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An Ethical Dilemma for Consumers &

Retailers?

An Ethical Dilemma for Consumers &

Retailers?

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FAIRTRADE

• Fair Price• Fair labour conditions• Direct trade • Democratic and transparent

organizations• Community development• Environmental sustainability

Example of a FAIRTRADE Labeling organization (FLO): Transfair

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Ethical Dilemmas

1. Influence of FAIRTRADE label on Customer purchase intentions

2. If a wholesale firm could source, say, only 40% of its coffee from Transfair, should it bother to separate its sales into two brands?

3. Trading in FAIRTRADE products the end of wholesaler or retailer responsibility?

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Influence on Customer purchase intentions

• Yes. Although this preference is linked to the price comparison of the products available

• Ready to pay 10-15% premium on FAIRTRADE products

• Adverse impact if the price difference is too high

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Branding Issue • Separate Brands

• Individual Vs Community• Ethical Coffee is Premium Brand, higher price• Caters for society where “everybody feels guilty”• Consumer forced to make ethical decision in

supermarket aisle

• Combined Brand• Short Vs Long and Individual Vs Community

• Producer is making ethical decision for consumer (relief!)• Retailers need to advertise moral high-ground

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Is Transfair a cop-out for retailers?• One hand wholesaler or retailer’s purpose is to

provide its customers with a good products at the lowest price possible

• On the other hand, a wholesaler or retailer might need to do more in term of social responsibility and check that the supply chain is ‘fair trade’ audited for all its products in stock.

• Especially relevant in Quasi-monopoly for food retailing like in Australia by

Coles and Woolworths

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Ethical Dilemma • Right Vs Right Paradigm

• Individual Vs Community

• Short Term Vs Long Term

• Truth Vs Loyalty

• Resolution Principles• I Means to an End – Australian

customers Vs millions of growers

• II Rule Based – Kantian principles

• II Golden Rule

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Resolution

• Coles and Woolworths could follow the example of Whole Foods Market

• Whole Trade Guarantee program, their in-house fair trade program

• Target of more than 50% FAIRTRADE products in 10 years and in the long-term convert to only FAIRTRADE products imported from third world countries

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Questions?