UK shoppers want ethical food without paying more

Freshly picked, organically grown potatoes sit in a basket on an allotment in the village of Lane End, Buckinghamshire, southern England, June 23, 2007.

LONDON (Reuters) - Britons have an appetite for ethical food, but as the recession bites shoppers are anxious to spend less.

Sales of ethical food, such as organic produce grown without chemicals, and Fairtrade products for which farmers in poor countries are paid more to help improve living standards, are both slowing.

"There is a huge propensity for people wanting things to be done in an ethical manner," said Jonathan Banks, U.K.-based business insight director with market research firm the Nielsen Company.

"But they are not going to make repeat purchases on something that is not good value for money," he said.

After years of rapid growth, organic sales in supermarkets fell 11.6 percent year-on-year to June 14, 2009 and Fairtrade sales rose just 5.7 percent, according to statistics from research company TNS Worldpanel.

In 2008, organic sales totaled 2.1 billion pounds in the UK and Fairtrade sales were in excess of 700 million pounds, according to organic and Fairtrade industry sources.

Organic foods in supermarkets are typically marked up 25 percent, Neilsen's Banks said, adding that the premium is turning price-conscious shoppers against purchases.

Sales of organic produce in farmers' markets, boxes of organic food delivered to people's homes, and standard Fairtrade food items appear to be recession proof.

Peter Melchett, policy director of the Soil Association, Britain's largest organic certification body, said he was confident that sales would recover when the economy picks up.

However, market research firm Euromonitor International said organic food sales in the U.K. are likely to fall this year and next year before achieving growth of 3.4 percent in 2012.

By contrast, the U.K.'s Fairtrade Foundation, an independent non-profit organization that licenses the use of the Fairtrade Mark on products in Britain, plans to nearly triple sales by 2012.

SHOPPING PATTERNS

At supermarket Waitrose sales of organic food have slowed down, while sales of Fairtrade products have continued to perform well.

Shoppers are increasingly price-sensitive.

Waitrose's budget food range, called "essential," which was launched in early March has been doing brisk business: in the last week of June it accounted for 14 percent of all sales, a Waitrose spokeswoman said.

Harriet Lamb, executive director of the U.K.'s Fairtrade Foundation, said shoppers still like making ethical choices.

"Helping other people during the recession is something positive people can do at a difficult time," Lamb said.

She sees growing sales of Fairtrade products which are widely accessible in stores such as Marks & Spencer, Tesco and Sainsbury's. The product range, including tea, coffee, bananas and chocolate, is also growing.

In addition, major brands such as Tate & Lyle have adopted the Fairtrade label. Cadbury is set to follow suit with Dairy Milk later this summer.

"Some cynics may have thought the recession would pour cold water over the whole sustainability agenda, and they've been shown to be wrong," Lamb said.

(Editing by Peter Blackburn)