Fair trade label retains purchasing power despite recession, study shows

Researchers from the University of East Anglia and the University of Manchester in the UK explored the performance of ecolabels during a recession. In the study,​ entitled “Ecolabels and the economic downturn”, released on 4th December 2023 in PLoS ONE, the scientists analysed consumer purchasing behaviours of goods with fair trade and organic labels on their packaging.

Examining ethical purchases using market data from a major UK supermarket chain, the research indicated that even when consumers’ budgets are stretched and disposable income is reduced, consumers are more likely to continue to make expensive ethical buys like shopping for fair trade products.

The researchers explored the 2008 economic recession and its impact on consumer expenditure on eco-labelled food products. Using UK supermarket loyalty card data, the researchers showed that the recession had vastly different effects on the spending share of various eco-labelled groceries.

Ecolabels as a strong sustainability signal

The scientists’ specific research question was motivated by an interesting observation in trade reports that claimed that organic grocery sales in the UK had fallen while in contrast, fair trade sales had held up during the 2008 economic downturn.

“This seemed contrary to intuition as we know that during an economic downturn, consumers become more price sensitive—so, we decided to test if this was indeed the case,” Dr Jibonayan Raychaudhuri, lead study researcher and Associate Professor in International Economics at the University of East Anglia, told FoodNavigator.