Fairtrade row percolates as Nestlé prepares 'ethical' brew

Nestlé, the world's largest coffee producer, is set for a head-to-head battle with the Fairtrade Foundation as it prepares to launch an "ethical" coffee product in the UK.

Nestlé, the world's largest coffee producer, is set for a head-to-head battle with the Fairtrade Foundation as it prepares to launch an "ethical" coffee product in the UK.

The Swiss food giant is understood to be planning a "direct coffee" product. The branding has not been revealed but Nestlé is not planning to work with the Fairtrade Foundation, the consortium of non-governmental organisations which verifies ethical food products.

Nestlé has been critical of Fairtrade and only last month unveiled a critical report on its policies. Fairtrade supports Café Direct, the coffee and tea maker, which is growing fast in the UK market, increasing sales by about 20 per cent a year. Café Direct recently launched a share issue and is close to its target of raising £4.5m. It buys beans direct from growers and pays prices above the market rates.

The big food groups have been eyeing the ethical consumer market, and have made much of their sensitivity to issues of sustainable food production.

Nestlé has published two reports on the coffee market, stung by criticism of its practices by NGOs such as Oxfam. In the first, the Coffee Report, Nestlé chief executive Peter Brabeck-Letmathe said that "Fairtrade can only work in a niche market".

The more recent report, What Can Be Done, went further, saying: "If ... farmers were paid Fairtrade prices exceeding the mar- ket price, the result would be to encourage those farmers to increase coffee production, further distorting the imbalance between supply and demand."

Ian Bretman of the Fairtrade Foundation attacked Nestlé's potential move into ethical products. "This could undermine trust in the Fairtrade product. It seems rather dishonest to do something without the involvement of Fairtrade."