Fair Trade in Scotland: review

Chapter 3 The Fair Trade Market in Scotland

3.1 Introduction: Fair Trade and the Consumer

Fair Trade goods represent one of the greatest successes of the ethical consumer movement in recent years, becoming a mainstay on almost all supermarket shelves. The Ethical Consumer^[52] magazine, which conducts regular research into the ethical market in the UK, states the four main benefits of Fair Trade as being:

a. Minimum price to producers;

b. Environmental standards related to water, no Genetically Modified Organisms (GMOs) and minimize use of fertilizers and pesticides;

c. Workers' rights: freedom of association, collective bargaining and non-discrimination and

d. Social: social premium used for projects such as sanitation, schools and medical facilities.

In fact, the publication regards Fair Trade to be so important in driving change around the world that it awards an extra mark in its scoring system to products that carry the Fairtrade label. However, as the evidence demonstrates, there is no room for complacency in terms of both direct sales to consumers and the challenges of securing FT product listing in major supermarket chains and food service provider offerings.

This chapter and the following Chapter 4 reflects on a number of key primary and secondary data sources collated and analysed for the review, including international Fairtrade Mark market data, Scottish Government commissioned Scottish grocery sales data (from Kantar Worldpanel), two online surveys conducted by the review team, stakeholder interviews and workshops to elicit FT campaigner, retailer, supplier and importer views.

3.2 Consumer and FT Sales in UK and Scotland

3.2.1 Consumer Stated Behaviour in Scotland

When the SFTF was gathering data in 2016 for Scotland's reassessment as a Fair Trade Nation, consumer awareness of Fair Trade products was reported to be at an all-time high, with 90% of those Scottish respondents surveyed^[53] having definitely heard of Fair Trade (compared to 81% five years before) and 7% thinking that they had (8% previously). This is supported, at a UK level, by survey data from Kantar Worldpanel^[54] showing that 83% of people trust the FT Mark. In Scotland (2016 survey) 43% respondents indicated that they had purchased Fair Trade products in the past year, with over half of this group also indicating that they would be prepared to pay more for FT branded goods of the same quality, and 40% indicating that they would pay the same.

As with all market research, how consumers state they will behave and how they actually purchase often do not align (referred to as 'consumer hypocrisy' in academic studies of behaviour)^[55] and this is no different for Fair Trade. Moreover, ethical consumer behaviour has been found to often be inconsistent and open to change.

For this reason, this review has sought to explore how a more accurate baseline of Fair Trade sales in Scotland can be established, and then how future measurements and efficacy of new interventions can be evidenced together with other market growth indicators. This Chapter firstly looks at the FT/Fair Trade market at an international level and then, secondly in relation to market consumer trends to contextualise the level of known sales in Scotland.

3.2.2 Market Context: Global Fair Trade Market

Whilst Fairly traded commodities and manufactured products cover many product groups including, homeware, jewellery, handcrafts, beauty products and clothing, the main markets of scale are found within the food system. Figure 3.1 illustrates the key players in the value chain for food production and where potential choke points exist. A key highlight is that within the global food chain, around 500 companies control 70% of food choice. At a Scotland level, this is seen through the predominance of a handful of supermarket chains and food service providers supplying domestic consumer, hospitality and public and corporate sector markets.

Figure 3.1: From Oxfam's Behind the Barcode Campaign report 2013: illustration of the 'choke' points in the food system

Infographic text:

Who controls the food system?

7bn consumers
Retailers
Food and beverage companies
Trade and processors
1.5bn producers
Input companies
In a world with 7 billion food consumers and 1.5 billion food producers, no more than 500 companies control 70% of food choice

There are over 30,000 certified Fairtrade products available to market worldwide and Table 3.1 provides a global breakdown by country of Fairtrade sales in 2017 -18, demonstrating the importance of the UK FT market -worth £2013M- to global Fairtrade sales. These figures comprise estimated sales of consumer products in stores and supermarkets ('retail sales') and direct sales of products consumed in cafés and restaurants, etc. ('out of home sales'). The countries listed are those with a national Fairtrade organisation or a Fairtrade marketing organisation. 'Rest of world' incorporates sales of Fairtrade products in all other countries for which data were available. Ireland has also seen a surge in recent growth and Sweden, which the review selected for its benchmarking study, has a similar growth trajectory to the UK. To date, it has been impossible to gauge the percentage of the Scottish sales annually recorded, since the data is not disaggregated by jurisdictions of the UK.

