What percentage of consumers are happy to pay a higher price for Fair Trade products? Watch a short video with Jens Haninmueller, Associate Professor of Political Economy at Stanford who has researched the subject:
Are consumers actually seeking out Fair Trade products? The Stanford researchers found that sales in US grocery stores increased by 10% when a product had the Fair Trade certified label on it. Even when the price was raised on the product sales continued to grow. But it was only true for one type of fair trade certified coffee tested.
For the less expensive coffee sales actually decreased dramatically. The researchers hence believe there are two segments in the market. Consumers who are willing to pay more for products with Fair Trade certification and as many that are not willing to pay more. About an equal split.
Have on and off been buying Fair Trade products all over the world. When I lived in the Middle East I used to buy from Marks & Spencers’ Fair Trade products.
Fair Trade is a certified label that no product can use unless it’s certified in accordance with Fair Trade standards. Companies have to apply and once accepted can use the label on their product. So far it benefits 1,4 million farmers and workers in approximately 70 countries.
Different from organic products
Fair Trade certified products should not be confused with organic products. The difference is that Fair Trade products are checked and hence live up to the expected standards. But unfortunately there are organic products on the market that are not organic at all. Just more expensive.
Are you looking into ethically differentiating your product?
There is a business case for differentiating yourself from your competition by becoming a Fair Trade product or brand. There are consumers who are willing to reward you. That segment of consumers will also punish you if you don’t and you will be perceived as a company left behind. If your competitors have upgraded ethically you take a huge risk if you don’t. So it may be necessary to start contemplating how your product could be produced in ways that are more friendly to the environment. It can be done through CSR and sustainability which is becoming more and more important to consumers all around the world.
Do you buy Fair Trade products? If so, why? If not, why? Is it important to you that products you buy are ethically produced? Do you support companies that are into CSR and sustainability by buying their products? Would you like to see more Fair Trade products on the market? Are we heading for a future where companies have to comply to Fair trade standards and CSR and sustainability or be punished by consumers?
VIdeo: Stanford Graduate School of Business – Photo: Lily lilivanili