Memorandum submitted by Sainsbury's plc
1. INTRODUCTION
1.1 We have 752 stores, of which 275 are
convenience, employ over 153,000 people employees, have 40 depots
and serve around 16 million customers a week. We sell around 26,000
food/drink products (15,000 of which are own-brand).
1.2 Sainsbury's are pleased to be able to
respond to the committee's inquiry on Fair Trade and Development
and would welcome the opportunity to give oral evidence to the
committee.
1.3 Our response provides you with some
information about Sainsbury's approach to ethical and fair trade
production and the role of supermarkets in supporting ethical
and fair trade production.
2. SAINSBURY'S
COMMITMENT TO
ETHICAL AND
FAIR TRADE
PRODUCTION
2.1 Sainsbury's have a long history in supporting
ethical and fair trade production. We were the first major retailer
to stock the first Fairtrade marked product, Green & Blacks
Maya chocolate in 1994 and recent research by AC Nielson concludes
that we currently sell more (in terms of volume) Fairtrade products
than any other retailer.
2.2 Wherever our suppliers are, either in
the UK or overseas, we expect them to conform to our Code of Conduct
for Socially Responsible Sourcing. This sets out the labour standards
we expect our suppliers to meet, including fair terms of trading,
protection of children, worker health and safety, equal opportunities,
freedom of association, freedom of employment and hours of work
and wages. We are also founding members of the Ethical Trading
Initiative and their Base Code forms a key part or our supplier's
code of conduct. We are also founding members of Sedex—an
internet based system that enables best practice exchange of data
on working conditions in the supply chain.
2.3 Sainsbury's sells more Fairtrade products
in volume and sales than any other retailer in the UK, accounting
for a quarter of the value of Fairtrade products sold through
major retailers. The value of Fairtrade products sold in Sainsbury's
in 2006 was £55 million, up 90% on the previous year and
includes over 120 lines of Fairtrade products.
2.4 Sainsbury's is the first UK retailer
to work to convert its entire banana range to 100% Fairtrade,
75% of roses sold at Sainsbury's are Fairtrade. 60% of Sainsbury's
customers buy Fairtrade products during their shop.
2.5 In 2006, Sainsbury's placed the UK's
biggest ever single order of Fairtrade cotton to produce 200,000
t-shirts in support of Sport Relief.
3. ROLE OF
SUPERMARKETS
Why are Sainsbury's supporting ethical and fair
trade production?
3.1 Sainsbury's are committed to working
with suppliers in their efforts to source sustainably throughout
the supply chain. We aim to be genuine partners with these suppliers,
encouraging them to follow our best practice and supporting them
in their efforts to maintain high ethical standards.
3.2 Our customers have greater awareness
of fairtrade than ever before and demand for increased range of
products is increasing. As a customer focused business, we must
respond and meet demand. Research carried out by TNS shows:
60% of customers purchase a Fairtrade
product during their shop.52% of our customers state: "I
think we should all try to buy more fair trade products"
(market average is 50%).
45% of our customers state: "I
feel good about buying fair trade products" (market average
is 42%).
How easy is it for customers to choose fair trade
production?
3.3 The marketing around the Fairtrade mark
has been very successful and there is high recognition among customers.
Its position on front of pack has also enabled customers to make
an informed choice, and Sainsbury's is committed to supporting
through marketing and promotions Fairtrade products throughout
the year. We have attached some examples of advertising as an
appendix.
What impact is retailers' support for fair trade
having in developing countries?
Sainsbury's and Bananas
3.4 Our recent announcement to convert our
entire banana range to Fairtrade by July 2007 will create a social
premium of about $7.8 million in 2007, which growers and their
communities will be able to put towards educational and medical
facilities and environmental projects.
3.5 It will be an increase of over $5.9
million on 2006 figures. This support for banana growers goes
back nearly half a century.
3.6 The countries to benefit from our move
to 10% Fair trade bananas are those who we currently source from—the
Windward Isles (St Lucia and St Vincent), the Dominican Republic,
and in addition from this year, Columbia and Costa Rica.
3.7 One example is the support Sainsbury's
has been giving to the Windward Islands in establishing itself
as a major source of Fairtrade bananas, which now make up about
10% of production.
3.8 There was concern that once trade barriers
were lifted, the Windward Islands would struggle to compete with
larger plantations in Central and South America. As a result,
Sainsbury's, with its supplier the Windward Islands Banana Development
and Exporting Company (WIBDECO), is working with the governments
of each island to modernise and simplify production and to find
other products the islands' farmers can grow which would sustain
their economies.
3.9 Sainsbury's approached one of its other
banana suppliers, Mack Multiples, to see if they would be interested
in getting involved in initiatives to help the Windward Islands
remain competitive once the EU legislation is introduced. It was
decided that a collaboration of Windward Island suppliers would
be more effective than competing individually. The combined focus
has helped WIBDECO reduce costs, leaving them in a stronger position
to survive.
Sainsbury's and Cocoa
3.10 Sainsbury's has ordered 40 tonnes of
Fairtrade cocoa to produce over eight million chocolate squares
that will be included in Comic Relief's famous Big Red Nose in
2007.
3.11 The chocolate will be made with cocoa
beans bought from Kuapa Kokoo—a farmers' co-operative in
Ghana. Kuapa Kokoo will receive a social premium of $6,000 to
invest in projects to improve family and village life. These include
education, healthcare and drinking wells. The amount could cover
the cost of installing a village well that will provide enormous
benefit to the entire community within a two to three mile radius.
3.12 Kuapa Kokoo co-owns Divine Chocolate
Ltd, the company behind Dubble and Divine chocolate, which means
the farmers not only get a Fairtrade price for their cocoa, but
can also share in the profits of the company too.
February 2007
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