Ethical product demand to remain strong

Posted by James Ferre on 1st December 2008

The cost of living pressures in the UK are not likely to inhibit growth of ethical consumerism, according to the Co-operative Bank. Its 9th annual report into green spending in Britain discovered the ethical market had risen by 15 per cent to £35.5b (A$83.6b) in 2007; although ethical spend remained a reasonably small percentage (about 5%) of total retail sales of over £600b.

Dick Parkhouse, Managing Director for Retail at the bank, believes that Government stimulus packages can help ensure the ethical market becomes stronger than ever. “Government intervention is underpinning these markets… ensuring that they continue to grow,” he claimed. “Of course, the state of the economy will impact on consumer spending but this report shows that bold Government action can stimulate markets, save consumers’ money and protect the environment.”

Research has indicated that consumer fears about the state of the economy could stall demand for ethical products and there have been suggestions that retailers and manufacturers will reduce their willingness to improve the sustainability of their businesses. For the time being, however, most retailers and manufacturers continue to advise that they are endeavouring to enhance their commitments to sustainability and social responsibility, while consumer demand has been reported to be robust.

The report found that last year, on average, each household in the UK spent £707 (A$1664) on ‘ethical’ products, up from £630 the year before (A$1483). Among the popular ethical products were organics, which increased in popularity by 10%, and Fairtrade goods, which managed a rapid 61% rise. Over half of the population said they had purchased for ethical reasons (51%) as opposed to 47% the year before, indicating steady growth in ethical concerns.

The Co-Operative Bank believes that ethical spend will hold up well in the downturn, but will be particularly strong in sectors where the cost differential is minimal. “Consumers’ emotional attachment to many ethical products is now well embedded, and we would argue that these areas will have an advantage over other markets in a downturn, particularly where the premium for the ethical choice is relatively low, as with Fairtrade,” they noted.