Health Markets:

Market Assessment Publications Ltd.
Market Study  June 2002

Since Key Note's 2000 Market Assessment report The Green & Ethical Consumer, there has been a substantial rise in demand for green and ethically-produced goods. This rise is fuelled in part by the growth in consumer expenditure as a result of the continuing strength of the UK's economy. Despite political and economic problems, the UK economy grew by 2.2.% in 2001, the fastest of any Group of Eight (G8) economy. Buoyant consumer expenditure continued in the first quarter of 2002, despite a slowdown in the growth rate of the economy.

Defining the size of consumer demand for green goods has always represented a problem for researchers due to a lack of verifiable data or indexing. In 2001, this situation changed with the publication of the Ethical Purchasing Index (EPI) by the Co-operative Bank and the New Economics Foundation (NEF). The EPI shows that spending on green and ethical products rose by 18.1% during 2000, contrasting with growth of 3% in the mainstream economy. Spending on ethical purchasing now outstrips growth with 'non-ethical' counterparts by more than six times. Green market leaders include ethical food markets, (in particular, Fairtrade) which grew by 24% between 1999 and 2000, and the green energy market, which grew by 74.3% over the same period.

Topline data results for the exclusive NOP survey conducted for this report show that green and ethical criteria are beginning to play a greater role in purchasing patterns. Only one in five consumers would buy any product with no reference to ethical or green issues. The most common `ethical' consumer activity is recycling, which is practised by around a half of all respondents. Nevertheless, an activist attitude to buying green goods remains a minority interest — fewer than one in five consumers have boycotted producers in the past 12 months. Price still remains the overriding factor in purchasing, particularly in relation to purchasing of non-food goods and financial services.

This report reveals substantial differences in consumer behaviour according to gender, lifestage and region. One in four men would buy any products regardless of ethical or green issues, compared with only 17% of women interviewed. The youngest age group (16 to 25 years old) is, in many categories of purchase, the least likely to respond to ethical issues. Key Note attributes this trend to a considerable debt burden among young people, and, to a lesser extent, to a depoliticised culture for young people in comparison with previous generations.

Key Note's survey suggests that adults in the South of the country are more responsive to ethical and green issues than are respondents in other areas, and that responsiveness to ethical and green issues may be determined by less easily measurable levels of affluence and parallel levels of education.

Key Note's research also indicates that there has been little substantive change in legislation in relation to green goods. EU directives will have a continuing impact in forcing the UK to implement more effective recycling programmes for plastics, white goods and cars. However, these measures will only have an impact in the long term.

One of the key drivers in ethical consumerism has been essentially consumer led. The market for ethically-produced or organic food has risen enormously as a consequence of the genetically-modified (GM) food scandal and, more recently, the 2001 foot-and-mouth outbreak. These two factors encouraged rapid growth in the UK organic food market, which grew by 33% during 2001, with sales of £802m. Over 80% of organic food is now sold in supermarkets and it can be argued that there is a major revolution in British consumerism underway towards `real' or ethically-produced food. This trend is apparent in rapid growth in specific markets, such as Fairtrade bananas and organic meat. Fairtrade produce has benefited considerably alongside organic goods, with wholesale sales increasing by 182% between 1998 and 2001.

Key Note's research suggests that there is considerable consumer interest in environmentally-friendly choices in relation to vehicles and fuel. However, there is substantially less willingness to pay extra on fuel or taxes. Recent government moves towards subsidising alternative fuels, such as biodiesel or hydrogen, are likely to see some growth in use of these other fuels, when initial distribution problems are solved. In the short term, a switching to `distance' taxing — to be introduced on lorries in 2005/2006 — represents a shift in government policy away from taxing fuel.

Other key consumer markets in relation to ethical criteria, such as the cosmetic and holiday industries, continue to demonstrate the difficulty of maintaining ethical criteria where wide chains of distribution and supply are present. The UK cosmetics market was worth £5.22bn in 2001. There is a significant increase in the number of products that can be identified as either decorative or non-essential, with an emphasis on `therapeutic' products rather than those that are ethically produced. Key Note research indicates, however, that producers are overlooking the preference of their two largest consumer groups for ethically-produced cosmetics. Women aged 18 to 25 and over 45 years old represent the most significant consumer groups for cosmetics. Although their demands are different, both groups are more likely to value good ethical practice in cosmetic production than women in the 25 to 45 age group, for whom price is a more important factor.

The holiday industry also shows signs of being behind customer demand for ethically-produced goods. Survey data published by Tearfund indicates that most tourists would be prepared to pay more for an ethical holiday; another recent survey conducted by the fund shows that most of the major companies felt that ethical tourism was not an issue that they needed to address. The tourism industry offers no comprehensive system to identify and purchase ethically-approved holidays. Despite this slow response, consumer demand continues to grow.

OVERVIEW 3

THE ECONOMY AND
THE GREEN POUND 4

GLOBALISATION 6

NOP RESEARCH OVERVIEW 12

The ’Green’ Factor 14

CONSUMER PROFILES 18

GendeR, Lifestage and Green and Ethical Attitudes 18

CRITERIA OF GREEN AND
ETHICAL CONSUMERISM 19

LABELLING 21

Legislation and Political Change 21

ATTITUDES TOwards BUYING 22

ATTITUDES TOwards
RECYCLING 25

SUPERMARKETS AND ETHICAL TRADING 29

GENETICALLY-MODIFIED
FOODS 30

ETHICAL TRADING 33

ATTITUDES TOwards BUYING FOOD PRODUCTS 35

BANKING AND ETHICAL
POLICY 41

ATTITUDES TOwards
BANKING 44

Cars and the Environment 49

THE TRANSPORT CRISIS 52

Donations and Giving 56

CHARITY OUTLETS 60

COSMETICS AND ANIMAL
TESTING 64

ATTITUDES TOwards GREEN
and ethical HOLIDAYS 71

For full details, please email matthewt@cmsinfo.com

Order Form

For more information about us, visit CMSinfo.