Table 3.1: Country 2017 (in €) Growth in Fair Trade certified product sales globally

Country	2017 (in Euro)	% Growth
Austria	304,000,000	13%
Belgium	145,000,000	8%
Brazil	10,539,685	**
Canada	296,557,255	11%*
Czech Republic/Slovakia	25,659,253	**
Denmark	134,317,800	15%*
Finland	233,532,569	23%
France	561,000,000	5%
Germany	1,329,345,276	15%
Hong Kong	4,563,458	**
India	2,764,715	**
Ireland	342,000,000	26%
Italy	130,032,000	16% ↓
Japan	93,687,248	4%*
Korea	30,478,322	**
Luxembourg	13,500,000	25% ↓
Netherlands	290,383,920	8%
Norway	120,795,621	22%*
Philippines	212,789	**
Poland	22,491,011	**
Spain/Portugal	35,243,798	12%
Sweden	394,375,476	6%*
Switzerland	630,583,295	12%*
Taiwan	7,377,960	**
UK	2,013,662,284	7%*
USA	994,122,992	5%*
Rest of world	96,287,099

* Growth rate is based on local currency
↓ Growth rate reflects an adjusted 2016 figure
** Validated growth rates for countries with a Fairtrade marketing organization are not available due to a change in the reporting

The Ethical Consumer's Market Report for 2018^[56] provides the following commentary:

'It has been a strong year across the board for ethical food and drink… The market grew by 16.3%, the largest increase since 2012, suggesting that it has recovered from the fall in sales of Fairtrade products seen in 2014. This is great news for certifications, after several announcements in 2016 created fears that the market could return to a decline. Despite Sainsbury's, Mondelez and Tesco all indicating that they would move away from the Fairtrade scheme in 2017,^[57] other retailers, brands and consumers have all demonstrated ongoing faith in independent certifications….Fairtrade volume sales were up 2.5%, however this was far outstripped by growth in value sales - up 7.0% for the year - suggesting that buyers are placing greater value on Fairtrade goods.'

Ethical Consumer Market, 2018

Table 3.2 provides a breakdown of sales growth across 'ethical and fair' food and drink in the UK and records the same 7% growth in 2017. Notable is the growth of Rainforest Alliance purchases in recent years. The Rainforest Alliance differs from FT in the focus and strategy of their missions. FT standards are designed to tackle poverty and empowers smallholder producers in the world's poorest countries, giving them a guaranteed minimum price for their products. Rainforest Alliance certification focuses on how farms are managed, with certification being awarded to farms that meet the comprehensive standards of the Sustainable Agriculture Network (SAN), a coalition of local, grassroots organisations. It is also, for many producers, manufacturers and retailers a much less expensive certification scheme due to the less stringent audit procedure.

Table 3.2: Extract from Table on Ethical Food and Drink from Ethical Consumer Markets Report 2018

Ethical Food and Drink	2010 £m	2016 £m	2017 £m	% Growth 2016-17
Organic	1,475	1,810	2,000	10.5%
Fairtrade	1,094	1,608	1,720	7.0%
Rainforest Alliance	1,198	2,377	2,955	24.3.%
Vegetarian products	540	574	657	14.5%

3.2.3 International and UK Market Trends for Fair and Ethical Products

Market research data internationally shows a major shift in both consumer demand for and retailer/ supplier sourcing of more 'sustainable', 'ethical' or 'fair' products in the past five years.

A recent survey conducted by the International Trade Centre and European Commission^[58] found that 85% of retailers (of a total 1832 retailers drawn from eight countries within the EU, not including the UK) reported increased sales of sustainable products over the past five years and 98.5% consider sustainability as a factor in product sourcing. The standards used more frequently for beverages are

Fairtrade and Organic standards: 26% and 21% of retailers used these standards for sourcing beverages in 2015-2017 respectively. Organic and Fairtrade are also most frequently used standards in the food sector: 25% of retailers used Organic standards for sourcing food products, and 15% of retailers used FT.^[59]

These trends reflect a growing consumer consciousness of what can be described as the 'provenance' of what we buy:

'… there is now I think more hunger for things that feel less anonymous - less a product of some global supply chain. So, being able to point to a particular factory or a particular farm where this product you've just bought was actually made - there's a premium to that.'

