Ethical food and beverage interest on the rise

Posted by Daniel Palmer on 7th October 2009

The market for products positioned and marketed on the basis of ethical standards (eco-friendly/green, natural/organic, humane, and fair trade) is thriving despite the global recession.

Based on data from a proprietary survey, a new report by market research publisher Packaged Facts indicates that one-fourth of adult shoppers frequently purchase certified organic food or beverage products and one-third are usually willing to pay more for organic foods.

“With the economy foremost in consumers’ minds, heightened price sensitivity in the midst of the current recession is inevitably having an effect on the market for ethical products,” Don Montuori, publisher of Packaged Facts, said. “However, our survey indicates that more shoppers understand the environmental, social, and economic implications of their choices. The result is a sizeable number of consumers who will purchase typically more expensive ethical products even in economically challenging times.”

The American-based report* showed the market for ethical products has annually grown in the high single- to low double-digits over the past five years and is expected to rise over 60 per cent in the next five years.

Foods and beverages dominate retail sales of ethical consumer products, accounting for nearly 75% of retail dollars through all channels in 2009. Non-food products-mainly personal care and household products-represent the remaining quarter. However, through 2014, Packaged Facts projects that non-foods will grow at a considerably faster pace than food, with an 80% versus 57% growth rate. Nevertheless, non-foods will still represent a smaller portion of the overall market.

Tapping into the trend are major marketers and retailers who are offering more ethical products, upping their corporate responsibility efforts through energy-efficient “green” facilities and sustainable business practices, and increasing their cause-related marketing efforts. Meanwhile, supermarket chains are entering the fray by developing private-label lines of organic foods and natural household products as well as improving the environmental efficiency of their stores.

* Ethical Food and Beverage, Personal Care and Household Products in the U.S.; Conscientious Consumerism and Corporate Responsibility in the New Economy, 2nd Edition