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At the co-op supermarket in Davos, just down the road from the Congress Center where the World Economic Forum was held last week, all the bananas on sale have a small round sticker proclaiming the brand: Max Havelaar. Across the road, the rival Migros store stocks the same brand. The name may not be as globally familiar as Dole or Chiquita, and has only been on shelves since 1998. Yet in Switzerland it has a remarkable 78% brand recognition rate and every second banana sold now bears a Max Havelaar label — probably the highest penetration of any fair-trade product in the world.
Who is Max Havelaar? It's not a real person, but rather a foundation set up in 1992 by six large Swiss charity groups. Named after the hero of a 19th century Dutch novel, it works to improve the terms of trade for small producers of bananas, cut flowers, coffee and other products in developing countries from Ecuador to Zimbabwe. It's just one of dozens of fair-trade groups that have sprung up in Western Europe and the U.S., offering consumers the option to buy everyday products that give farmers and producers a better deal. Once dismissed as a fringe movement, fair trade has become too big to ignore. Sales of Max Havelaar-labeled products rose 40% to $126 million in 2003, and while figures for 2004 haven't yet been published, Paola Ghillani, the organization's chief executive, says sales grew again to about $170 million. "Consumers are voting with their wallets for something better," she says.
There are plenty of examples of fair trade peeking through to the mainstream. In the U.S., Starbucks has been selling fair-trade beans since 2000 (though nearly all of its brewed coffee is purchased at market rates). And the British-based fair-trade business Cafédirect last year successfully raised $9.6 million through a public stock offering.
But Max Havelaar has had the biggest success taking its products to mainstream consumers. It doesn't market the items itself but, for a small licensing fee, it lends its name as a seal of approval to products that meet its stringent social and environmental criteria. Increasingly, Switzerland's affluent consumers are looking for that endorsement. Max Havelaar coffee is even sold in 140 McDonald's outlets in the country.
The path has not always been smooth. When Max Havelaar first tried to bring bananas from small Latin American producers to Switzerland in 1998, it was a disaster. Sometimes the fruit that showed up was poor quality; sometimes it didn't show up at all. Ghillani joined the organization the following year. A pharmacist by training, she previously worked for the huge Swiss drug company Novartis and says that the marketing techniques she learned there "are very helpful." The big breakthrough came last year, when Co-op decided to dump one of its two multinational banana suppliers, Dole Food, and substitute Max Havelaar instead. "It wasn't a decision against Dole," says Denise Stadler, who deals with fair-trade products at Co-op. "Rather, we made a decision to stock fair-trade bananas and Dole couldn't offer them." Dole says it doesn't comment on specific issues, although it notes that it does supply fair-trade bananas to the Benelux countries and France.
For all the growth, fair-trade products remain a niche market. Still, they've forced even the biggest players in the food business to adapt. Chiquita Brands International is using an activist group called Rainforest Alliance to monitor its social and environmental policies. "The moment [fair-trade groups] reach a certain threshold, they exercise an influence," says Ernst Ligteringen, chief executive of the Global Reporting Initiative, an Amsterdam-based organization that sets international standards for companies to report on their social and environmental activities.
Ghillani is still looking to expand, noting that sales of fair-trade products throughout Europe grew some 20% last year to about $460 million. She hopes to launch cotton and some textile products this year. "I am an advocate of globalization, but a fair and healthy one that serves human development," she says. A growing number of consumers seem to agree.
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At the co-op supermarket in Davos, just down the road from the Congress Center where the World Economic Forum was held last week, all the bananas on sale have a small round sticker proclaiming the brand: Max Havelaar. Across the road, the rival Migros store stocks the same brand. The name may not be as globally familiar as Dole or Chiquita, and has only been on shelves since 1998. Yet in Switzerland it has a remarkable 78% brand recognition rate and every second banana sold now bears a Max Havelaar label — probably the highest penetration of any fair-trade product in the world.