Justine Hess, Associate Head of Global Monitor at Kantar Consulting

Part of the move towards more sustainable sourcing practices at the European level can be explained both within the context of the UN (SDGs but also the greater mandatory regulation being introduced at European and UK level relating to Sustainability Reporting. In 2018 the UK adopted The Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016 transposing the EU Non-Financial Reporting Directive in UK regulation.

Sustainability standards are now central across all sectors and major companies must produce a sustainability report now through ESG (Environmental, Social and Governance) Disclosure. Other broader 'ethical trading' schemes such as Ethical Trading Initiative and Marks and Spencer's 'Plan A' focusing on transparency in the supply chain have also been developed. This creates both opportunities and challenges for Fair Trade:

'Fair Trade in itself mis no longer a unique selling proposition and authentic companies, such as Divine (Chocolate) can struggle against the 'sustainability' hype of theulti-nationals'

Pauline Tiffin, Vice Chair of Divine Chocolate, stakeholder interviewed^[60]

It is also important to note that whilst the SFTF 2016 survey reported that consumers would be prepared to pay a little more for Fair Trade products, broader market research indicates that the emergence of two tiers of 'ethical consumer' who are described as light and dark green. The Deep Green^[61] consumer accounts for 9% of consumers who make a planned choice to 'buy green'; however, most concerned consumers are light green and perceive a trade-off between environmental aspects and other product attributes, most notably price.

'Imagine it's Friday afternoon and you are needing a fix of chocolate. The works vending machine has the usual major brand of milk chocolate and beside a bar of FT Ghanaian chocolate. What will make you switch from your usual brand? Three things: Utility, it's got to taste as good, Price - it has to be competitive and Availability - it's got to be available and visible wherever you shop, which means the social business has to be scalable (to meet demands and scale of larger distribution companies and networks).'

Ian Walker, Senior Director of Global Impact, Johnson and Johnson

As this comment illustrates, buy-in to Fair Trade is as much dependent on price as it is on making a conscious ethical behaviour change for many individual and corporate consumers. This is problematic when there is a huge difference in 'costs to market' and impact on producers, their voices and FT premium, between a Fair Trade certified in-house supermarket product and a FT item produced by an FTO with social purposes as their mission. The margins, due to scale and the way they do business are bound to be differentiated. Divine Chocolate for example, can never compete with Lidl or Aldi on the price of their fairly traded chocolate. Yet the latter continue to score at the bottom of Oxfam's Supermarket scorecard on their transparency and due diligence in relation to supply chain human rights abuses.^[62]

Ensuring competitive price points of the offer 'on shelf' is key for major retailers. 'cost is king', according to Leigh Sparks, Professor of Retail Studies at University of Stirling and leading commentator on the Scottish high street.

'The sustainability agenda is more an opportunity (for retailers) to reduce waste in the broadest sense, with retailers tending to think about it in terms of financial efficiency. At the higher end consumer level there is acknowledgement that traceability is a consumer issue, though this has receded slightly due to larger concerns around profit, price and Brexit.'^[63]

Leigh Sparks, telephone interview for review, September 2019

Professor Sparks believes the biggest threat (and therefore focus for) major supermarket retailers in Scotland is the discounted retailer market threatening major household names. He believes that 'ethical' sourcing will continue to be a niche, higher end consumer issue in the short term, as major retailers 'choice edit' their Fair Trade offering and de-list major FT brand names such as Divine Chocolate (see case study later in this chapter).

3.2.4 Fair Trade Actual Sales in Scotland: Assessing Retail Consumer Sales

This review encountered several challenges in attempts to obtain sales data for Scotland and Fair Trade. In summary these were: firstly, most published market research data on consumer direct sales purchases is provided only on UK and GB level and is focused on FT Mark certified products only; secondly there is a reluctance of the larger 'multiple' retailers to provide commercially sensitive market intelligence (i.e. till sales), and thirdly Food Service providers' delivery of public and corporate contracts account for huge volumes of FT certified sales in the UK and Scotland through public procurement contracts, but FT sales data for these markets is not collated and reported on a Scottish level. For example, one FE College Procurement Manager in Glasgow we spoke to estimated that coffee sales amounted to £80,000 and £60,000 tea sales in the last academic year.

