February 9, 2006

Ethical Brands Confuse Coffee Drinkers: Report

By Eleanor Wason

LONDON -- Coffee consumers need to be told more about industry efforts to help the environment and farmers in poor countries if so-called fair trade products are to break out of their niche markets, an independent report said.

The study, by Consumers International and the International Institute for Environment and Development, said a widening range of schemes guaranteeing social and environmental production standards and the recent entry of large roasters like Nestle into the area risked confusing consumers and increasing costs for farmers.

"Consumers are now facing a growing complexity of ethical and environment claims in coffee and there is concern about confusion and declining standards," the report said.

"It is also possible that certification may be another requirement for market access and a barrier for small producers."

The report looked at the Fairtrade, Rainforest Alliance, Organic, Utz Kapeh and Bird Friendly certification schemes. On the demand side, it looked at markets in the United States, Denmark, Finland and Portugal.

Fairtrade focuses on giving farmers a premium to help protect them from the fluctuations of world prices. Utz Kapeh, a Netherlands-based scheme, covers good agricultural practices and worker welfare. The Rainforest Alliance, Organic and Bird Friendly certifications address environmental concerns.


The survey found that producers working with the Fairtrade organization benefited but that the impact of the other schemes was more mixed and depended on location and farmers' practices before certification.

Camilla Toulmin, director of the IIED, a London-based research institute, said it was hard for smallholders to finance the extra costs involved in meeting certification requirements.

More than 70 percent of global coffee production is on farms of less than 10 hectares.

"There is a coming together of certification schemes and that is to be welcomed thoroughly. It partly reduces the costs for smallholders," Toulmin told a news conference on Wednesday.

Ethical labels account for less than 3 percent of the world coffee market but the launch of certified coffees by some of the world's largest roasters reflects rising consumer demand.

Nestle introduced a Fairtrade coffee for the UK market last year while Sara Lee Corp.'s Douwe Egberts has teamed up with Utz Kapeh and Kraft with Rainforest Alliance.

The adoption of certified coffees by mainstream roasters has improved consumer awareness of such products and may boost demand, the report said.

However, the companies have tended to add a new certified brand to their portfolio and the report found little indication they planned to use certified coffee on any major scale in their established brands.

"We welcome the growing range of certified coffees offered by the big roasters but we want to see a general contribution to long-term sustainability, not a token nod," said Richard Lloyd, director-general of Consumers International.

He also called on supermarkets to improve the visibility and availability of certified coffees on their shelves.