Blog: Dean BestFairtrade, M&S under the microscope

Dean Best | 3 March 2008

Shall I buy organic? Shall I support my local farmer? Shall I buy Fairtrade? Right now, shoppers are more anxious about which retailer can help them meet the weekly food bill.

Nevertheless, despite ongoing unease over the economy, perhaps now is the best time for Fairtrade Fortnight, two weeks when the Fairtrade brigade tries to convince consumers to throw an ethical pound or two in their direction. Fairtrade products are experiencing something of a boom in the UK. Last year, sales jumped 81% to just under GBP500m (US$993m) and, in the UK, retailers of every colour are stocking Fairtrade coffee, chocolates and, of course, Fairtrade bananas.

But, just what impact is the Fairtrade scheme having on those it claims to benefit? Last week, a UK think-tank claimed the Fairtrade scheme is leaving Third World farmers worse off and does not aid economic development – assertions that then provoked a frenzied response from the Fairtrade Foundation.

Here in the UK, shoppers have taken readily to the concept of Fairtrade, sales are healthy and retailers have used their ad spend in the last week or so to promote their Fairtrade credentials. But how is the scheme faring overseas? Are consumers in Pittsburgh and Paris less swayed by Fairtrade? Keep an eye on our pages this week for an international perspective on the category.

One UK retailer that has been one of the most heavily involved in Fairtrade is Marks & Spencer. The company’s ethical programme – Plan A – has been held up as one of the most ambitious and wide-ranging in retail. Last week, however, the company’s credentials took a bit of a hammering after claims that it is not doing enough to stop "widespread discrimination" among workers in its meat supply chain. Predictably, M&S brushed off the accusations. Nevertheless, the allegations were another bit of bad news in a year that has started less than brightly at M&S. It seems 2008 could be a challenging year for the company and its chief executive, Sir Stuart Rose.

One key task for M&S this year will be to make inroads in the world’s emerging retail markets. Sir Stuart has identified China, India and Eastern Europe as offering the business a substantial opportunity for growth. Last week, it emerged that M&S is in talks with Reliance Industries over a possible tie-up with the Indian conglomerate but a deal has yet to be signed. Markets like India remain a long-term play with huge potential but, with larger rivals like Tesco, Carrefour and Metro either building or looking to build a presence in the world's emerging economies, M&S needs to move quickly.

Emerging markets are also focusing minds at Unilever, the Anglo-Dutch conglomerate behind brands from Knorr soup to Magnum ice cream. The company has decided to manage its businesses in Central and Eastern Europe alongside its operations in Asia and Africa. The move comes after a year in which Unilever’s sales jumped in developing and emerging markets. On the face of it, it seem a wise move from Unilever. Markets from Asia to Africa will have similar characteristics and there will be learnings to be gained. But will the new super-division, which also includes Eastern Europe, be too unwieldy to manage?


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