Selling certified products enhances traceability and brand loyalty for South African food and clothing retailer
Woolworths sources an array of certified products for sale in its more than 400 stores. Such developments have enhanced the Woolworths brand, increased sales and convinced Woolworths that there is a strong business case for the company's commitment to third-party certification schemes.
Going on the 'Good Business Journey'
Tyrone Williams is a food technologist with the South African retailer Woolworths who has been co-ordinating the use of UTZ Certified cocoa in the company's house brand of chocolates. His work is part of a larger effort to make the company more environmentally and socially responsible, a programme that Woolworths calls its 'Good Business Journey.' In the process, Williams himself has become a proponent of sustainable agriculture.
"UTZ Certified resonated with us because it is holistic," he explains. "The standard includes sustainable farming practices, social impacts, biodiversity conservation and a fair price for farmers." In order to experience sustainable agriculture's impact on the ground, Williams travelled to Ghana in March 2014 to visit UTZ Certified cocoa farms and meet some of the smallholders who grow cocoa for Woolworths. The UTZ Certified label was one element of a product launch that included new flavour profiles and packaging, but the survey found that the ecolabel played a significant role in boosting sales.
At the time of the launch in 2012, Woolworths' chocolate box line was made with 25% UTZ Certified cocoa, but that percentage has since been increased, and the goal is for Woolworths chocolates to be 100% UTZ Certified by the end of 2016. The majority of the products sold in the stores are Woolworths' own brand, and Williams is working to incorporate UTZ Certified cocoa into all of those products that contain cocoa - such as cakes, biscuits, ice cream and breakfast cereals - by June of 2018.
Strengthening a Respected Brand
Woolworths is involved in a process of sourcing an array of certified products for sale in its more than 400 stores. For example, since 2012, in-store restaurants called WCafés exclusively serve Fairtrade coffee - primarily grown by smallholders in Tanzania and Ethiopia. Apart from the WCafés, all the stores also carry a selection of packaged coffees with the Fairtrade mark, which indicates that farmers are receiving a fair price and are following good agricultural practices.
According to Lucy King, a Woolworths Good Business Journey Analyst, such developments have enhanced the Woolworths brand. She notes that there is a strong business case for the company's commitment to third-party certification schemes.
"What we're trying to do is to embed sustainability into the way we do business. A combination of factors is driving this change. We have a highly educated customer base that expects a lot of us, but we are also using sustainability standards to deliver cost savings, to help us address our supply chain risks, and ensure transparency. Our customers play a big role, but they aren't the only reason we're doing this."
"Traceability and transparency are an important part of this," she adds. "Thanks to Fairtrade and UTZ Certified, we can say to customers that we know exactly where our coffee comes from and that we know exactly where our cocoa comes from. This is huge in terms of our reputation."
As well as UTZ Certified cocoa and Fairtrade coffee, Woolworths sells wild-caught seafood with the Marine Stewardship Council (MSC) ecolabel and works with the Forest Stewardship Council (FSC) to source paper and cardboard from responsibly managed forests for its products and packaging. The company was the first in South Africa to become a member of the Roundtable on Sustainable Palm Oil (RSPO) with the goal of eventually selling only products containing Certified Sustainable Palm Oil (CSPO).
There has been a 40% increase in sales of Woolworths' boxed chocolates since the UTZ Certified chocolate line was launched. More than 60% of respondents of a customer survey claimed that sustainable cocoa is important when they purchase chocolate, indicating that responsible sourcing can be profitable.
Ensuring a Future Seafood Supply
Approximately 30% of the wild-caught seafood sold by Woolworths in 2014 bore the MSC ecolabel, and 67% was listed as sustainable by WWF South Africa. Woolworths intends to carry only sustainable wildcaught seafood by the end of 2015, and only responsibly farmed seafood and freshwater fish by the end of 2020.
Chris Kastern, of WWF South Africa's Marine Programme says: "According to the FAO State of World Fisheries and Aquaculture report of 2014, 90% of the world's fisheries are either being fished at their maximum sustainable level or are being overfished, so there isn't a great deal of potential for growth. For a retailer, integrating sustainability into their supply chain is critical to ensure a supply of seafood."
While ensuring that its seafood supplies remain viable in the future is important for the company, using MSC also has a consumer dimension.
Hezron Joseph, a food technologist with Woolworth's seafood department, says consumers want to know where products are from and if they are sustainably sourced which can be a challenge for a department that sells approximately 60 different seafood species. This makes MSC's traceability system especially important. He explains:
"If you're a retailer, you want traceability and transparency right through your supply chain. You may sometimes be very far removed from a fishery. You may be buying from a supplier, who buys from an agent in another country, who buys from the fishing company, so there are quite a few steps in between. Certification has had a big, positive impact on traceability and transparency."
Since introducing a sustainable seafood policy in 2008, the company has collaborated with MSC and the conservation organisation WWF South Africa to source sustainable seafood and educate consumers about the importance of preserving productive fisheries.
South African consumers and media hold Woolworths to a high standard, and the proliferation of social media increases the risk that any shortcoming could explode into a controversy.
Lucy King said: "Woolworths has always been a trusted retailer. South Africans have a very personal relationship with our brand, and they expect a lot of us. So if we do anything that upsets them, they'll feel personally offended. In terms of brand differentiation, sustainable sourcing policies have definitely helped Woolworths. People trust the brand and they feel more positive about our company since we began this good business journey."