Ethical Sourcing: A Blossoming Trend in Food

Consumers identify unethical food sourcing as practices that have crossed the bounds of food safety, health, environmental and social responsibility. For example, consumers perceive gestation crates unethical from an animal welfare point of view. In the mind of the consumer, it is difficult to separate unhealthy animal treatment with the final product they consume. Likewise, unethical practices that don’t affect food production, such as Nestle’s baby formula promotional tactics or Dole Pineapple’s labor law violations, have also had a profound impact on consumers’ buying decisions. Like any other product, consumers vote with their wallets to “punish” companies for perceived unethical behavior. No matter how superior in quality, if your coffee grain is linked to child-labor, consumers will hardly want to associate themselves with your product.

When it comes to making food choices based on ethical sourcing, consumers seem to be influenced by both brand reputation as well as individual product reputation. Chipotle’s efforts to highlight its ethically raised meat have paid off in phenomenal growth during very difficult economic times. When it comes to individual product selection, third-party certifications are playing a huge role in influencing consumer perceptions. The number of U.S. products launched with Fair Trade Certification doubled from 2008 to 2011. For the same time period, Innova Market Insight, a marketing research firm, reported that sales of ethically positioned foods grew from 3.7 percent to 6 percent. Clearly, third-party food certification is having an impact on buying behavior.

Stonyfield Farms is a great example of how a company can leverage both brand reputation and third-party endorsements to promote “ethical” products. The company promotes its ethical farming practices (organic, sustainable, animal welfare and chemical-free) as well as environmentally-responsible operations (efficient transportation, renewable energy, and zero waste). The business uses third-party certifications like the USDA Organic Seal to further its credibility. The company has maintained an overall annual revenue growth rate of over 26 percent (5 times the industry average) and built annual revenues of $300 million. They attribute this financial success directly to core values that dictate how well food is made, animals and employees are treated as well the environment.

As much as food manufacturers and businesses would like to distill a proper definition for ethical sourcing, it seems it won’t be possible for the time being. A survey conducted by Innova Market Insights in 2011 shows that people consider several factors beyond organic when considering “ethical” food purchases. Most foods recognized as “ethical” are using third party certifications from Fair Trade USA, The Marine Stewardship Council and the Rainforest Alliance. All these certifications touch different realms of sustainability, human and environmental responsibility –thus making it difficult to narrow down a static definition for ethical sourcing.

One of the best ways for brands to engage consumers on ethical sourcing is to proactively improve on issues that are important to consumers. Third party certification schemes definitely lend to brand integrity but, to best navigate consumer quality expectations, brands must listen into consumer conversations in real-time. In the case of ethical sourcing –which is a fluid, evolving concept– listening to what is being discussed on online is essential to understanding what is today’s definition of ethical sourcing and matching a company’s ethical sourcing efforts to consumer expectations.