Nestle introduces fairtrade coffee, eco-friendly product goes mainstream
By Eleanor Wason, Reuters
October 7, 2005
LONDON – For coffee drinkers overwhelmed by choice in the coffee aisles, add this: Fairtrade coffee from the world’s number one food group, Nestle.
“Fairtrade” coffee, which up to now has mostly been marketed by small groups trying to give impoverished farmers a bigger cut of the pie than food giants like Nestle, lands in British supermarkets with a Nestle brand in two weeks’ time.
“From our point of view there is significant consumer demand behind this launch,” said Fiona Kendrick, managing director of Nestle’s beverage division.
The “Partners Blend” soluble instant coffee made from Arabica grown by smallholders in El Salvador and Ethiopia will have the Fairtrade certification guaranteeing certain developmental, employment and environmental standards and a premium paid for the farming community.
“This is a turning point for Fairtrade in the U.K. – the first time that one of the four major coffee roasters has taken its first step in response to rapidly growing consumer demand for products certified by Fairtrade,” the UK-based Fairtrade foundation’s Executive Director Harriet Lamb told Reuters.
The foundation runs the scheme that allows companies that market products with a “Fairtrade” label to claim it has been produced in compliance with its standards.
The launch follows swiftly after Nestle’s American rival Kraft linked up with the Rainforest Alliance, another ethical label, to introduce Kenco Sustainable Development.
These companies don’t just have farmers’ better interests at heart, though.
Britain, where organic foods are also very much in vogue, is the world’s largest Fairtrade market with sales up 51 percent to 140 million pounds ($247.7 million) last year and similar growth expected for 2005 and 2006. It is only four percent of the U.K. coffee market, but is one of the fastest growing segments.
“It’s not just about cannibalising what is already available in Fairtrade or in Nestle’s range,” Nestle’s Kendrick said. “This is a mass market product for consumers across the range.”
Other companies and organisations involved in Fairtrade gave the launch a cautious welcome.
“This is an amazing success to get a big company like Nestle on board but it is a challenge — how do you accommodate a company under that brand when so many people are suspicious of it (Nestle)?” said Oxfam’s trade spokesperson Amy Barry.
Oxfam helped found the Fairtrade Foundation in 1992.
Nestle has in the past been criticised for its promotion of baby formula in developing countries and is being sued in California by activists on charges of child labour on West African cocoa farms.
Nestle critics such as the activist organisation Baby Milk Action have issued statements warning that Fairtrade’s acceptance of a Nestle product could tarnish the label’s image.
“Nestle recognises that Fairtrade has a useful role to play in helping smallholder producers cope in today’s global economy,” the company said in a statement regarding the launch.
Retailing at 2.69 pounds per 100 grams, Nestle’s Partners Blend is priced in line with other Fairtrade products such as those of Cafedirect.
Phil King, finance director of Cafedirect, was optimistic about retaining consumer loyalty, saying: “We hope it won’t take sales from us, but will appeal to a wider range of customers. We see it as a good move. We hope that if there is a degree of unease about a large company coming in it will not rub off on us.”
Nestle said that depending on the success of its new coffee it could expand its Fairtrade initiatives into other markets.
The Fairtrade Foundation is relieved Nestle has signed up with it rather than using its own competing labelling system.
“The point is to set a standard that every company can apply to so we stop a proliferation of claims,” Fairtrade’s Lamb said. “The main risk would be everybody running around making claims for themselves.”
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