NEW YORK — Brooklyn Roasting Co. has a booming business based on helping people thousands of miles away.
Ninety percent of the coffee the New York-based company sells is Fair Trade — certified as produced by people who are treated and paid well.
Being socially responsible pays off for Brooklyn Roasting, which sells to restaurants, food stores and the public through its website. Sales of its Fair Trade coffee, which comes from Mexico, Peru, Indonesia and Ethiopia, have soared from $900,000 in 2011 to $4.4 million last year. They are expected to reach $6 million in 2014.
“In a thoughtful urban center like New York City, I think it's a smart business decision to be the company known for responsible coffee sourcing,” co-owner Jim Munson says.
Demand for Fair Trade products is rising as people become more aware of how their food and other products are made. That makes the Fair Trade market a growing opportunity for small business owners. While companies sell Fair Trade food, clothing and bedding products because they believe in being socially responsible, the goods can also be part of a marketing strategy, says Russell Winer, a marketing professor at New York University's Stern School of Business. Sixty percent of shoppers are willing to pay the higher prices that Fair Trade items tend to have, according to a 2013 study he co-wrote.
This is how it works. Goods — coffee is the best known, but there's also chocolate, sugar, coconut, cotton, tea, flowers, nuts, fruits and vegetables — are certified as Fair Trade by a handful of organizations around the world. They pledge to visit farms and production areas to inspect working and living conditions.
In return for the certification, product manufacturers pay a premium. For coffee, it's 20 cents a pound; for chocolate, $200 per metric ton. This cost is usually passed on to shoppers, who can tell products are certified by labels on packages.
No organization tracks the amount of Fair Trade products sold in the United States, but Fair Trade USA, which says it certifies 90 percent of the products in the country, estimates the domestic market at $2 billion, just a sliver of grocery sales. It bases that number on a 2011 estimate by Fairtrade International, a global organization that sets certification standards for Fair Trade products.
While Fair Trade represents a growing opportunity for small businesses, it is still a tiny part of the market for food and clothing. Supermarkets had $620 billion in sales in 2013, according to the Food Marketing Institute, a trade group for the supermarket industry. Shoppers are more likely to find Fair Trade items online or in stores that specialize in organic or natural foods — in the coffee aisle at a Manhattan grocery store, just two out of 130 separate brands and roasts had Fair Trade labels.
The growth in Fair Trade products has also been helped the last few years by the recovering economy. Shoppers aren't as concerned about frugality as they were during the recession, says Winer, the NYU marketing professor.
“In a recession, private labels start to sell better and many products that are trying to get a premium for socially responsible behavior are squeezed a bit,” he says. His study says the average premium, or price increase, on Fair Trade products is 17 percent.
