Market Recognition and association representing 50 + members - PDF document

Southern African Natural Products Trade Association � Non-profit trade Market Recognition and association representing 50 + members Sustainability Schemes � SMEs, producer groups, Gus Le Breton NGOs, researchers, in 8 countries Southern African Natural The Big Picture Products Trade Association � Objective – develop What are we trying to income for rural producers achieve? (wild harvesting, traditional farming systems – pro- Basic goal is to reduce poor) poverty for this generation � Develop and facilitate + markets for new natural Without threatening the products derived environmental security of exclusively from selected the next generation indigenous plants The Big Picture The Big Picture Biodiversity conservation Certainly not something is an essential element that the market of environmental security understands BUT For most consumers, the definition of an environmentally sound Not an element that product is one that is … many people understand 1

The Big Picture The Implications for Business • Any business that is making genuine steps towards sustainable biodiversity management and poverty alleviation has no means of: - Assessing its progress - Differentiating itself on the market NOT TESTED ON ANIMALS!! The Implications for The Implications for Business Poverty/Biodiversity • If it cannot differentiate itself on the market, it cannot • Biodiversity-friendly, pro-poor businesses cover the additional costs associated with biodiversity almost invariably incur greater costs management and poverty alleviation • Those costs have to be covered somehow • If a business cannot cover the additional costs • Either they are covered through the market incurred, it will either: • Or they are covered through subsidies (including fiscal incentives, tax breaks etc) • Go out of business; or • If they are not covered, there will be no biodiversity-friendly, pro-poor businesses • Stop incurring those costs Challenges Will the market get it? • The move towards naturals and organic is 1. Will the market ever get it? overwhelming • L’Oreal buys the Body Shop, then Sanoflore 2. Will it ever be possible to differentiate yourself? 3. If so, will the benefits of differentiation • Colgate buys Tom’s of Main outweigh the costs? • Clarins buys Kibio • Etc. etc. 2

Will the market get it? Will the market get it? “L'Oreal CEO Jean-Paul Agon has …. made it clear that he • Question is whether the more complex wants to increase the company's footprint in the naturals and biodiversity/poverty argument will ever be understood organic arena, stating that current demand was too great to by the market ignore, indicating the possibility of further acquisitions in this • All the signs are that it can and will be area.” Cosmetics Design Europe Oct 2006 • Market is growing more sophisticated “Natural & organic cosmetic sales are increasing by over 20% a • Issues of biodiversity, equitable Access and Benefit year whereas the conventional cosmetics industry is Sharing, genuine pro-poor impact are all appearing in stagnating.” Organic Monitor Oct 2006 consumers minds • Also starting to feature in the consciousness of governments and of private investors (e.g. Natura) Will differentiation be possible? Will the market get it? Product Volume Producers Value • It has to be 000s MT 000s HH Millions USD One natural • If there is consumer demand for biodiversity- Mongongo 45 400 20 products Kalahari 300 1,500 21 friendly, pro-poor goods and services, there will Melon feasibility study be demand for a differentiation system Parinari 95 2,400 37 conducted in 10 Ximenia 90 1,500 38 • Once this demand exists, the market will SADC countries Marula 880 2,400 263 respond Trichilia 915 2,300 502 in 2005 Baobab 715 1,300 962 • How the market responds will determine the Kigelia 705 1,800 1,588 success Total 3,745 13,600 3,430 Will differentiation be possible? Will differentiation be possible? • Natural response would be through the rapid • A more measured and thoughtful response implementation of a number of different would be to look ahead and plan for the time certification/verification schemes when differentiation becomes the norm • Many will be hastily conceived and poorly • Develop something now that will serve this developed, and will quickly sink function in the future • There will be a period of confusion in the • Thereby avoiding that initial period of boom- market before, eventually, the regulatory bust confusion and regulatory intervention authorities step in 3

Will the benefits exceed costs? Conclusion • Initially probably not • Is the scale of the market opportunity for biodiversity-friendly, pro-poor goods and • But in the longer term, the balance will tip in services big enough to warrant serious favour of the differentiation mechanism investigation? • Ultimately, differentiation will cease to be an optional extra, it will become an inevitable pre- requisite for entering the market ✔ Conclusion Conclusion • Is market differentiation going to be possible • Has the time come to start working towards and desirable for this market? such a market differentiation mechanism? ✔ ✔ Thank You www.phytotradeafrica.com 4