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This article comes from an Ethical Corporation focus on sustainability in food and drink supply chains, sponsored by PepsiCo UK & Ireland. Consumers want to do the right thing, especially about the environment, but expect brands to make it easy for them
Consumers do not much care for sustainability. This is a well-worn line of those who doubt shopping can be a force for good in the world. But is it true? That depends on which consumers you talk to.
Research into ethical shopping shows that we break down into three broad groups. Some of us care very little for sustainability; some care an awful lot; and many more of us would care a lot more if buying ethical products was easier.
Consumers that do care have traditionally had four main priorities: health (of themselves and their family); concern for other people (such as workers in supply chains); the environment; and, finally, animal welfare. Now this order is changing.
Marks & Spencer’s head of sustainable business, Mike Barry, says: “In the last few years environmental issues have muscled their way towards the top.” He says health remains a key concern for shoppers, but the environment is displacing social concerns as the next most important ethical issue.
All this means that brands – often under fire from activists for having too much power – are now expected to use their influence to persuade shoppers to lead greener lifestyles. It’s a difficult balance to strike. Brands see their responsibility to spread the green word, but they have a duty to give customers what they want.
Alex Cole, corporate affairs director of Cadbury, explains: “When you’ve got a brand you have to be careful how and what you talk to consumers about. Governments can regulate and preach. Brands have to tread a fine line and stay true to brand values.”
It’s a challenge that will get harder in the recession. “Consumers want to make a difference, but they expect to be able to do so without making sacrifices,” says Jonathan Horrel, corporate affairs director of Kraft Foods.
The number of concerned consumers – those who say they consider ethical issues when shopping – who are willing to pay more for an environmentally friendly or ethical product dropped by five percentage points in March to 53%, according to a Populus poll commissioned by Good Business, a consultancy.
Committed ethical shoppers may be less willing to pay for ethics, but they still want brands to stock ethical products: 71% said the availability of fair trade products made them more inclined to visit a particular store.
Despite the recession, long-term trends towards ethical consumerism look set to continue. According to Barry, “80% of customers want to buy responsibly – on a brand level rather than a product level”. It’s not hard to see why. Faced with 35,000 products in a high street food store, shoppers cannot weigh up the pros or cons of each in a 10-minute shopping trip.
Consumers instead need brands they can trust to deliver on ethics. PepsiCo’s UK head of corporate responsibility, Andrew Smith, says: “All brands need to have environmental goals and have to make sustainability progress. So all products need to be ethical in that sense.”
Barry agrees. “It’s not a case of turn left to the ethical range, turn right to the unethical range,” he says. “Consumers generally expect what they’re buying to meet high standards.”
Brands use different models to gauge levels of green awareness among customers. The first of Cadbury’s three types of customer is the relatively small number of people “who do not understand sustainability and do not like it”, says Cole. In focus groups they say things like, “there’s too much of this stuff around” and “I don’t want to pay more”, she says. These consumers are overwhelmingly motivated by value.
The second group is by far the biggest. People in this group want to shop ethically but “they want it to be made easy for them”, says Cole. “They don’t want to pay more. They don’t want to have to think about it.” Brands and retailers are already eyeing up this group. Sainsbury’s, for example, has switched its own-label tea and coffee to Fairtrade to woo mainstream shoppers who it thinks might be tempted to add an ethical option to their basket.
The third and final group is smaller. Cole explains: “They are generally quite educated. They will think about these kinds of questions and are willing to make sacrifices for their sustainability beliefs – but they think they do it more than they do.” Within this group are the “puritans”, a small segment who will go out of their way to buy products certified as sustainable. These shoppers see labels such as Fairtrade not as options, but essentials.
This committed group of customers – about 10% of shoppers – who make a concerted effort to buy products certified as ethical make up what academic David Vogel has termed the “market for virtue”. Food and drink brands are tapping into this market through launching new ethical products.
PepsiCo, for example, is launching a new potato crisp to appeal to eco-conscious snackers. Red Sky crisps are made from 100% natural ingredients. One-third of the packaging is made from paper, not plastic, and is sourced from sustainably managed forests accredited by the Forest Stewardship Council.
