Fairtrade and the Ethical Brand World July 2010

1. Fairtrade and the Ethical Brand World July 2010 prepared for: FDIN prepared by: Tom Ellis & Claire Nuttall date: 2nd July 2010 issue: 01

2. Background What does Ethical mean to consumers Exploring Ethical Brands Looking into labels Understanding successful brand communication A look at packaging best practice The role and effectiveness of symbols and icons Summary of Learnings

3. Overview • The world has changed – in an internet age the engaged consumer can be much more aware of what goes on behind the scenes of a brand: “the roof has been lifted off the house and we can all look in” • Brands whose ethical practices have been less than exemplary have received huge waves of negative publicity • Although driven by a vocal minority this new tide of active consumerism has been regularly seized on by the press and brands have been trying to smarten up their act • CSR programmes and ethical missions are now part of many businesses and brands, although how wired into the brand DNA differs hugely • But how are these efforts understood by consumers, what do ethical messages and labels mean and do they motivate the majority of consumers to change their own behaviour

4. 1 Hard Question: “How can Food and Drink brands best communicate their ethical stances in a way that is easily understood by consumers and creates a real point of difference?”

5. Research methodology and sample • 6 x 2 hour qualitative focus groups with a mix of BC1 men and women representing different typologies: • Health loving liberals (2 groups) • Buy into freshness and seasonality • Manage their health through foods (self-diagnosis) i.e. Pre & Pro-biotic, low GI etc • Support Local (1 Group) • Look to support small business and local farmers • Feel supermarkets are too powerful • Ethical Balancers (2 groups) • Aware of fair-trade, organic, carbon footprint etc • However, pick and choose what they feel is important at a point in time i.e. They may buy ‘Dolphin friendly tuna’ but ‘Carbon footprint’ and ‘fair trade’ have no relevance to them • Ethical Worriers (1 group) • Live and breath all things ethical • Will go out of their way to source food & drink products that are fair-trade / Organic / Low air miles /Sustainable

6. What does Ethical Mean?

7. A wide variety of definitions “Tastes better – organic tomatoes are not picked too soon and taste better” “[Thinking about it] Now I wonder what it means: who regulates it and what does it really mean anymore” “Gone out of the window, whilst they don’t put chemicals in the ground they cover the food afterwards” “I give organic a wide birth; its aimed at the affluent who have more money than sense” “If being really healthy I look for organic thinking it has more vitamins / healthier but it’s double the price” “Grown as it should be – with little intervention”

8. But largely focused on 3 different areas • Treatment of Suppliers • Fair pay for workers, who aren’t exploited • Supporting the local community • Fairtrade • Treatment of Food • Careful sourcing of ingredients • Seasonal produce • Organic • Local • Treatment of Environment • Sustainable • Cares for the environment • Reduced packaging • Carbon reduction • Broadly speaking though, ethical behaviour is understood to be caring about the implications of your actions and behaving according to an established moral code

9. Consumer differences We found four broad attitudinal splits amongst consumers, from the Ethically Inactive through to the Ethically Motivated, with a majority either unengaged or only superficially engaged As a secondary factor in most consumers’ choice of food and drink consumers move between these attitudes constantly – depending on category, occasion, convenience etc • Ethically Inactive • No effect on choice • Little awareness of ethical issues • Can be cynical about ‘ethical’ messages (to the point of possible rejection) • Ethically Aware • Can be a point of difference, all other factors being equal • Want easy ethics with no negative effect on them (ie. same price, same taste etc) • Aware of ethical issues, but not engaged • Leaves a positive impression • Ethically Active • Significantly effects choice in certain areas • Seek out information • Ethically Motivated • Drives choice and behaviour • Cynical about brand ‘ethical’ messages

10. Consumers are often confused • The multitude of messages and logos doesn’t help the ethical agenda – often seeming contradictory and confusing to less engaged consumers

11. Consumer confusion doesn’t help • The multitude of messages and logos doesn’t help the ethical agenda – often seeming contradictory and confusing to less engaged consumers “I’ve heard that with food miles its worse to drive to farmers markets than supermarkets” “Is Fairtrade better than Rainforest Alliance? Are they the same thing” “Isn’t it all just marketing spin – can I trust any of it when it comes from big companies” “When it says ‘Farm Eggs’ does that mean their free range or are they battery farms?” “It just offers companies a chance to stick a label on it and whack the price up” “Should I be buying organic food or locally sourced food”

