Byravee Iyer
Oct 21, 2016

Consumer concerns drive ethical sourcing

The growing popularity of sustainable products and packaging is leading brands to rethink how they make and subsequently market their products.

Fair trade: Coffee brands have recognised the marketable value of ethical sourcing policies, and clearly labelling that to consumers.
Fair trade: Coffee brands have recognised the marketable value of ethical sourcing policies, and clearly labelling that to consumers.

Australian consumers really care about their eggs. About 65 percent of them are willing to pay extra for a free-range egg, but are they getting their money’s worth? 

Probably not, says Choice, an Australian consumer advocacy group.  According to the new Model code of practice for the welfare of animals issued by the Primary Standing Industries Committee, for eggs to be labelled ‘free-range’, they should be laid by hens that have been living in a space not more crowded than 1,500 chickens per hectare of land. 

Almost 20 ‘free-range’ brands in Australia fail to meet this standard and Choice is one of several groups calling for a boycott. The organisation claims that Australian consumers are spending about US$43 million on mislabelled eggs.

But consumer preference for sustainably sourced products extends far beyond eggs and shoppers are demanding that brands take into consideration moral, religious and social ideals as well as environmental concerns. Typically, ethical goods and services are loosely categorised as organic, fair-trade, sustainable or cruelty-free. More broadly, this can also include vegan, halal and kosher products. 

Consumers in the developing world are more affected by issues related to ethics and sustainability. Amid stories of counterfeiting and food poisoning, people—particularly urban youth—increasingly want to know which brands have their best interest in mind. Ethical labels can provide a shortcut to identifying such ‘trustworthy’ brands.

At present, most ethical claims in new product launches are in the categories of skincare and cosmetics due to high levels of usage of ethical animal and ethical charity product claims. Similar claims are also becoming an increasingly common sight in the food and drink aisles, as products from carbonated soft drinks to tea start to label their stances more clearly on packs.

This year, 15.6 percent of new CPG products launched in Asia carry an ethical or environmental claim, up from 10.9 percent in 2011, according to Mintel’s Global New Products Database. 

According to recommendations from a recently released report by MSLGroup, The future of food communications, communicating a commitment to consumer health and safety is key to a brand’s success in the region. Proactively informing consumers about ingredients by attaching labels is conducive to establishing trust. 

“Use healthier, natural and organic alternatives to artificial additives, colours and preservatives,” the report suggests. 

Environmental hazards are also determining consumers’ attitudes to brands and consumption choice. “Consumer knowledge and awareness in this space is starting to rise,” says Jane Barnett, head of insight for Mintel in Asia-Pacific. “There is a growing global concern over the effects of polluted air and environmental conservation.”

Positive action: Danone Aqua’s mantra of “kebaikan hidup” (goodness in life) is striking a chord with ethical consumers.

The annual burning of land for the production of pulp, paper and palm oil on the island of Sumatra and Borneo has in recent years increasingly fuelled concerns over air pollution around Indonesia and nearby Southeast Asian countries. Likewise, the Fukushima nuclear disaster in Japan has influenced the public. 

Another key trend is also emerging. The dominant narrative until now has taught people to look for products that ‘don’t do bad’, and ethical labels are a shortcut to identifying these brands. But shoppers are starting to seek out brands that take a more active role. “Now we’re seeing an emergent desire for brands that are ‘doing good’,” explains Adri Reksodipoetro, managing director of Flamingo Jakarta.

One such brand is Danone’s Aqua in Indonesia, which has for decades had social good at its heart and in its brand purpose of “kebaikan hidup” (goodness in life). Last year, the company launched a campaign aimed to inspire Indonesians by championing acts of everyday kindness. There were several TVCs that used hidden camera footage of real people engaged in genuine acts of kindness, such as offering their seat to a pregnant lady and returning a dropped wallet.  

“They are not just actively communicating how they’re ‘not doing bad’, but also how they’re ‘doing good’ for society, and this is resonating more strongly than ever,” Reksodipoetro adds. 

Heineken New Zealand’s launch of Brewtroleum, an initiative to turn brewing by-products into commercially viable biofuel that became a runaway success. The Cannes Lion winner sold 8.8 million bottles of beer to make this happen, and Brewtroleum is available at 60 Gull gas stations across New Zealand. 

The prevalence of ethical labelling varies across Asia. In India, Australia and Japan products with ethical claims exists on 12.5 percent to 17.5 percent of all products. In Southeast Asia, the number of products in this category is lower, but the volume is increasing. In the Philippines, for instance, 3.6 percent of products in 2016 came with an ethical claim, up from 1.7 percent in 2011.

 “Clean labels are growing fast in Asia,” says Hope Lee, senior beverage analyst at Euromonitor. “These are more personal and directly related to personal health and consumers in developing markets [who] are concerned about food safety.”

It also goes beyond wanting to know that food is safe to eat. Consumers are now looking for products that are grown, harvested and distributed with respect for the environment. This is particularly true for coffee manufacturers. These firms argue that building direct relationships with growers enables them to source the best beans and by cutting out the middle men ensure the farmers receive a fairer price for quality produce. 

Nestlé Indonesia’s 3 in 1 Original Instant Coffee Mix recently announced it was committed to increasing the life quality of coffee farmers in Lampung with education, training and direct trade—a fact which is now communicated to consumers on the back of packs.

Animal-friendly: Products that support or adhere to certain moral or social ideals that regard the treatment of animals. Common terms include: not tested on animals, against animal testing, free-range, BUAV approved, dolphin-friendly.

Charity: Products that claim to support a charitable organisation.

Environmentally friendly: Products that claim that the product or packaging is friendly to the environment. Examples include references to bio-degradable, made from recycled materials, CFC-free, sustainable ingredients.

Human: Products that support or adhere to certain moral or social ideals that regard the treatment of people. Keywords include: fair-trade, child-friendly), community trade.


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