September 29, 2021

How can private label roasting drive sustainability?

Private label products – coffee and beyond – have seen a rise in sales during the pandemic, according to findings from Coresight Research

In the US alone, for the fourth consecutive year, private label products in supermarkets and grocery stores have experienced more sales growth than name brands. This shows that there is a thriving market for roasters to enter if they have the capacity to do so. 

But as sustainability rises up the agenda for stakeholders across the industry, one key question remains: how can private label roasters do their part to promote sustainability in the coffee supply chain?

One in three US consumers believes that fair trade values are an essential part of their purchasing decisions. Similarly, research indicates that using the Fair Trade CertifiedTM seal on products can increase sales by up to 3.3%. 

To learn more about how private label coffee can drive sustainable coffee supply chains, I spoke to three coffee sector experts. Read on to find out what they said.

You may also like our article on becoming a private label specialty coffee provider

bags of private label coffee

What is private label roasting?

In the simplest possible definition, private label products are produced by one company and then sold under another company’s brand. 

In the coffee sector, this means that any time you see roasted coffee sold with a non-coffee business’ branding, it is likely that this is a private label product. 

Ashley Singer is the Senior Partnership Development Manager for Private Label products at Fair Trade USA. She tells me more about why private label coffee is so popular with brands.

“Brands often look for stability and consistency when it comes to private label products – whether this is with packaging, roast profiles, recipes, or sourcing requirements. 

“Ultimately, this means brands can leverage private label products to source according to their specifications, and ensure they have a product that is consistent.”

coffee poured into cup

Rising popularity of private label coffee

Within the wider private label sector, food and beverage has been one of the fastest-growing individual categories – coffee included.

In the US, the consumer packaged goods (CPG) sector grew by 10.3% in 2020 to a total value of over US $933 billion. It’s estimated that private label CPG accounted for 18% of that growth. September 2020 data from McKinsey reflects this in consumer behaviour, with as many as 17% of surveyed consumers said they would buy more private label products in the future.

Ashley tells me that Covid-19 has strengthened the private label market. She points to findings from a 2020 USDA report, which indicate that global economic disruptions significantly contribute to private label market growth.

“Sustainably marketed goods have continued growing during the Covid-19 pandemic – capturing a 17% market share in the US alone,” she says. “I think the pandemic has led more people to understand how interconnected the world is.”

According to this report, product availability, quality, trust, and price are the four major factors that influence consumer perceptions of private label products, including coffee. However, it also notes that sustainability is becoming an increasingly important deciding factor, too.

“Consumers care now more than ever how a product was made and how workers were treated along the way, and third-party certification has earned their trust,” Ashley tells me. “Alongside that, they’ve continuously seen private label brands penetrating new product categories and occupying more shelf space each year.”

Darcie Renn is the Director of ESG & Sustainability at Albertsons Companies, a private label food and drug retailer which represents over 20 US grocery brands. She tells me more about how Albertsons leverages its private label reach to be more sustainable.

“In 2020, Albertsons Companies met its Sustainable Coffee Challenge commitment to have 100% of O Organics coffee products be Fair Trade Certified,” Darcie says. 

Albertsons’ private label O Organics range first launched in 2005 and now includes over 1,500 products available in all Albertsons Companies stores.

“As customers strive to better understand the sources of the coffee they purchase, they look to well-known certifications, like Fair Trade and USDA Organic, to know their purchases have a positive impact,” Darcie adds.

woman with processed coffee beans

Capturing a growing market segment

With some 57% of consumers open to changing buying behaviour to minimise their environmental impact, outlining and improving sustainability efforts for the private label coffee sector is no longer important – it is essential. 

Furthermore, this figure increases to a staggering 95% when solely considering millennial and Gen Z consumers – demographics which are hugely influential in the coffee industry.

Ashley says: “By investing in certifications like Fair Trade USA, retailers are showing consumers that sustainability is part of their business model, and that they have verified the sustainability behind their own products.”

This is supported by a study from Inside Own Brands, which found that 65% of US consumers place more trust in Fair Trade Certified products and are summarily more likely to purchase them. 

“By sourcing responsibly and sourcing Fair Trade Certified coffee or other ingredients in their private label products, retailers enable a huge surge in consumer awareness,” Ashley explains.

This communication of environmental and social responsibility is a vital way for private label companies to win market share on behalf of the retailers they work with. By showcasing a range of characteristics on packaging – including organic production, ethical sourcing, and eco-conscious processing methods – private label roasters can make products more competitive for their clients. 

Darcie says that presenting certifications and guarantee seals on packaging can promote consumer awareness.

“The Fair Trade Certified seal is displayed on the front of each O Organics coffee product so shoppers can make the choice at the shelf. Furthermore, our customers shopping online can see the Fair Trade Certification in product images and descriptions on our e-commerce websites.”

Ashley adds: “Retailers have dynamic power to instigate change. The products they put on shelves are the products consumers grab and eventually gain loyalty towards.”

coffee farmer picking cherries

How does private label roasting affect sustainability?