An important market was therefore not quantified in this review and it was not possible to identify this market's contribution to the known impact of these sales in Scotland. To address this data deficit, the review has:

a. Identified that most supermarket retailers use Kantar Worldpanel for the provision of consumer sales of FT certified grocery products and approached Kantar for data broken down to Scotland level (see Table 3.3);

b. Carried out an online survey of suppliers, importers and retailers to Scottish FT Market;

c. Conducted 1:1 qualitative interviews with the Co-operative Group's and Waitrose's Sustainability and Sourcing Managers and attempted to contact several more major retailers and food service providers (unsuccessfully). The Co-operative Group is the only multiple retailer growing the volume of its FT offering achieving a 21% GB market share in 2018 (growth of 6.3%), whilst Sainsburys currently retains the largest market share of FT sales, though this will reduce when (and if) it follows through on its announcement in 2017 to withdraw from the FT Mark certification scheme, in order to offer its own unaudited 'fairly traded brand' and

d. Interviewed and canvassed the opinions of several FT companies including Divine Chocolate Ltd, Kools Skools and in Scotland Just Trading Scotland and Bala Sports, which are included in case studies within the following chapters.

3.3 Scottish Fairtrade Certified Grocery Sales

Kantar collates sales data for supermarket retailers on FT Mark certified products through its panel of 30,000 households across GB (UK and Northern Ireland), with the household number proportionate to population size in each of the jurisdictions. Sales are recorded through each household scanning the barcodes of every item purchased for their grocery shopping (see Figure 3.1 and Table 3.3). Total sales are collated through each household scanning the bar codes of every grocery item purchased. Key findings from this data were:

a. For the 52 weeks ending on 5 November 2017, sales amounted to over £74 million in Scotland, and to £67. 8 million at the same week in 2019;

b. This demonstrates a significant 9% decrease in sales in Scotland from 2017 to 2019;

c. There is a similar decline seen across the UK (GB) of 8.5% between 2017 and 2019;

d. The products showing highest growth in sales over the two-year period were wine (26%) and instant coffee (24%);

e. The largest sellers in Scotland remains 'grocery impulse' items (£18 million), even after the sales decrease, whereas the highest selling product group across GB is 'grocery edibles';

f. Across GB the highest growth sales were health and beauty products (such as cotton wool, soaps at 57%) and milk and cream, such as sweetened food drinks at 72%;

g. Whilst remaining the highest selling category the most marked decline was 60% decline in grocery impulse purchases which include such as biscuits and confectionery (chocolate) which saw a decline of 55% and 61% respectively.

These figures appear to contrast with the 7% growth reported is for all sales channels (in Table 3.1) and across all product groups (including non-grocery categories) cited by Fairtrade International (FTI) in its report of 2018 international FT Mark product sales. The Fairtrade Foundation's Director of Public Engagement provides the following explanation:

'Kantar only measures Grocery sales whereas the FTI data includes out of home outlets too. The Kantar data therefore does not capture sales of Fairtrade coffee in Greggs for examples and Greggs is the third biggest coffee seller in the UK'.

Julia Nicoara, Interim Director of Public Engagement, Fairtrade Foundation

Greggs^[64] has been selling FT tea, coffee, hot chocolate, orange juice, apple juice and bananas for 10 years now. Food service suppliers' sales (servicing major contracts to both public sector and corporate business) such as Brakes and BID foods also contribute significantly to the FTI total sales data.

The main reasons for sales decline in FT certified sales are related more to the reduced offering of FT certified confectionary products in favour of 'own brand' certifications such as Cocoa Life and in- house 'fairly traded' supermarket brands. Choice editing has also been undertaken by supermarket retailers, to 'de-list' premium FT certified brands such as Divine Chocolate due to its higher price point and anticipation of the wider consumer demand for low cost products. Decline is therefore not

Chart 3.1: Sales of Fairtrade Marked products in Scotland over 2017 and 2019 showing trends in household purchases
(Kantar Wordpanel data).

due to deliberate change in consumer behaviour, but rather retailers changed behaviour due to economic factors. Sainsburys, Tesco and Asda all took decisions in 2017 to reduce their FT offering, often in favour of own-brand schemes. Most significantly, Mondolez (Cadbury's) withdrew from certified FT licensing in favour of their own Cocoa Life due diligence, having a major impact on the number of FT certified products sold (and for the revenues received by FTF).

In addition, with a concern to be competitive on price and maintain profit margins in challenging economic conditions, retailers have taken a conscious decision to limit the range of FT products on offer, particularly around confectionary and impulse purchases, including biscuits, nuts and chocolate, by 'delisting' brand offerings such as Divine Chocolate.

