Apr 2007
Fairtrade is changing the shape of
the banana trade
Mike Knowles
By the end of July, every banana sold by resurgent UK supermarket group Sainsbury’s will be branded Fairtrade. The group’s chief executive Justin King has informed suppliers of their obligations and, as we speak, these companies are working with banana producers to get plantations certified in time. Anyone who thinks Fairtrade is just a passing fad or just another brand for righteous, do-gooder consumers had better think again. Fairtrade is here to stay because not only does it appeal to the public, it’s giving retailers a healthy dose of good PR and a chance to sell more bananas.
As Fairtrade banana sales continue to rise, however, you have to wonder where importers will find the additional volumes necessary to support such a commitment without detracting from the quality of the fruit. Independent inspections need to take place and certification needs to be granted, but even these do not guarantee ample supplies of fruit. As one major European importer told me at the start of this month: “There are other supply options we could switch on for Fairtrade, but you’d be compromising on quality.”
And at some point the retailers are going to want to make a healthy margin out of all this. As well as insisting the price of their bananas will not rise and that quality will not suffer, they have also reassured suppliers that they will not have to foot the bill. In this case at least, they appear to be putting their money where their press releases are. But the financial backing needs to be sustained and, crucially, must be seen as a buying cost rather than a marketing expense.
Across Europe, other retail operators are buying into the Fairtrade produce trend, and you have to wonder where this leaves the major banana companies, who prospered under the licence system and who still make much of their money from supplying conventional bananas in bulk. As more shoppers demand Fairtrade and even organic bananas, it begs the question what impact it will have on the shape of the European banana market as a whole. You would be forgiven for thinking that the trade is about to see upheaval on an even greater scale than that witnessed following EU policy changes in 1993 and 2006.
Food retail has driven change in the fresh produce business for the last 20 years, but in many ways the banana business has been left untouched. The end of the licence system has at last given supermarkets the opportunity to shake up the category for the first time.
By the end of July, every banana sold by resurgent UK supermarket group Sainsbury’s will be branded Fairtrade. The group’s chief executive Justin King has informed suppliers of their obligations and, as we speak, these companies are working with banana producers to get plantations certified in time. Anyone who thinks Fairtrade is just a passing fad or just another brand for righteous, do-gooder consumers had better think again. Fairtrade is here to stay because not only does it appeal to the public, it’s giving retailers a healthy dose of good PR and a chance to sell more bananas.
As Fairtrade banana sales continue to rise, however, you have to wonder where importers will find the additional volumes necessary to support such a commitment without detracting from the quality of the fruit. Independent inspections need to take place and certification needs to be granted, but even these do not guarantee ample supplies of fruit. As one major European importer told me at the start of this month: “There are other supply options we could switch on for Fairtrade, but you’d be compromising on quality.”
And at some point the retailers are going to want to make a healthy margin out of all this. As well as insisting the price of their bananas will not rise and that quality will not suffer, they have also reassured suppliers that they will not have to foot the bill. In this case at least, they appear to be putting their money where their press releases are. But the financial backing needs to be sustained and, crucially, must be seen as a buying cost rather than a marketing expense.
Across Europe, other retail operators are buying into the Fairtrade produce trend, and you have to wonder where this leaves the major banana companies, who prospered under the licence system and who still make much of their money from supplying conventional bananas in bulk. As more shoppers demand Fairtrade and even organic bananas, it begs the question what impact it will have on the shape of the European banana market as a whole. You would be forgiven for thinking that the trade is about to see upheaval on an even greater scale than that witnessed following EU policy changes in 1993 and 2006.
Food retail has driven change in the fresh produce business for the last 20 years, but in many ways the banana business has been left untouched. The end of the licence system has at last given supermarkets the opportunity to shake up the category for the first time.
|