The growing prominence of the private label coffee market makes sustainability an increasingly important question for roasters and retailers alike. So what can they do?

Andrés Hidalgo Espinoza is the Coffee Programme Coordinator for Fair Trade USA. He tells me that the sheer size of the private label market is a great place to start for large-scale sustainability programmes.

“Private label products present an incredible opportunity to deliver impact and resilience at scale through Fair Trade Certified supply chains,” Andrés explains. “The volume that is sourced, combined with the accessibility they provide to a broad swath of consumer demographics, can add up to incredible impact.”

Ashley says that Fair Trade USA ensures sustainability commitments throughout the private label coffee sector by working all along the supply chain.

“[Fair Trade USA is] in direct communication with each level of the supply chain,” she tells me. “Within the private label space, that means we partner with a large number of roasters and manufacturers with the capacity needed to ensure they are licensed and familiar with the fair trade model, processes, and benefits to producers.”

Andrés, however, is based in Costa Rica. He tells me about some of the environmental initiatives that the organisation runs there.

“Environmental initiatives are among the most common in Costa Rica,” he says. “CoopeAtenas commits Community Development Funds to buy land to protect freshwater springs, preserve water resources, and guarantee the availability and quality of water for future generations.”

Andrés explains that Community Development Funds are a fundamental mechanism in the Fair Trade programme. According to him, they empower workers to earn additional funds on top of wages that they can invest in projects of their choosing.

Although Andrés is highlighting specific programmes in Costa Rica, the Fair Trade Certified seal supports farmers in over 63 countries. It has generated more than US $840 million since 1998.

He adds: “Co-operatives like CoopeAtenas allocate funds from their premium to coffee seedling development, so they can help their small producer partners reinvigorate their crops and dramatically decrease their cost of production.

“They also provide reforestation programmes. Proper shade helps coffee cultivation, which in turn attracts pollinators, thereby creating more sustainable farms and an overall environmental balance,” he says.

However, Andrés adds that Fair Trade USA supports social initiatives, too.

“One of the social projects supported by Fair Trade Community Development Funds is the initiative called ‘Casitas de la Alegría’, or ‘Houses of Joy’,” he says. “The project has built five daycare centres to provide care for infants and toddlers, including the kids of migrant coffee collectors.”

raw coffee beans

The importance of sustainable coffee

The need for more sustainable coffee has never been so pressing. According to the International Trade Centre, the increasing effects of climate change are likely to affect coffee quality and crop yields around the world, as well as causing pest and disease incidence to rise.

“Resilience in supply chains has always been a goal of business – from brands and companies, to the communities that depend entirely on coffee production,” Andrés says. “However, the supply chain is only as strong as the people behind it, so it is essential that the coffee industry invests in social, economic, and environmental sustainability.”

Beyond environmental issues, the volatility of the coffee market can also severely affect coffee farmers. Price instability doesn’t just hurt the long-term prospects of a farm; it can also limit smallholder producers’ capacity to support their families or adapt to unforeseen circumstances.

A recent example of this instability is the severe and sudden frost that hit coffee-growing regions of Brazil in July. It has been predicted that farmers may lose anywhere from five to ten million bags of coffee because of frost damage. Extreme weather conditions such as these only drive home the volatility of the coffee market.

However, there is hope that with more roasters – including private label roasters – achieving sustainability certifications, there is a way forward.

Ashley says: “We see more and more retailers making commitments to responsible and Fair Trade Certified sourcing every year. These commitments and the continued growth in Fair Trade Certified coffee and other ingredients drive a positive impact for over 975,000 farmers and workers annually.”

Darcie adds: “Albertsons Companies is a long-time partner of Fair Trade USA, and to date our O Organics coffee has generated more than US $3 million in Community Development Funds.

“[These funds] have supported farming communities by helping to build schools in Ethiopia, improving coffee processing facilities with dry mills and solar dryers in Peru, training farmers in agricultural and business practices in Honduras, and replanting trees in Colombia.”

Andrés points out that the growing size of the private label coffee market can be leveraged to reduce market volatility, and drive a much greater impact.

“Larger-scale demand from the private label sector helps communities improve economic and social stability,” he says. “This is particularly critical in the time of the Covid-19 pandemic, just as it was during the coffee price crisis that preceded it.”

cupping coffee

For private label products, sustainability certifications and seals have a multitude of benefits. While we know that sustainability-minded consumers are more likely to purchase these products, the rest of the supply chain also benefits. 

In realising this impact, we can help to secure the longevity of the coffee supply chain for everyone – at origin, in the roastery, in cafés, and at home.

Enjoyed this? Then read our article on growing sustainability in the coffee supply chain.

Photo credits: Albertsons Company, Andrés Hidalgo Espinoza, TRANSFAIR USA

Perfect Daily Grind

Please note: Fair Trade USA is a sponsor of Perfect Daily Grind.

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Learn more about Fair Trade Certification here.