More work is required to improve the comprehensiveness of FT Mark sales data for Scotland in order to take account of the large corporate and food service markets. However, this baseline, will in future enable progress in the growth of Fairtrade Mark certified product sales to be measured and market trends tracked to consumer purchases in Scotland for major commodity groups. It is also a strong demonstration of the commitment in Scotland to ethical consumer choices (linking well to SDG on Responsible Consumption) and potentially to the NPF's International Development indicator.

Table 3.3 Kantar Worldpanel consumer Fairtrade sales 2017 and 2019.

	Spend £000s
	52 w/e 05 Nov 17	52 w/e 05 Nov 17	52 w/e 05 Nov 17
Total FT Grocery Sales GB	837,044	798,614	-5
Total FT Grocery Sales Scotland	74,009	67,809	-9
Frozen	4,339	3,348	-30
Produce	11,675	13,784	15
Vegetables	-	-
Fruit	11,622	13,772	16
Bananas	11,604	13,762	16
Poultry	-	-
Milk & Cream	-	1,545	100
Wine	9,431	12,774	26
Health & Beauty	-	-
Grocery Impulse	29,248	18,233	-60
Biscuits	644	416	-55
Total Confectionery	28,568	17,736	-61
Confectionery	27,684	16,129	-72
Seasonal & Gifting	-	1,607	100
Crisps Snacks & Nuts	-	-
Grocery Edibles	17,512	17,714	1
Table Sauces & Pickles	-	-
Herbs & Spices & Aids	-	-
Hot Beverages	13,561	13,791	2
Food Drinks	4,402	3,402	-29
Herbal Tea	-	-
Instant Coffee	2,532	3,312	24
Liquid+Grnd Coffee+Beans	3,898	4,164	6
Tea	2,126	2,570	17
Sugar	3,003	3,154	5

Where unrobust (less than 100 buyers) a '-' replaces data; Food Drinks = majority Cocoa but also has malted drinks;

Green text indicates significant increased sales; red text decreases in sales.

3.4 Summary Learning Points: Fairtrade Certified Produce Sales in Scotland

a. There is a marked decline in Fairtrade sales over the 2 years between November 2017 and November 2019 of 9%, largely attributable to reduced sales of 'grocery impulse' and confectionery items.

b. The figures provide an invaluable benchmark for Fairtrade sales in Scotland against which future growth in product areas can be measured.

c. There continues to be a need to encourage and work with major retailers to promote consistently Fairtrade certified products, building on the success of partnerships at national and local level with the Co-operative Group.

d. This importance of 'food service' and major providers to this market underlines the need for more effective partnerships with this sector, including educating and upskilling the providers and those corporate and public sector procurement agencies on Fairtrade's importance within Global Citizenship Education.

e. The power of major retailers in the food value chain needs to be recognised as a key 'choke point' for growth.

3.5 Retailers and Suppliers: Online Survey

The online survey was hosted on the SFTF website and promoted through social media, to suppliers, importers, distributors and retailers to the Scottish market. An invitation to participate in the survey was distributed to all Scottish FTOs and suppliers/ retailers registered with the SFTF totalling approximately 50 businesses/ enterprise (41 retail and 22 supplier) amounting to approximately 50 separate companies. All businesses /enterprises held on the database are based in Scotland and do not include the larger UK supermarket retailers with the exception of Scotmid.

The survey was also circulated to the eleven members of the UK Fair Trade Leaders Forum (which include Cafédirect, Divine and Liberation Nuts) and promoted via the Fairtrade Foundation's Business newsletter 'Fair Comment' which is distributed to all commercial business partners holding FT certification licenses. In order to supplement this data, further research into filed accounts of FT businesses was undertaken, but this proved impossible due to all registered companies being 'micro- entities' in terms of EU accounting roles (up to £630k turnover per annum) and therefore not required to file full accounts.

The survey sought to establish, by organisational structure, the level of sales of Fair Trade products, sales trends, barriers to growth and business/ social enterprise need for support in growing their sales and market. The survey allowed anonymised responses to encourage engagement. A total of 49 respondents completed the survey, largely from Scottish based social enterprises, co-operative businesses and businesses with a social mission; 35 of respondents could be described as Scottish companies representing a 70% response rate in terms of known Fair Trade Organisations trading in Scotland. As anticipated, only one 'PLC' multiple retailer responded to the survey and chose not to provide sales data. This mirrors previous experience of the SFTF in attempting market research with larger commercial businesses and retail chains.

