Italian Fair Trade: reaching the same market success as in the UK

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1 - INTRODUCTION 
 
1.1 - FAIR TRADE: A STORY 60 YEARS LONG 
Fair Trade can be generally defined as a social movement aimed to deliver better trading conditions to 
producers in developing countries in order to promote development (Moore, 2004; Becchetti and 
Costantino, 2010). Fair Trade tries to offer an alternative model for business that focuses on social 
objectives, such as guaranteeing human rights and adequate working conditions along the entire supply 
chain (Moore, 2004; Moore et al., 2006; Jaffee and Howard, 2010). It also tries to modify the model of 
international trade between North and South in which cutting down costs has always the highest priority 
(Renard, 2003; Raynolds and Long, 2007).  
In Europe Fair Trade started in the late 1950s when Oxfam imported handmade pincushions made by 
Chinese refugees in Hong Kong and then resold them in the United Kingdom (Tallontire, 2006; WFTO, 
2011). In 1964 Oxfam created Oxfam Trading, the first ATO, and in the following years new ATOs emerged 
also in the Netherlands and Germany (WFTO, 2011). However Fair Trade until the end of the 1960s was still 
seen as a form of charity-based movement (Littrell and Dickson, 1997; Hockerts, 2005; Tallontire, 2006; 
Barrientos and Smith, 2007). The late 1960s and early 1970s saw the further expansion of the European 
movement with the birth of new trade relationships with the producers of the South, under a spirit of 
solidarity and the willingness to support poor communities and countries for political reasons (e.g. 
opposition to Apartheid, fight inequalities in the world economic system, etc.) (Van Tongeren, 1982; 
Tallontire, 2006). This change within the movement can be summarized with the slogan from the 1968 
United Nations Conference on Trade: “Trade not Aid” (Barbetta, 2006; WFTO, 2011). Other important 
changes were the inclusion of food products in the Fair Trade channels, when the Dutch Sugar Cane Action 
first started to import cane sugar (Van Tongeren, 1982; WFTO 2011), and the opening of the first World 
Shop in 1969 in The Netherlands (Redfern and Snedker, 2002). New food products entered the European 
Fair Trade channels  (e.g. tea, coffee, dried fruit etc.) and more European countries joined the movement 
(Hockerts, 2005). In the 1990s however  it became clear that sales of Fair Trade products only through 
World Shops limited ATOs’ ability to reach more consumers and so the strategy of expanding the sales 
through mainstreaming channels was adopted increasingly, together with the birth and growth of national 
Fair Trade labelling institutions (Hockerts, 2005; Tallontire, 2006; Bennet, 2013).
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1.2 - THE DIFFERENT DIMENSION OF FAIR TRADE IN ITALY AND UNITED KINGDOM 
Fair Trade has changed deeply, after its initial meaning of goodwill selling, from the 1990s it became always 
more synonym of sustainable partnerships, a concept of trade that brings together market and ethics and 
that is beneficial for both producers and consumers (Tallontire, 2000; Hockerts, 2005; Tallontire, 2006; 
Anderson, 2013). Fair Trade tries to change the modern market trend that focuses only on economic 
variables in international trade in order to stop countries of the South from being exploited by the North 
which holds all the dealing power (Knapp, 2010). 
Today Fair Trade is a social movement widespread in Europe, however its market dimension varies highly 
between European countries. Wide difference exists between the UK, the pioneer of Fair Trade in Europe, 
and Italy, in which the social movement arrived only at the end of the 1980s. In 2007 the sales of Fair Trade 
labelled products generated a turnover of over €700 million in the UK and only about €39 million in Italy 
(FTI, 2009), whereas total turnover from non-labelled products  were more similar, respectively about €35 
million and €43 million (Krier, 2008). The different market approach to Fair Trade, the diffusion of 
certifications, the use of mainstreaming and the type of supply chains involved are generally considered the 
main reason explaining the big different market success of Fair Trade in such two countries (Becchetti and 
Costantino, 2010; Huybrechts and Reed, 2010; Doherty et al., 2012). Furthermore, such market difference 
is even growing as shown by 2012 data: labelled Fair Trade products alone reached a turnover of about 
€1.9 billion in UK, whereas in Italy labelled products reached about €65 million (FTI, 2013) and unlabelled 
ones generated about €60 million (value obtained adding the turnovers for 2012 of the main Italian ATOs 
not licensee of the Fairtrade label: CTM Altromercato (2014), Libero Mondo (iCRIBIS, 2014), 
Equocommercio (2014b), Mondo Solidale (2012)).  
