Dive Brief:
- The Fairtrade Foundation, a U.K.-based nonprofit that works to ensure farmers are getting fair pay for crops including cocoa, coffee, tea, bananas and more, will begin to aid companies in developing their own internal certification programs, according to a Reuters report.
- In recent years, an increasing number of large food companies have transitioned away from the Fairtrade certification in favor of creating their own internal fairness standards. Mondelez and Sainsbury's have both dropped the certification in favor of an internal standard developed with the Fairtrade Foundation.
- The foundation's CEO emphasized to Reuters that the certification is not going away, but the foundation is finding new ways to work with companies outside of certification.
Dive Insight:
Transparent sourcing is a major selling point for food companies. A recent report from Label Insight and the Food Marketing Institute (FMI) showed 75% of shoppers say they'll switch to a brand that provides more in-depth product information, beyond what’s provided on the physical label.
Though for baby boomers transparency applies more to nutrition and ingredients, millennials are more concerned with sourcing details, such as animal welfare, labor practices and certifications.
But sourcing details come with a premium — both for consumers and procurement professionals.
Certifications verifying the absence of environmental or human rights abuses may all seem to be on the same side, but the Fairtrade Foundation, USDA Organic, Rainforest Alliance, Non-GMO Project and others cost suppliers and brands to obtain and are somewhat in competition with each other.
Upon choosing certifications, brands musts decide where their priorities are, and which ingredient premium cost will provide the most value. Likewise, the certifications, whether for profit or nonprofit, need to remain relevant in order to maintain their value in the public eye and ensure consistent revenue.
With this move, the Fairtrade Foundation is making an attempt to be relevant to big food companies in a new way. The question remains, will the growing number of corporate fair trade programs confuse consumers, causing a ripple effect up the supply chain?
