Costs versus consciences

The weekly shop is not the simple, brain-numbing exercise it used to be. The 21st-century shopper is bombarded by a challenging array of messages – about a product’s origin, ethics, production standards and health values – represented by a host of logos.

However, if the latest research from the IGD (the new name for the Institute of Grocery Distribution) is to be believed, brands hoping to gain some advantage over their competitors by sporting one of these marks are wasting their time (MW last week).

The study, which examines food logos relating to environmental issues, animal welfare, fair trade and geographical origin, paints a picture of uninterested selfish shoppers who just want no more than to get in and out of the shops as quickly as possible. More damning for the organisations behind these logos is the low recognition factor – one emblem was recognised by just two per cent of those surveyed.

On the other hand, just days after the research was released, the Co-op Bank published its Ethical Purchasing Index (EPI) which measures ethical spending in the UK. Flying in the face of the IGD research, the EPI shows that expenditure on ethical products has increased by 19 per cent in the past year, compared with growth of 2.1 per cent for the UK economy as a whole.

A spokesman for the bank claims there is “definitely a move to people thinking more about what they buy”.

He continues: “We don’t have to go out of our way any more to buy these products: they are now readily available on the supermarket shelves. Consumers are becoming more sophisticated and aware of the impact of their spending. Companies ignore this at their peril.”

Taking both these findings at face value, it is unclear whether the “caring consumer” is real or fictitious. On a wider level, the situation is similarly confused. On one hand, it is widely held that people have become more interested in ethical issues – a movement that started to gather pace in the Nineties. The launch of services such as FTSE4Good – an index of socially responsible investments – and the consumer-focused Good Shopping Guide bear testament to this. On the other hand, companies such as Nike, Gap and Starbucks – which have, in the past, been criticised for unethical working practices – still draw in the customers.

It means nothing to me

As far as UK supermarket shoppers are concerned, IGD business director Richard Hutchins says large numbers of consumers remain unaffected by the messages being promoted in the supermarket aisles. According to IGD’s survey 70 per cent of people’s purchasing decisions are based on price, taste and sell-by date alone. The British Farm Standard – known as the Little Red Tractor, which is an assurance scheme relating to food production standards – was the best-recognised logo, but even it was recognised by just 35 per cent of respondents. The Soil Association mark was recognised by nine per cent of consumers, while Fairtrade did a little better with 14 per cent.

Worse still, says Hutchins, those consumers who did know the logos did not always understand what they meant: “For instance, some people related ‘fair trade’ to the price they were paying for the product, not the price being paid to growers.” He predicts that, through necessity, there will be consolidation.

The IGD study did not touch upon the legions of logos relating to healthy eating, such as 5 A Day, and supermarket sub-brands such as Sainsbury’s Free From, which must surely muddy the waters further.

“Too much information” is also the cry from the Food Standards Agency. Speaking at the annual conference of the Trading Standards Institute earlier this year, FSA chairman Sir John Krebs called for a radical shake-up of food assurance schemes.

He said: “Most people are thoroughly confused about assurance schemes. The number of different schemes and logos adds to the confusion. For instance, consumers are not sure whether the Red Tractor logo is to do with country of origin, better standards of production, or better quality food.” Krebs called for the assurance schemes, of which there are more than 20, to co-operate to deliver a clearer message to consumers.

However, co-operation is not so easy as it sounds. Running these schemes can be a money-spinner, and any simplification implies the survival of some at the expense of others.

This town ain’t big enough

The Soil Association, whose logo is carried by a number of big brands, including Heinz, as well as some supermarket own-label products, is calling for a “rationalisation” of organic certification bodies. A spokeswoman says: “We are concerned at the number of organic certifications and have called on the Government for a review.” Unsurprisingly, the Soil Association does not propose to kill itself off, and the concern is aimed at competitors.

The spokeswoman casts doubts on IGD’s figures, saying that Soil Association-commissioned research found that, among “opinion leaders” – journalists and politicians – recognition of the logo was universal, while a Mori poll found that 16 per cent of consumers knew what it meant.

But Hutchins maintains that the everyday shopper remains unmoved: “People like to know that somebody is looking after ethical issues, but they don’t necessarily want to have it slammed in their face. When they are in the pressurised environment of a supermarket, having to deal with the kids, parking and so on, these issues tend to drop out of their minds.”

One company which would beg to differ is the Co-op supermarket. It was founded on a set of philanthropic values and principles in 1860. In the 19th century, shop-owners were generally unscrupulous. The Co-op set out to give poverty-stricken workers a better deal.

Co-op head of brand and corporate development Terry Hudghton says these principles survive today, but he admits that the Co-op lost its way, as far as marketing itself is concerned, in the Fifties and Sixties.

He says: “The Co-op was spending too much time trying to mimic superstores. It lost touch with the values it was founded on. In the last seven to eight years, we have made a concerted effort to go back to our roots.” The chain has tried to carve out a niche as the ethical choice among supermarkets.

Last week, it demonstrated this commitment by making sure all its own-brand chocolate is Fairtrade-labelled, in a move that is expected to double sales of Fairtrade chocolate in the UK. Hudghton hopes the move will have a commercial advantage as well as an ethical one: “I would like to think that not only are people going to eat more of our chocolate, but hopefully new shoppers will venture into our stores.”

He comments: “We have two main objectives for Fairtrade. One is to be the leading Fairtrade retailer and the second is to bring Fairtrade into the mainstream.” The Co-op had an exclusive agreement to stock Fairtrade bananas, but did not hold on to this for long as it wanted to encourage other supermarkets to follow its lead.

Try to keep the customer satisfied

But maintaining consumer choice in store is a must. The disastrous example of Iceland, which had to reverse a large-scale move into organic food when sales suffered, serves as a lesson to those considering taking the plunge.

Costa Coffee marketing director Chris Sedgewick agrees that keeping all options open is important. Costa’s teas are all Fairtrade, but it offers Fairtrade as an alternative on its main coffee lines. Sedgewick says the ethical products do well in some parts of the country, such as Brighton, but points out that they are only a small part of the chain’s range. He says he plans to explore other Fairtrade options in future.

Perhaps unfairly, the desire for quality can act as a barrier to consumers making an ethical purchase. Fairtrade deputy director of marketing and communications Ian Bretman says this view harks back to the days when ethical products were not as good as they are now.

Bretman says: “There may be a hangover from the days when the products were sold only in Oxfam shops. But now Fairtrade has gone beyond the ‘beards and sandals’ brigade. Sales have been growing and people seem more comfortable with the idea.”

Cafédirect head of marketing Sylvie Barr says companies selling ethical products should look to the Body Shop for inspiration: “When people are really into the product, they start looking at the message as well.”

Cafédirect is the sixth-largest coffee brand in the UK, and has outperformed the coffee market as a whole. Turnover for the year to September 30 was £10.4m, a year-on-year increase of 28.6 per cent. IRI MAT sales statistics for the 52 weeks to November 3, covering roast and ground coffee, showed a 22.7 per cent sales increase by value for Cafédirect roast and ground coffee. Overall growth in the roast and ground category was 3.7 per cent.

Barr says the company’s ethical stance has played a part in this success: “If you have two similar products, but one helps people while the other doesn’t, which one would you choose? It is definitely an advantage.”

Observers agree that there is a need to increase consumers’ knowledge of the variety of messages they face at the shops. But most of the organisations in the ethical movement do not have money to burn on huge marketing campaigns. While individual consumers’ behaviour is too complex to be branded as ethical or unethical, getting them to at least understand the issues must be the highest priority for these organisations.