Using Sustainable Ingredients in Food and Drinks: Opportunities in local sourcing, fairtrade and organic

Sustainability issues and sustainable products are becoming more than a marketing fad. Consumers are actively seeking out responsibly sourced products and avoiding products marketed by manufacturers that are known for irresponsible behavior. For many consumers, the presence of a Fairtrade or similar seal is becoming a purchasing point.

This report looks into the market for ethical ingredients and products labeled with sustainability-related seals and describes trends and synergies with other claims. It highlights the sustainability initiatives of the top 20 food and drinks ingredients manufacturers. Ingredients are profiled with regards to sustainable sourcing. The report offers guidance for manufacturers wishing to embark on sustainability initiatives and profiles the main non-governmental organizations involved in them.

Key benefits of this report

Understand the market for sustainable products and how “green” labelling increases the chances for success.

Be in a position to advise on steps necessary for your company to “go green”, and on the benefits of such an initiative.

Learn about non-governmental organizations promoting sustainability initiatives, and the benefits of your company joining them.

Understand consumer motivations for purchasing “green” products.

Understand the regulatory background for “green” labelling.

Key market issues examined

Consumers are basing purchasing decisions increasingly on how "green" a product is; manufacturers can use that by engaging in "green" iniatives in the manufacture of their products and saying so on the labels.

Even though their share is largest (76,7%), the growth of organically produced ingredients is slowing, as ethical consumers are demanding more than just agrochemical-free farming.

Omega-3 fatty acid sourcing carries the potential of overharvesting of fish. Krill and algae are alternative sources that are being explored.

The increased need for palm oil worldwide is threatening rainforest areas. This has led to the formation of a special NGO engaged in the promotion for sustainable palm oil, the Roundtable on Sustainable Palm Oil (RSPO).

The growing demographic of informed consumers tends to be ethically-minded and aware of the link between health and food. This will drive sustainability-related product claims in the future.

Key findings from this report

Consumers are increasingly basing purchasing decisions on how “green” a product and its manufacturer is.

In most markets, Fairtrade products show a double-digit growth, with the US market being the largest market globally.

Fairtrade beverages sales are generally larger than fairtrade food sales, which is due to the high percentage of fairtrade teas.

Key questions answered by this report

How important is sustainability as a trend?
What are the market figures for sustainability-related claims?
How does manufacturer behavior influence consumer behavior in terms of sustainability initiatives?
What are the sustainability initiatives of the top 20 food and drinks manufacturers?
What can manufacturers do to “go green”?
Which sustainability-related organizations exist?
What is the regulatory situation regarding sustainability-related labeling?

Contents

Using Sustainable Ingredients in Food and Drinks
Executive Summary 10
Introduction 10
The sustainable ingredients market 11
Case studies: Ingredients 12
Case studies: Companies 13
Conclusions 14

CHAPTER 1 INTRODUCTION

Summary 16
Introduction 16
Sustainable cultivation methods 18
Wildcrafting 18
Cultivation 19
Sustainably sourced ingredients 20
Environmentally sustainable sourcing 20
Method of production 22
Energy (carbon footprint) 24
Local sourcing 25
Conflicting consumer trends 27
Green products 28
Fairtrade 29
Organic products 30
Packaging 31
Cause marketing 32
Regulatory background 33
Wildcrafting 33
Organic 33
Labeling 34
Greenwashing 35

CHAPTER 2 THE SUSTAINABLE INGREDIENTS MARKET

Summary 38
Introduction 38
Fairtrade 40
By region 40
By category 42
Organic food and beverage markets 44
Organic food 44

CHAPTER 3 CASE STUDIES: INGREDIENTS

Summary 48
Introduction 48
Sustainable ingredients in food and drinks products 49
By search terms (growth and weighted growth) 50
Share of sustainable ingredients 51
By key trend 53
By claim 54
Key ingredients 57
Omega-3 57
Alternate sustainable source: Marine algae 58
Alternate sustainable source: Krill 58
Coffee 59
Shade-grown coffee 59
Organic coffee 60
Cocoa 60
Cinnamon 62
Palm Oil 62
Key applications 63
Example: Natural Sea Pink Salmon 64
Example: Cocoa Camino Organic Chocolate Chips 64

CHAPTER 4 CASE STUDIES: COMPANIES

Summary 68
Introduction 68
Major ingredient and finished product manufacturers and sustainability 69
Kerry Group plc 71
Tate & Lyle 73
DSM 74
CSM 76
Corn Products International 77
Ajinomoto 78
Danisco 79
Südzucker 80
BASF 81
Archer Daniels Midland 82
Cargill 83
Royal Cosun Group 84
Givaudan 85
Associated British Food 86
McCormick & Company 87
Arla Foods 88
International Flavors and Fragrances 89
DuPont 90
Imperial Chemical Industries (Akzo Nobel) 91
Aarhuskarlshamn AB 92
Organizations 94
Fairtrade Foundation 94
Sustainable Agriculture Initiative Platform 95
Sustainable Agriculture Network 97
Roundtable on Sustainable Palm Oil 98
Rainforest Alliance 99
The Organic Trade Association 100
Ethical Consumer Research Association Ltd 101
Ethical Products Organisation 101

CHAPTER 5 CONCLUSIONS

Summary 104
Introduction 104
Importance of various sustainability strategies for the food and drinks manufacturer 105
Raw materials sourcing (cultivation, wildcrafting) 106
Processing 107
Packaging 107
Transportation 108
Company attitudes towards sustainability 109
Sustainability as a consumer choice 109
The informed consumer 111
Regulatory issues 111
Future outlook 112
Index 115

LIST OF FIGURES

Figure 1.1: The Protected Harvest label 19
Figure 1.2: Sustainable methods of production 23
Figure 1.3: A carbon footprint label 25
Figure 1.4: Climate change chocolate by Bloomsberry & Co and Earth Water 32
Figure 2.5: Sustainable ingredients by key trend 39
Figure 2.6: Fairtrade overall product sales by country 2008 41
Figure 2.7: Estimated sales of organic food and drink, top five markets ($m), 2008 46
Figure 3.8: Sustainable ingredients by trend 54
Figure 3.9: Sustainable ingredients by claim 56
Figure 3.10: Natural Seal Pink Salmon 64
Figure 3.11: Cocoa Camino Organic Chocolate Chips 65
Figure 4.12: Sustainability initiatives by Top 20 ingredients manufacturers 70
Figure 4.13: The Fairtrade Mark 95
Figure 4.14: Rainforest Alliance certification logo 99
Figure 5.15: Sustainability and product life cycle 106

LIST OF TABLES

Table 2.1: Fairtrade overall product sales by country, 2007-2008 ($m) 40
Table 2.2: Fair-trade sales by country and category, 2002, 2007, 2012 ($m) 43
Table 2.3: Estimated sales of organic food and drinks, top five markets ($m), 2008 45
Table 3.4: Food and drinks products by claim 51
Table 3.5: Sustainable ingredients by key trend 53
Table 3.6: Sustainable ingredients share by claim 55

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