12. Information sources are multiple and inconsistent • Consumers are bombarded by information from different sources, which are often not coordinated in their messaging: • Press coverage: national and local news • Film / TV shows / Books: eg. Food Inc., Fast Food Nation, End of the Line • Celebrity Chefs: eg. Jamie’s School Dinners, Hugh Fearnley-Whittingstall’s Chicken Campaign • (Trusted) brands : eg. Innocent, Green and Black, Ben & Jerry’s, • Retailers: eg. Tesco, M&S, Co-Op & Waitrose • But few consumers seem to actively seek out information from the ‘regulator brands’ themselves (ie. Fairtrade, Marine Stewards, Soil Association etc) to better understand what they mean Currently it is too much effort for consumers to really understand the ethical agenda and so they remain disengaged until something or someone clarifies an issue for them

13. Price matters Price is a crucial factor – especially in today’s market – but many consumers are willing to pay a premium, sometimes quite significant, for food / drink with ‘ethical’ labels. But this does differ by category: However, for the majority of these, higher premiums are more to do with the benefit it has to the food (and therefore the consumer) than to the environment or the suppliers, so locally sourced, organic etc can command higher premiums than Fairtrade More willing to pay a premium for: Baby/ Childrens Food Meat (esp more expensive meats) Cheese Chocolate Vegetables Why?Better taste Better quality Healthier Less willing to pay premium Frozen food Everyday vegetables Chicken Very expensive items Why? Seen as commodities Low interest categories

14. Exploring Ethical Brands

15. Ethical brands: size matters “Trying very hard with Plan A” [although many respondents hadn’t heard of this] “They help farmers and have lots of Fairtrade stuff” “Uses small suppliers and delivers seasonal produce” “They’re purely Fairtrade – they clearly saw an opportunity, but have stuck to being ethical” “Its wired into the DNA and they’ve got a figurehead like Anita Roddick who embodies it” “They are owned by the farmers and the CEO was influential in Dairy Milk going Fairtrade” “It has changed a lot in the last 2 years and now uses a lot of organic produce” “Ribena Lite has no sugar, so that must be better for people” Size matters – and respondents felt smaller brands were more ethical – but they picked out a whole range of brands for a wide range of reasons – reflecting a disparate understanding of ‘ethical’ and differing connections with the messaging

16. …and unethical? “At the other end to Divine, Cadbury have signed up to Fairtrade, but Nestle haven’t” “Everything is mass produced” “They created Rainforest Alliance as they didn’t want to sign up to Fairtrade” “I just don’t trust them – whatever they say” “They can’t be trading properly to be selling products at the price they do” “They’ve driven disposable fashion and, environmentally, that’s not great” Consumers find it hard to believe that big organisations can be driven by ethics rather than profit. However, there was recognition by some that Nestle and Primark had strong ethical policies, but this still seemed dissonant with experience

17. Looking into Labels

18. How different labels resonate • We looked at a number of different labels in isolation – with no images or labels - to understand what they meant to our audience: • Fairtrade • Organic • Sustainable • Responsibly Farmed • Regionally Sourced • Ecological • Eco-friendly

19. Fairtrade • Strong recognition and broad understanding of the concept, but there is a threat of an erosion of trust as bigger brands come to market “African farmers who are happy and not exploited” “It seems to be slipping away: for example how can Kit Kat do that – there must be a loophole” “I tend to buy Fairtrade products by default –I’m primarily buying the brand and it happens to be Fairtrade which makes me feel good” “Fairtrade is the price the Western world pays for 3rd world products” “It’s a high end product you feel is premium, but could taste like crap” “Its people rather than environment focused”

20. Organic • Well understood, but a clear divergence over opinion over the value it offers – the price is high and the value is seen more in the quality of the produce than the ethical stance “Tastes better – organic tomatoes are not picked too soon and taste better” “[Thinking about it] Now I wonder what it means: who regulates it and what does it really mean anymore” “Gone out of the window, whilst they don’t put chemicals in the ground they cover the food afterwards” “I give organic a wide birth; its aimed at the affluent who have more money than sense” “If being really healthy I look for organic thinking it has more vitamins / healthier but it’s double the price” “Grown as it should be – with little intervention”

21. Sustainable • Has very broad (perhaps too broad) application and therefore largely seen as something retailers need to take a lead on: its too complicated for consumers to really understand all the elements of a supply chain and what sustainability might entail “Incorporates everything: environment, people who grow food, everything” “Makes me think of fish – such as sustainably sourced salmon, careful stock management” “Supermarkets should be responsible for this, making it their ethos like M&S & Waitrose” “Sustainable communities – its not ruining the local community” “Not farmed into submission, take something away and replace it with something ” “Feels more pack than food: glass, trees etc”