Taking into account such data and considering the fact that the UK has similar characteristics to Italy in 
terms of population and wealth distribution, it is useful to explore the differences between the two Fair 
Trade models and markets in order to  recognise possible growth opportunities. However, in so doing, the 
potential for growth need to be considered in the light of the possible trade-offs between social and 
economic goals, as many critics of UK mainstreaming have highlighted (Doherty et al., 2012). 
 
1.3 - AIMS AND OBJECTIVES 
The overall aim of this study is to compare the Italian and UK’s Fair Trade models in order to better 
understand the different ways in which such particular social approach to trade can evolve. The analysis will 
therefore focus on understanding why the last 25 years have seen Fair Trade in the UK succeeding on the
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market widely more than in Italy, helping to answer the main research question addressed by this 
dissertation: 
“Is it possible for Fair Trade in Italy to reach the same market success as  in the UK? And if so, what would 
be the most appropriate strategy? ” 
Market success of Fair Trade is here meant as the combination of per capita expenditure and total turnover  
generated from the yearly sales of Fair Trade products within each country. The reason for choosing the UK 
as element of comparison instead of a country like Switzerland, more successful in terms of per capita sales 
(FTI, 2013), is because the UK and Italy are two countries described in the literature as comparable for 
population and  market and also because the Fair Trade movement within them had similar characteristics 
until the beginning of the 90s (Becchetti and Costantino, 2010; Doherty et al., 2012).  
With the aim of answering adequately the main research question, this dissertation will require the 
achievement of the structured series of objectives reported as follows: 
1) to identify the characteristics of the Fair Trade model in Italy and in the UK in order to recognize the 
reasons explaining the different market success of this movement in the two countries; 
2) to understand the priorities and the objectives of the organizations involved in importing, certifying and 
commercializing Fair Trade products in the two countries; 
3) to explore the possible risks and opportunities, both social and economical, associated with the UK’s and 
Italian Fair Trade model; 
4) to examine Italian and UK’s consumer trends and expectations in regard to Fair Trade; 
5) to understand to what degree the UK’s Fair Trade model could be imitated in order to pursue market 
growth of the social movement without affecting the social standards and the reputation of Italian Fair 
Trade; 
6) to consider which are the aspects that requires particular attention in order to guarantee the “healthy” 
market growth of Italian Fair Trade (i.e. economic growth that does not scarifies the social values and 
goals of Fair Trade). 
In order to better address all the reported objects and answer the research question, the paper has been 
structured in different parts. The following chapter (n.2) contains a review of the existent literature which 
initially help to understand better the different Fair Trade models characterising Italy and the UK. 
Afterwards the paper identifies the strategies that are at the base of the Fair Trade market success in the 
UK and recognises the risks associated with their implementation.  Chapter n.3  presents the methodology
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followed and chapter n.4 reports the results of the investigation, separating between interviews and survey 
data since they have been obtained from different categories of stakeholders. Finally chapter n.5 discusses 
the results, comparing the different type of data with the literature, and responds to the main research 
question whereas chapter n.6 concludes this research and offers some recommendations about future 
research on the topic. 
 
2 - ITALY AND UNITED KINGDOM: TWO DIFFERENT FAIR 
TRADE MODELS 
2.1 - BACKGROUND 
Fair Trade reached Italy only in the 1981 when, under the influence of the Swiss and German Fair Trade 
movement, the first Italian World Shop was opened in Bressanone, at the very North of the peninsula 
(Becchetti and Costantino, 2010). The movement had success since the beginning, in  1988 the  first and 
today biggest Italian ATO, Cooperazione Terzo Mondo (CTM Altromercato), was founded and ever since 
Fair Trade has spread over many  Italian regions with the name of “commercio equo e solidale” (Becchetti 
and Costantino, 2010). 