Table 3.4 below provides a breakdown of the way in which respondents described their business or organisation. Respondents were offered more than one response to this question, with three retailers (majority FT) also indicating that they operated as distributors/ wholesalers/importers and five of the nine wholesalers also importing produce directly. One of the five food service providers also stated that they retailed and distributed FT products. Those stating that they were a Fair Trade Organisation included those that sold produce on a voluntary basis, through school, FT steering group or church base stall.

Table 3.4: Breakdown of online survey respondents' description of their business type (total respondents = 49)
where some respondents chose more than one category

Answer Choices	Respondents: %	No.
Retailer: the majority FT	37%	18
Retailer: a minority FT	8%	4
Wholesaler/distributor: supplying only FT goods	18%	9
Importer of Ft commodities	16%	8
Food service using FT produce	14%	7
A Fair Trade Organisation	39%	19
	Answered	49

Chart 3.2 shows the legal entity of respondent or in some cases the most dominant legal entity - if respondents selected more than one - such as co-operative registered as a limited company, or social enterprise also registered as a charity.

Chart 3.2: Respondents by legal status (n = 49)

Of the 11 respondents describing their organisation as a social enterprise, several also identified themselves as being:

• Community Interest Companies (3)
• Community benefit society (also a Co-operative and a Ltd company) (1)
• Limited companies (2)
• company owned by a charity

For the purposes of the review, the ten voluntary groups which participated in the survey have been extracted from further analysis, since they do not represent businesses or social enterprises operating on a full time basis to grow their turnover.^[65]

Taking the remaining 39 responses of enterprises focused on importing, wholesaling and/or retailing Fair Trade products, four businesses (three retailers and one wholesale/distributor) were based in England but supplying the Scottish market, with the remaining respondents Scotland based.

The larger England based enterprises that responded reported considerably higher Fair Trade sales across the UK in their last financial year than their smaller Scottish counterparts, as is seen in the figures of the first three businesses listed in table 3.5 (in comparison to the highest sales in Scotland being £274,000 for a Scottish importer/ Wholesaler.

Table 3.5: Range of sales achieved in most recent reported financial year from England based companies supplying Scottish market

England-based Organisations	Total UK sales
Co-operative Group (retail and food service)	£164,870,000
Retailer (minority FT), hot beverages, homewares and handicrafts	£4,000,000
FT Wholesaler/importer/food service provider	£1,140,000
FT Wholesaler/distributor clothing	£130,000

3.6 Scottish Respondents: Enterprises

Of the 35 Scottish respondents, 20 chose to provide information on their sales in the latest reported financial year (2018, month depending on the enterprise's year-end) which is given in Table 3.6.

Table 3.6: Scottish Respondents sales (those which chose to provide data)

Scottish respondents providing sales data
	Number	Highest sales	Average total sales	% sales Scotland	Median average sales growth forecast in FT products
Retailer: majority FT	18	148,000	51,900	10 - 100%	15%
Wholesaler/importer	5	274,000	96,614	50-100%	61%

Most respondents were optimistic about sales growth, with only two respondents predicting zero growth. Median sales growth for wholesaler/importers was skewed by two respondents predicting very high levels of growth. Six respondents indicated that they were entirely dependent on Scotland based sales. The British Association of Fair Trade Shops (BAFTS) indicated that its retailer members are generally reporting a decrease in sales, compared to BAFTS suppliers, where sales history is more variable.^[66]

Table 3.7 Product or organisation ethical certification schemes (*which include certification and membership schemes) stocked by respondents (29 responses)

Ethical certification schemes retailed or supplied by respondents
Answer Choices	Responses	No. of respondents
Fairtrade Mark (registered certification from the Fairtrade Labelling Organisation)	83%	24
WFTO (World Fair Trade Organisation) Guarantee Scheme	41%	12
Rainforest Alliance/UTZ	10%	3
Cocoa Life (Mondolez)	0%	0
Leaf Marque	3%	1
Fairly traded in-store own brands	10%	3
Non-certified but fairly traded direct imports (e.g.. Just Trading Scotland rice)	52%	15
Other (please specify)	34%	10

Table 3.7 demonstrates that the most commonly supplied ethical branding or certification was the FT Mark. Non-certified fairly traded direct imports (such as Just Trading Scotland's Kilombero Rice) were stocked by 12 of respondents, whilst the WFTO organisational membership Guarantee Scheme was selected by 10 UK suppliers/ retailers.

