fair labor label increased retail sales 10%

The Fair Trade label improved coffee sales by 10% in supermarkets.

A Harvard Business School study showed a 10% sales increase for the Fair Trade label.

It’s one thing to say in a survey that you will pay extra for an ethically sourced product and quite another to actually pay extra for it. There is a large body of research showing the discrepancy between consumers’ hypothetical willingness to pay for social and environmentally friendly products and their actual purchases. However, a 2014 Harvard Business School study collected empirical evidence (cash register data) of significant marginal returns for ethical labelling in an actual supermarket purchase environment.

They compared sales of coffee with and without the Fair Trade label in a field experiment conducted in 27 grocery stores spread throughout 3 states. They carefully controlled their research to isolate the impact of the Fair Trade logo on coffee sales. Using regression modelling they found that the Fair Trade label had a significant positive impact on sales, which they calculated at an average of 10%. That means that coffee with a Fair Trade label coffee sells 10% better than the same coffee, in the same store, with the same packaging and placement, but with a generic (non-ethical) label. A 10% increase in sales is huge when it comes to business, particularly in a competitive, commodity market like coffee beans. Would the Fair Trade label work the same magic with other products? Do other social labels besides Fair Trade carry the same value to consumers?

There is very little research to answer those questions. However, we started Thayer Certified because we believe:

  • Yes, other products and services would benefit from social/ethical labels, like Fair Trade.
  • No, consumer demand for social labels does not end with Fair Trade.
  • In fact, the most valuable social label would be one that exclusively communicates a simple and fundamental definition of “Safe & Fair” labor.
  • Even a 1% increase in marginal sales would justify a significant investment in social/ethical labelling, particularly if that social impact of the product and service is already positive.

Here are some links if you would like to learn more about the Thayer Certified definition of “Safe & Fair” labor, our certification method and value proposition.