In the 80s, at the same time Fair Trade was moving its first steps in Italy, in the UK the movement was 
continuing to expand with the opening of new World Shops, the founding of new ATOs (i.e. Twin and Twin 
Trading, Cafè Direct, etc.) and the inclusion of more food products such as coffee and cocoa (Tallontire, 
2006; Barrientos et al., 2007).  
At the beginning of the 1990s the Fair Trade approach of Italy and the UK were really similar with systems 
based on importers that were as well organizations totally dedicated to Fair Trade (e.g. Traidcraft in the UK 
and CTM Altromercato in Italy) and on sales taking place only in World Shops (i.e. “Botteghe del mondo” in 
Italy) (Barrientos and Smith, 2007; Becchetti and Costantino, 2010). However from 1992, with the 
establishment of the Fairtrade Foundation (Fair Trade certifying organisation in the UK), Fairtrade labelling 
became increasingly popular in the UK pushing Fair Trade certified products to be sold more and more on 
supermarkets’ shelves from 1994 (Fairtrade Foundation, 2006). In Italy instead, although in 1994 the Fair 
Trade commodity certifier TransFair Italia  was founded, labelling did not receive the same boost since 
many Italian ATOs feared that a product certification was more a marketing tool, rather  than a useful 
instrument to promote the original social goals of Fair Trade, and also because the same ATOs were dealing 
with many producers too poor to afford the certification costs (Dal Fiume, 2002; Barbetta, 2006; Becchetti
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and Costantino, 2010). Italian ATOs has indeed always been very careful about the respect of social values 
of Fair Trade as demonstrated by the principles listed in the Italian Charter of Fair Trade (AGICES, 2005) to 
which most of Italian ATOs (Altromercato, Libero Mondo, etc.) and World Shops commit. Guaranteeing 
global political and social justice is in this context so important that the same Italian Charter prescribes that 
organisations involved in Fair Trade should be set up as non-profit organisations in order to guarantee that 
the willingness to make corporate profits do not obfuscate social goals (AGICES, 2005). 
As consequence the Fairtrade certification has been mainly used by corporates and only a few Italian ATOs 
have chosen to sell Fairtrade certified products (e.g. Baum and Altraqualità) whereas Altromercato decided 
to developed its own label, also because the commodity label was considered too limited, since it was 
allowing to certify only a small range of products (Dal Fiume, 2002). Altromercato let also other 
organisations use its label if they are 100% committed to Fair Trade and join the consortium Altromercato: 
through this strategy the consumer can so be aware of which organisation commits entirely to Fair Trade 
and which one instead commits only the supply chains concerning Fairtrade certified lines (Becchetti and 
Costantino, 2010).  
In the late 1995 the coffee line “Per la Solidarietà” sold by Coop Italia was the first Fair Trade product to 
enter Italian supermarkets (Coop Italia, 2014) and in 1997 also CTM Altromercato opened to supermarkets, 
selling through Esselunga initially Fair Trade footballs and later food stuff (Becchetti and Costantino, 2010; 
Bertoni and Gigliotti, 2014). Later, also other Italian ATOs  entered mainstreaming (e.g. Commercio 
Alternativo) and this decision proved to be really important for the market growth of Italian Fair Trade 
(Becchetti and Costantino, 2010): CTM Altromercato alone saw its turnover growing from about €8 million 
in 1998 to more than €34 million in 2004 (Bertoni and Gigliotti, 2014).  
However given the low use of the Fair Trade commodity certification, sales of Fair Trade products grew 
more slower than in the UK, especially after 2000 when in the latter country Co-op first and other 
supermarkets such as Tesco and Waitrose started to sell own brand Fairtrade certified products (Barrientos 
and Smith, 2007; Doherty et al., 2012). Furthermore also the big number of volunteers working in ATOs and 
World Shops has kept the Fair Trade movement from growing on the Italian market as much as it has in the 
UK. Indeed, although volunteers have been essential for the initial development of Italian Fair Trade 
(Becchetti and Costantino, 2010), they do not generally own the business expertise and planning skills that 
are required to enhance the optimal growth of organisations that operate on the market (Perna, 1998). 
Today the ratio volunteers to paid staff working in Italian ATOs and World Shops is about 4 to 1 (AGICES, 
2014b).