Red Sky crisp eaters will see a percentage of their money go towards saving rainforests, through a tie-in with conservation charity Cool Earth. For every bag sold, an area of endangered rainforest will be protected.
Smith says PepsiCo’s aim in launching Red Sky is to “stretch the organisation”. He says the shift to paper-based packaging and the multi-year partnership with Cool Earth are bold moves that might be too risky to try with an established brand, such as Walkers. “Doing this with a smaller scale product allows the company to experiment – it could become a catalyst for change,” he says.
PepsiCo is also working to make all three layers of the film that make up its crisp packets either biodegradable or recyclable. The new film could result in a lower shelf life for the product than the current 12 weeks, which could affect its possible roll-out to other brands. PepsiCo may soon have to decide whether the new packaging’s environmental benefits outweigh the loss in operational efficiency, and possible risk to product quality, that a shorter shelf-life could entail, says European sustainability director Martyn Seal.
Rather than launching their own niche ethical products, brands have been keener to buy into their existing market. Cadbury, for example, has owned Green & Black’s organic chocolate since 2005. This appeals to the “puritans” among ethical shoppers who would not reckon much to the rebranding of Creme eggs as “sustainable” simply because they require small amounts of packaging, says Cole.
Iconic brands have the scale and marketing expertise to take ethical products to the mass market. The increasing use of certification schemes, once the preserve of the committed ethical shopper, is a case in point.
In March, Cadbury became the latest UK food brand to switch to Fairtrade. All the cocoa used in its Dairy Milk chocolate bars will be certified under the label. Under the scheme, cocoa farmers in west Africa are guaranteed a minimum price for their crop, protecting them from price drops in commodity markets.
This is all well and good, but Cole notes that while many consumers welcomed the news, many were straight on the brand’s blogs, asking, “will it taste the same?” and “it won’t cost any more will it?” Cadbury, which sells 300m Dairy Milk bars a year, says it will not pass on the higher sourcing costs to customers. The idea, says Cole, is to “take Fairtrade to consumers who don’t know what Fairtrade is”.
Cole says: “If you’re a mass brand you’re not really going to sell a lot more through your ethics. You can lose customers by not having basic ethics. More likely you can start to sell the issue to the consumer.”
On the environment, she dismisses cynics who say Cadbury is going green just to sell more chocolate. She says: “Right now, more people are interested in chocolate than in the environment. We use chocolate to sell the environment.”
Of course, brands would not certify products if it did not pay off. Kenco coffee, owned by Kraft Foods, has grown into a £100m brand. At the same time, Kenco is rolling out its plan to make sure 100% of the coffee it buys is certified to the Rainforest Alliance scheme, an ethical certification mark that covers social and environmental issues on farms.
Like Cadbury, Kraft and Kenco made clear that certified products would cost no more to the consumer. “We have been clear about consumers’ expectations around coffee,” says corporate affairs director Jonathan Horrel. This includes concerns about packaging. Kenco now sells refill packs with 3% the amount of packaging, by weight, of a standard coffee jar.
Rainforest Alliance is less well known than Fairtrade in the UK, but Horrel says this has not hindered communication to customers. “You need a story you can tell to consumers. It doesn’t have to be a story that consumers already know.”
Rainforest Alliance continues to gain ground in the US. In April Naked Juice, a juice company owned by PepsiCo, announced that it would buy all of its bananas – found in 80% of its products – from Rainforest Alliance certified farms.
Hard to crack
Despite this progress, some believe brands could do more to sell sustainability to customers.
Sally Uren, deputy chief executive of Forum for the Future, a thinktank and consultancy, says: “Right now no one has cracked how to really engage customers on this agenda.”
Uren says food and drink is yet to achieve the consumer behaviour-changing impact of a campaign such as Ariel’s Turn to 30, which encourages consumers to wash clothes at a lower temperature. She cites Sainsbury’s Love your leftovers initiative as a good attempt. This gives shoppers ideas for what they can make with food that would otherwise go to waste. PG Tips, the Unilever-owned tea brand, has encouraged tea-drinkers not to overboil their kettles to save water.
The core sustainability message for brands to communicate to customers, says Uren, is: “Sustainability is about doing more of the good stuff, less of the bad stuff, and not about giving everything up.”
Now that’s a message many of us would like to hear.