22. Responsibly Farmed • Responsibly farmed was generally well received, but it did split some groups as to whether it was marketing spin or a genuine ethical message: for those who were positive about it, it also had knock on connotations for the quality of the food itself “I believe it, its better than Tesco’s Own, they’ve take care of local animals etc and are thinking about it” “It makes me think of celebrity chefs: people who have taken care” “Links to sustainability, the way you rear it, catch it, kill it, pack it and deliver it – from being bred to end provider ” “Bullshit – I know what its meant to mean, but I’ve no idea who’s regulating it” “Can it relate to fish? One doesn’t necessarily think of fish being farmed, but of course they are” “Free range sits in here – not keeping the chickens cooped up”

23. Regionally Sourced • At first look this chimes with desires for local produce, but on closer examination it smacks of ‘Greenwash’: it would need to be supported by some further RTB (eg. fame of region or farmer) “I would be suspicious: regions are huge and sourced doesn’t mean produced” “Honesty and traceability” “Helping local trade rather than a big Tescos” “Sourced locally to where you are” “I did look at it and think ‘local’ but now I think about it it might mean nothing” “Sourced has a good ring to it, its sounds select, as if they’ve tracked down a good supplier”

24. Eco-Friendly • Ecological and Eco-friendly were both widely seen as less relevant to food and drink and more relevant to washing powder etc. but eco-friendly was seen as being more linked to packaging and recycling, rather than the food / drink itself “Sounds like a washing powder: I don’t associate it with food” “Good for the environment” “It’s about being responsible for your behaviour. Be aware of the amount of energy and water you use.” “I wouldn’t know what to think if I saw this on food” “This is all about packaging – it links in with recycling” “Reducing the environmental impact – for example bio-degradable packaging”

25. Ecological • Ecological and Eco-friendly were both widely seen as dissonant with food and drink and more relevant to washing powder etc. As such they were not particularly motivating in this context, but were widely understood to be connected to the environment “This is back to detergents; I can’t imagine ‘ecological’ bread” “It’s to do with the Eco-system, making sure we still have green areas and nature reserves” “It’s doesn’t appeal when you link it to food” “It feels like I’m being told this is the right choice” “It’s all about the environment – its back to wind farming and things like that” “I know what it’s meant to signify, but when you think about it I’m not really sure what it means”

26. Understanding Communications

27. Starbucks Ad “We’ve always been crazy about coffee Now we’re certified* *100% of our espresso beans are now fairtade certified It’s not just coffee. It’s Starbucks.”

28. Starbucks Ad “I think the fact Starbucks has gone ethical is brilliant – a big company like that can’t lie, so I trust it” • This ad causes some very different opinions: • For most it’s great that Starbucks has gone Fairtrade and a real positive – if a bit of a surprise - that would make them feel about buying coffee there • But for some they question how a brand that they’ve never known as an ethical brand can be Fairtrade and it is seen as a marketing ploy (on closer examination people start to question ‘Fairtrade Espresso Beans’ only) • For a few who thought Starbucks had been Fairtrade before, they wondered whether they had been lied to in the past “It makes me feel better about drinking Starbucks” “For me there’s a disconnect between the big Starbucks chain and smaller, more earthy ethical brands” “I’m cynical: its only espresso beans – they just pick a drink and make a claim”

29. Ben & Jerry’s Ad “Ben & Jerry’s support small farmers Our new tub’s loaded with ingredients that improve farmers’ lives and protect their land. Sustainably grown macademias. Fairtrade sugar, cocoa and vanilla. Plus dairy from happy cows. Peace, love & Ice Cream”

30. Ben & Jerry’s Ad “Its very well communicated – I can see the reasoning behind it and the clear thought process” • This ad is very positively received, and seems in line with everything everyone has known about Ben & Jerry’s • It feels very authentic and consistent with the brand and a clear tone of voice • It is clearly communicated on all levels and everyone knows what it means • However, for some ice cream is a treat and so it would have no impact on what brand or flavour they chose “I liked the fact that it shows all colour and races and isn’t just focused on Africa” “This is a real positive: it shows and ice ceram with personality and I would go for it over others as it would assuage my guilt” “As a bloke it would have no effect on me: I go for what I want taste wise when I’m buying ice cream”

31. Innocent Website “We sure aren't perfect, but we're trying to do the right thing. It might make us sound a bit like a Miss World contestant, but we want to leave things a little bit better than we find them. We strive to do business in a more enlightened way, where we take responsibility for the impact of our business on society and the environment, and move these impacts from negative to neutral, or better still, positive. It’s part of our quest to become a truly sustainable business, where we have a net positive effect on the wonderful world around us. Below you will find our strategy for, and our performance to date, in doing so…”

