I'm here now with Bob Doherty, professor of marketing of the University of York, and Iain Davies, professor of the University of Bath. Both are experts in the area of fair trade and particularly Cafédirect in the UK. Thanks for joining us today Bob and Ian. Why don't you tell us a little bit, what has happened after the case material that we have discussed early on in this week? And how has Cafédirect as an organization evolved its communication strategy? And what are the major results of that strategy? >> The field has changed significantly from when the pioneers launched Cafédirect in 1992, and Divine Chocolate in 1998. They were really the early pioneers along with organizations like Traidcraft and people like Liberation as well. So they were the early pioneers, but I guess since 2000 fair trade has started to go into the mainstream. So you've got very different value chains that have been created. So you've got those organizations starting to market their products in the mainstream. But you've also got those pioneers developing own label products for the big supermarkets. You've also got the supermarkets launching their own label fair trade products. And then, you get the major manufacturers who start to come into the fair trade category with their own conversions. Such as Sainsbury's fair trade bananas, Cadbury's Dairy Milk, Nestlé with their own coffee product called Partner's Blend, which actually didn't do very well initially. And then you've got other organizations like Tate & Lyle with fair trade sugar. Mars with fair trade Maltesers. So it's changed the whole landscape. It's grown the sector, the fair trade category, significantly. But there's an argument that some people think that the mainstreaming of fair trade's actually diluted the original principles and standards of fair trade. So it's a real tension, and it's a contested area and that's why it's such an interesting and fascinating field to research because of those different viewpoints and the different tensions that have been created because of the mainstreaming. But you can't argue that the sector's grown from about 200 million pounds worth of sales in 1997 to over 5 billion pounds worth of fair trade certified sales by 2013. >> The thing we don't know though, is whether more sales of fair trade by people who aren't close to the farmers is actually a good thing for fair trade, and good for the farmers, or whether it actually has a negative-. There isn't enough impact studies for us to understand whether or not the small corporations like, smaller businesses like Cafédirect and Divine Chocolate and Liberation, working closely with farmers. >> Yeah. >> And selling a small amount. Whether or not that is better for the farmers, and development, and moving people out of poverty. Than actually having big brands that maybe don't work quite so closely with the farmers, with the issues that they're dealing with. I mean in the paper that Bob and I did last year, we were looking very particularly at the way in which the values and the standards that people live by in fair trade have actually become diluted over time. So, you look at something like Fair Trade USA, and some of those products may only deal with one or two principles that they work with. Whereas someone like Divine or Cafédirect may be dealing with 9, 10, 12 different principles that they work with with those farmers to make them drag themselves out of poverty. And we just don't know. We have no idea whether or not selling more with less values is better than selling less with more values. And the case that's been looked at in this session is Cafédirect where both Bob and I have had a lot of relationships over the years. My prime interest with them started in about 2000, so kind of eight years after their founding. Bob, a touch later with close relationship, well both of us have been consumers [LAUGH] of the brand a long time before then. They're an interesting company, because they've gone a huge amount of change over the evolution of their business. They originally started out very much as a pure branding and marketing organization, but backed by a lot of NGOs, a lot of charitable organizations, a lot of people that work very closely with supply chains. And in that time, and we refer to it in the case study as the solidarity area because they're really showing their solidarity with those farmers and working closely with those farmers. And that comes across in their marketing and their messages. Almost charitable-style marketing. Well then we see as the evolution of the business progresses, they start to think, actually, we can make more use of our network and make more use of our relationship with farmers. If we can get into that mainstream and take on the big players. And so they really pioneered the idea of fair trade in supermarkets and actually taking on the big corporate players in the market. And in the UK, they became the fourth biggest coffee company. But that wasn't on the back of telling people about the ethics of the product. That was very much talking about the luxury nature and the high quality of the product. Not really focusing on the charitable aspects of what the company did. The fair trade mark got smaller and smaller. The stories about the farmers got smaller and smaller. And so you would get at the peak of their sales where literally this is a premium brand. That people could very easily be buying without even knowing there was any ethics in this business whatsoever. >> So as the market for Cafédirect became more competitive, you had major manufacturers coming in, the supermarket own label. They decided to try and carve out their own particular unique position in the market and they decided they wanted to reinforce on their packaging, their relationship with the farmers. They did a piece of market research with their core ethical consumers and they floated this idea. And if you take one of their major brands, which is Tea Direct, they floated this idea in the market research of using smallholder farmer tools on the packaging. So it's just secateurs and other cultivation implements. And obviously the core supporters thought this was great idea because it demonstrated the difference that Cafédirect had compared to some of the new entrants into fair trade. But in effect what happened to put these tools on the packaging they also had to remove the rich green evocative background of the previous Tea Direct packaging and they made it white. So you had a white background with these tools of agricultural production on, which were sitting on a supermarket shelf against all these new entrants that had very, very, if you take Taylors of Harrogate for example, had very rich, stand-out packaging and branding. And basically what happened their core consumers actually when they walked into the supermarket, couldn't find the product. And with tea it's such a habitual product. If somebody changes their tea brand, it's very difficult to get them back to the original brand. So within three months, in fact, Cafédirect, just taking Tea Direct as an example, lost 40 to 50% of their sales of that particular product. And what it demonstrated was a poor piece of branding. Where you drop those rich evocative colors, and also the tools look very, very strange, and even in the market research, somebody described them as tools of torture. >> Yeah. >> Yeah. >> In many ways, especially in my own opinion, I think it was more than just the consumer losing the product on the shelf. They made a fundamental mistake in actually thinking their consumers cared about the ethics of the product and what they stood for and what they did. At once stage they had, in the roast and ground coffee market, about 14% market share when they were at their peak. And the research we know on ethical consumption just says there aren't that many ethical consumers. Yeah, plenty people will tell you that they care, but the ones that actually go out and buy, distinctly less than that. Even the positive numbers say 4 or 3%. I think the reality's probably less than 1%. And so when they changed their message from one that was about quality, and high quality, what they ended up doing was suggesting that people buying for ethical reasons. That's just not a strong message in the marketplace when you're trying to work in the mainstream. We see it with charities, people wanting to give less money to charity. We see it with ethical products, people see them as niche. They don't see them as necessarily their regular purchase. So a fundamental issue for the social enterprise here in actually marketing their ethics, is actually demonstrating how the ethics of the product leads to benefits for the customer. Not benefits for the producer or benefits for the environment. But actually how does working closely with farmers give you a better quality product that customers will really want to buy. Not telling them that this is a more ethical product. >> Okay, and I think one of the big challenges for social enterprises, like Cafédirect, is really to craft that message in their marketing communications between the quality of the product and also the ethics. And I think the Cafédirect, from what we've been talking about, got the balance wrong during that critical key period. And if you contrast Cafédirect to a similar organization, but working in a different sector, which is chocolate. Such as Divine Chocolate, which is one of the other pioneers in the United Kingdom. Again, quality's very important. It's become more and more important in chocolate, as it has done in coffee. Where they craft their message in a slightly different way. So they focus on quality to begin with and bring consumers to the product because of the quality of the chocolate. And then tell them the story about the ethics and the special relationship they have with the farmers. And I think in case of Cafédirect, they got the balance the wrong way around. And I think that's one of the lessons to take home for other social enterprises, it's this importance of crafting the message and the communications between the social and ethics and the quality of the product or the service that they offer to their customers.
