Ethical spending on the rise despite the recession

When we started EcoEats we wanted to explore how eating in a way that was sustainable for the environment and for local communities might be affected by economic hardships. We were interested in how resilient these markets were. We had assumed that when people had less money they would choose value rather than ethics.

Each year The Cooperative Group produces a report into the UK spending on ethical goods. The Ethical Consumers Market report examines spending across different areas. All of the data used in this post on ethical spending can be found in the reports found here.

In 2011 we spent £7.5 billion on ethical food with represents an increase of almost 8 per cent on the previous year. If we contrast the ethical food market in 2000 with 2011 (see pie charts below) we can see that the area has diversified with types of food available that did not even feature in 2000.

2000

2011The ethical food market has become far more diverse. In this blog Simon Bajkowski has examined the issue of sustainable food which features in the debate in a much more prominent way than even a few years ago. Spending in this area grew by over 30 per cent from 2010-2011. In Simon’s post he attributed this partly to the high profile names backing the campaign but also looked at the severity of the problem which the fish shortage poses. Campaigns really take off when they are backed by big suppliers such as McDonalds which committed to sustainable fish for its filet o’fish.

Another growth area is Freedom Food. Again the campaign has been boosted by the involvement of McDonald’s who committed to making all of their pork products Freedom Pork as I explained in my McFreedom Pork post.

Spending in Mc Donalds increased by 10 per cent in 2012 which the firm attributes to a difficult economy in which people’s incomes are squeezed but they are still eating out causing them to switch from more expensive restaurants to the fast food chain. This is significant when it comes to ethical food because we might assume that a big corporation like McDonalds would be the enemy of local and sustainable food, however as a company it is very sensitive to public perception and willing to change to please its customers and, as we have seen when it comes to sustainable fish and freedom pork, because it sells food in such quantities it can have a profound impact on the whole market.

Different types of ethical food fared better in 2011 than others. Whereas sustainable fish grew by over 30 per cent and  Of all the categories examined in the report the only one to fall was organic, which accounts for over a quarter of all the money spent on ethical food. But spending on organic food as more than doubled since 2000.

 Ethical Food Markets 2005 2011

The Soil Association have looked at this issue in detail. Their 2013 report which takes figures from 2012 and found that the year had shown a 1.5 per cent decrease in spending on organic food. They attributed this largely to the overall effect of the economic downturn.

They have observed that supermarkets who identified a fall in demand for organic products turned this into a self-fulfilling prophecy by reducing their available stock. They saw a 2.5 per cent decrease in sales across retailers. But the online organic market remained buoyant with companies like Ocado, Abel & Cole and Riverford which are the leading businesses in this area increasing sales by 10 per cent.

The report suggests reasons for optimism since the drop of 1.5 per cent is less than the previous year but organic food has significantly dropped since its peak in 2009. As the bar chart above shows the UK spent £1,986m on organic food in 2009 but this has dropped now to £1,500m falling by 24 per cent.

The Soil Association have identified that there is hope for the sector in terms of the number of younger people buying organic – what they are calling the ‘Jamie generation’ in reference to the preoccupation of the celebrity chef with eating healthily. Something we referred to in our debate on food in schools.

The Horsemeat scandal also made people address where their food was coming from and figures from Kantar Worldpanel suggest that this contributed to the year’s peak in organic spending in February 2013.  However, although the scandal has made the public more aware of where their food is coming from, its longterm impact may be limited. As Matt Dathan has suggested in his post on the scandal, the British public are resilient in the face of such news and put their desire for cheap meat above other concerns with over 80 per cent of those questioned saying that the scandal had not changed their shopping habits.

Is it all due to the economic downturn?

In fact if we chart the spending on ethical food since 2005 and also chart UK GDP (a rough indication for the state of the UK economy) there are some comparisons to be made.

This chart shows in crude terms the state of the economy over time. I have taken figures from The Guardian data blog which show UK GDP with adjustments made for inflation.

GDP

What I wanted to examine was what has happened to spending over time and during the course of the recession. The chart below tracks spending showing that spending on ethical food was on the rise before the recession took hold but this begins to decrease in late 2008 and early 2009 when the recession began to take hold and filter through into people’s spending habits. The changes are less dramatic than the fluctuations in GDP but this is accounted for by the time it takes for people’s spending reacts to the markets.

spending1

Despite the continued effect on squeezed spending habits in 2012 it seemed like a lot of people are convinced about the ethical arguments for sustainable food, they just need to be convinced of the economic benefits. In 2012 42 per cent of people say that they bought a product primarily for ethical reasons, compared with 27 per cent in 2000. It will be interesting to see how the sector does when the economy improves. The recession has been a big test for the ethical food sector because it is only when things are tough that we see the resilience of this area. Although it has suffered it has also diversified.

It is clear to me that it campaigners should focus on making the economic case for ethical shopping and businesses should invest in making doing the right thing cheaper for consumers.

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