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Ethical brands: Gimmick or guarantee?

This week, Starbucks became the latest global brand to join the ranks of the Fairtrade Foundation  

By CNN's Paula Hancocks

LONDON, England (CNN) -- Starbucks, like Costa, has begun selling so-called ethical coffee. Other companies are also jumping on the bandwagon.

But some of the stalwarts of ethical products, like The Body Shop, are struggling.

Shopping with a conscience sounds good in theory. In practice, though, a shopper's good intentions can be forgotten with the promise of a bargain.

Increasingly customers are demanding more for their money in the form of ethical guarantees. But is it a real consumer trend to be tapped, or just a marketing gimmick?

A growing number of companies sell ethical products to raise consumers' conscience and tap into their wallets. CNN's Paula Hancocks reports.

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"It becomes a completely different issue when it becomes something that customers want, because you can't really have a debate about that," says Ian Bretman of the Fairtrade Foundation.

"Businesses exist to supply what customers want, and I think the growing sales curve, the growing interest in the product, means it's perhaps easier for businesses to respond."

Business is never likely to put the environment ahead of its bottom line -- but it seems to increasingly consider it a part of the equation.

As Nike discovered when admitting to unacceptable working conditions at its Indonesian plants, the cost of underestimating the customers' conscience is high.

Businesses today have to consider adverse media attention -- the knock to their reputation caused by protesters and the inevitable cost of crisis management.

The Body Shop is well known for its environmental concerns. All products are advertised as being free from animal testing, and most advertise doing direct business with producers from developing countries.

But environmental concern may be coming at a price. The group's profits fell sharply last year, and many say The Body Shop has become a victim of its own success.

By putting pressure on so many companies to "go green," it has created fierce competition for itself.

"I think it's clear that being ethical on its own isn't enough," says Rosey Hurst of Impactt, an ethical risk consultant.

"The way it works is when it is part of a solid business plan, a business strategy, and it's part of the value of the product."

The Internet has been the fastest to pick up on consumers' demand for ethical shopping. Thousands of new sites have sprung up to service the recent surge in demand.

Starbucks became the latest global brand to join the ranks of the Fairtrade Foundation this week.

Fairtrade is starting a fortnight campaign next week, promoting a better deal for farmers and producers in developing countries.


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