribute and benefit?

• How will this initiative enhance the lives of your producers?

• Fairtrade “guarantees a better deal”…

Consumer Trust is critical

1. “Which of the following do you think are the most effective and achievable ways for you to improve the lives of poor people around the world? (Select up to 3 items)”

2. “Which of the following brands do you MOST trust to deliver against any ethical promise? (Choose maximum of five)”

70%

34%

30%

27%

23%

21%

19%

13%

10%

7%

5%

5%

4%

3%

2%

2%

13%

Fairtrade Mark

Soil Association

Green & Black's

Co-op

Marks and Spencer

Innocent Drinks

Waitrose

Tesco

Sainsbury

Kenco

Cadbury's

Pret a Manger

Starbucks

Tetley

Nestlé

McDonalds

None of these

Accreditation Mark

Retailer

FMCG Brand

Brands Most Trusted to Deliver on Ethical Promise2

% of Respondents (n=503)

Key Developments and The Future

•International Project Management- capacity build

•Fairtrade Foundation capacity build

•Strategic Review roll out

Thank you