Other 'ethical' or Fair Trade certification or membership schemes included:

• Traidcraft
• Global Shea Alliance
• Soil Association SPP (small producer partnership)
• British Association of Fair Trade Shops certified suppliers
• Good Weaves
• Global Organic Textile Standard (GOTS)
• General 'organic'

The most common FT product category sold was hot beverages, with 40% respondents supplying tea, coffee, hot chocolate (Chart 3.3 below); chocolate and 'other food' follow, with no sales for flowers and wine in Scotland. This is not surprising since flowers and wine are generally merchandised in large retailers with own brand offerings of these commodity groups (such as England based Co-operative Group reported earlier in this chapter). Handicrafts were sold by nearly 30% of respondents. Other products not specifically listed in the survey but cited by respondents were natural skincare (3), homeware (3) and one wholesaler cited cacao nibs and powder. A total of four enterprises sold all 5 commodity categories, and 3 of these were FT retailers.

BAFTS has confirmed that it has 9 members in Scotland amongst its network. Two are shop members (both of which responded to the survey), and 5 are certified supplier members (one of which also has a retail outlet), with a further 2 direct sourcing retailers. Scottish BAFTS members account for £1,989,500 of turnover per annum across the UK, with the largest organisation accounting for £1,284,700 of this total.

No one commodity group was clearly identified as being a faster growing product group in Scottish sales terms, although a total of 4 respondents did stated handicrafts as a growth area and a 2 further homewares. One respondent cited 'zero waste' products. Through our consultations and workshops there was also little appetite found for focusing on a single commodity group for promotion and increased sales of Fair Trade products in Scotland. This was largely due to the need to diversify products ranges in order to minimise risks caused by supply constraints (such as crop failure, import issues).

Of those that answered the question relating to future plans, over half (12) stated that they would be increasing their product range over the next 2 years, with only slightly less (11) stating that they would retain the same range. All the larger respondents (with sales over £150,000) stated that they would be retaining the same product range. Only 1 respondent (a retailer) planned to reduce their product range of Fair Trade goods.

Chart 3.3: Fairly traded product categories sold by retailers/suppliers
(29 respondents)

Case Study 2: Scaling Up a Fair Trade Organisation - Divine Chocolate Ltd

'Dignified Trading Relationships'

Established in 1993, Divine is a highly regarded Fair Trade Organisation (FTO). Although its headquarters is based in the UK, the Kuapa Kokoo Ghanian Co-operative owns 45% share of the company. It was established by and for the benefit of smallholder Ghanian farmers (35% of which are women) and produces high quality Fairtrade certified chocolate and cocoa products.

Essential attributes of successful FTO

• Scalability to achieve volume sales
• Robust model of business management
• Quality of product
• Segmenting the market: know your audience and be realistic about their likely motivation
• Resilience!

In 2006 the company achieved its first profitable year, and by 2018 turned over £16 million in sales, with the majority (64%) coming from the non-UK market. It employs 34 staff and also operates in Sweden and the USA. The final product is manufactured in factories in mainland Europe.

Sophi Tranchell is the company's CEO and in 2017 took the business through the process of verification as a B Corp, demonstrating the whole organisation's commitment to ethical trading and employment practices. She believes the FTF's focus on seeking global player conversion to the FT Mark label (Cadburys: Mondolez), had led to FT failing to deliver in terms of transforming trading practice.

Since the Brexit referendum and the devaluation of sterling against the euro, Divine has fought hard to maintain its market share, with major retailers 'choice editing' to reduce the premium offers on shelf, in anticipation of consumer demand for lower prices.

Current challenges to Fair Trade social enterprise in the UK are:

• Supply chain: future costs of importing finished product from mainland Europe
• Cashflow and Standard Terms of trade with supermarkets in UK: suppliers are paid some 60 days after end of the month
• Practices of global brands (e.g. Amazon purchasing USA Wholefoods and passing price of promotions onto the supplier, which renders product uncompetitive in price)
• Fractured and inefficient distribution network to towns level and demise of wholefood wholesalers: opportunities to address in Scotland
• Competing with lower price retailers' in-house Fairtrade certified goods: supermarkets are using CSR budgets for some of the 'cost of goods'
• Young consumers have high expectations but don't look too far beyond the brand or hype.

Interview with Sophi Tranchell, CEO, Divine Chocolate Ltd. 2 December 2019