Tea, coffee and chocolate shelves in Europe are full of products making ethical claims such as Fairtrade and organic. But in more price-sensitive markets, such as Latin America, these are much rarer.
Market research service provider Lumina Intelligence recently analyzed the sustainable claims of 2,800 chocolate, ground coffee, and tea products in 20 countries and evaluated consumer engagement with the claims in each country.
It found that European countries have the highest concentration of sustainable products - France (57%), Belgium (53%), Sweden (45%), Germany (45%) and the UK (44%) led the way while the US comes in at 31%.
Mexico and Brazil, however, lie at the bottom end of the spectrum with less than 10% of products carrying an online sustainable claim, according to the report, Up to standard: Third-party certification and company programmes compared.
Of the 140 best-selling chocolate, coffee and tea products sold online in Brazil, for example, only 12 made sustainable claims. Of these 12 claims, most were organic while Fairtrade and Rainforest Alliance – two major global certifications– did not feature at all.
In Mexico, Lumina Intelligence tracked 126 products and found that only 10 made sustainable claims - six organic, two Fairtrade and one UTZ claim.
“Since products with claims carry a price premium – to support certification and company program overheads - manufacturers likely suspected purchasing power isn’t high enough to put more sustainable products on the market," says Oliver Nieburg, market analyst for Lumina Intelligence Sustainability, journalist and report author.
Jose Luis Casuso Bedia, head of the Latin American and Caribbean Fair Trade Network (CLAC), echoed this.
"It [is] hard to increase prices as local economies are still very weak and consumers are not yet ready to pay the 'extra' bit to buy Fairtrade certified products.
"Still, the potential is truly amazing, we just need more time to create a marketing team only for Latin America and a strategy for each product within its country," he added.
The Lumina analysis, also shows that average reviews and star rating for brands making sustainable claims in Brazil and Mexico are actually slightly lower than brands making no claims.
However, there are so few products making claims this doesn’t mean that sustainability itself has little resonance with consumers in these markets, says Nieburg.
“Latin Americans lack the access to products purporting to be sustainable afforded to European consumers,” he says. "Even if we assume Latin Americans are more aware of local labor issues in cocoa and coffee, there are not enough sustainable products at their disposal to engage with, and those that do exist are very expensive."
Share information and define a strategy
Mexican start-up SmartFish, which sells sustainably caught fish and seafood has found that, while consumer awareness is generally low, people are interested in learning more.
“Unfortunately, most people aren’t looking for this," said Lorena Luna, head of business development at the company. "They aren’t really aware there’s an issue or that 90% of all stocks are over-fished. But when we share this information, people are very interested."
According to Casuso, a more joined-up approach to drive demand is needed.
"We need to work more closely with markets - consumers and business- , local governments, schools, universities," he told FoodNavigator-LATAM.
"There is great potential but a local strategy needs to be put in to place in each country. Each region and country have special contexts that need to be addressed by a defined strategy.
Arguably, however, manufacturers should be sourcing ethical and sustainable ingredients for all markets, whether or not consumers are aware of problems in the supply chain and are willing to foot the bill.
Nieburg said: "If brands prove a contribution to sustainable development, it may be reasonable to expect consumers, even in price-sensitive regions, to pay more. Another view is that ethical production should be a given, so why should anyone have to pay more for something that isn’t exploitative?”
Choosing an ethical claim
Companies wanting to source ingredients responsibly need to ensure the claim they decide to support is credible, and that it meaningfully contributes to sustainable development, says Lumina Intelligence.
Claims that are certified by third parties and tied to key performance indicators such as the United Nations' sustainable development goals (SDG) are a good place to start.
In recent years, increasing numbers of manufacturers have been moving away from third-party certification labels to in-house programs, such as Nestlé’s Cocoa Plan and Mondelēz’s Cocoa Life. However, these in-house programs often lack transparency.
“These company programs could be impactful but are often shrouded in secrecy,” said Nieburg. “A nebulous mesh of sustainable claims has emerged on products and online, leaving chocolate, coffee and tea consumers struggling to understand what is fair.”
Nestlé’s Cocoa Plan is active in Mexico but Lumina data analysts found just two products making Nestlé Cocoa Plan claims in Mexico among the online bestsellers: Carlos V and a certain KitKat variant.
This may increase; Nestle has set itself the target of sourcing 230,000 tonnes of cocoa each year under its Cocoa Plan by 2020, which accounts for around 57% of its annual needs, and as this grows, the logo may appear in more emerging markets where the company operates, Nieburg said.
Lumina suggests that manufacturers drive consumer engagement by supporting a single label from a body such as the International Organization for Standardization (ISO), instead of flooding the market with competing ethical labels, each vying for consumers’ attention.
Will this ensure greater resonance with Latino consumers?
“It is too early to tell if Latin American consumers will respond to such products or a standardized ethical label," says Nieburg. "However, most brands are moving to fully sustainable volumes anyway so can start to increase the availability of products making claims to test the waters.”