32. Innocent Website “I love all they do (no awareness of being bought out by Coca Cola) for example the fact you can apply to join in their board meeting, is truly transparent ” • This communication is positive and seems in line with what consumers know about Innocent, but there is a growing sense that they are ‘trying to hard’: • This fits well with the brand and is seen as providing back substance to the brand messages • Their tone is seen as friendly and colloquial, not too preachy, but for some this comes across as fake and another gimmick • For those who know about Coke they feel that by not mentioning it, Innocent are being opaque and avoiding a big issue “It feels personal and down to earth – like a friend talking to you” “I’m surprised there’s nothing about coke – it felt like they had sold out and it’s a bit of an elephant in the room” “I like it – it validates their image and gives proper evidence as back up”

33. Communicating effectively We believe there are 5 key rules to communicating an ethical stance in the most compelling way: Brand consistency – if an ethical message is out of the blue or not in keeping with your brand until now, you need to take consumers on a journey Don’t preach – no one’s perfect and this isn’t the ultimate factor in choice Be transparent – especially if you are a big brand, consumers are cynical and are on the look out for marketing spin and ‘greenwash’ Communicate across all touchpoints – don’t just pop a label on the packaging, but try to also use ATL and PR to support and build your story Back up your message - give consumers evidence of what you’re doing and what this really means, especially if you are a big brand (though this can be through separate media such as a website)

34. Packaging Designs: Some lessons for the future

35. Optimising your on pack communication • A recap of some of the learnings: • Taste cues are key – first and foremost people are choosing food and drink, especially more premium products, for its taste and enjoyment • Don’t hide your light under a bushel – for most brands front of pack is their key comms channel, so use all the tools at your disposal (colour, positioning, size, finish etc) to ensure you communicate your point of difference effectively • Back of pack is important too – if consumers are engaged enough to look for ethical produce they are interested in the whole story; here you can help evidence your big message and cement consumer relationships • Find the ‘mark’ that works best for your brand – identify the ethical message that fits best with your vision and your category – ethical ‘sub-brands’ like Fairtrade, Soil Association, Organic etc. carry their own connotations (and not all are equally powerful) • When it all works it’s a thing of beauty – when the whole mix works together (brand, product, ethical positioning, pack, messaging etc) it can get consumers really excited and drive strong brand loyalty – even at a premium

36. Reading the signs

37. Mapping the landscape Recognition High Impact High Low Low More recognised labels tend to have stronger impacts – however, logos that make it clear and ‘do what they say on the tin’ can also be impactful, even if not familiary

38. Summary

39. Consumer Landscape • Consumer yo-yo between different ethical ‘attitudes’ when buying food / drink depending on a range of factors such as category, occasion, price (and even where they are shopping); few people are consistent in their approach across all purchases • The multitude of messages and ethical labels often confuse the consumer and can prevent further engagement – too few labels are clear about what they mean and, on deeper interrogation, too many smack of ‘greenwash’ or marketing spin • Equally, not all ethical labels are equal: more established labels such as Fairtrade have greater impact, less recognised ones may go unnoticed • While many are interested in ethical factors, it is not a prime driver of purchase; but it can be a differentiator and, for some, ethical labels are key when they purchase certain products (eg. chocolate, tea, coffee, meat) • However, there is a growing number prepared to pay a premium for products / brands that meet their ‘ethical’ selection criteria (though in many cases this is because it cues better flavour, better health, greater freshness etc)

40. Brand planning • With this in mind brands need to focus on 2 key areas – identifying the strongest areas to communicate and working out how to do this well: • What to communicate: • Your ethical message must fit with your brand and build consistently over time • When teaming up with any ‘ethical label’, consider the strength of their ‘brand’, category relevance, clarity of message and fit with your own brand • Assess how much you need to communicate – generally the more consistent the ethical message is with your brand the less you need to do on pack (but consumers still value supporting messages via different media such as websites etc) • Finally, remember taste is still the biggest motivator in most purchases of food and drink – which can also sometimes clash with more ‘ethical’ positionings – so make sure that any packaging gets the taste-buds going first and foremost

41. Brand planning • How to do it well: • Most consumers don’t have time or interest to seek out ethical labeling once in the shop, so any label should be clearly visible on front of pack • If you decide to use a new ethical label or a less established on, make sure it is crystal clear about what it means - further clarity on back of pack is a great support • Don’t try to do too much on front of pack – less is more in many cases • Finally, don’t preach – ethical messages may well not be motivating or interesting to all (or indeed the majority) of your consumers, make sure you’re not alienating this group • When it all works together ethical labeling can support and strengthen core brand messages, differentiate the brand and actively attract ‘ethically minded’ consumers; done badly it can clutter packs, confuse consumers and detract from key messages about taste