Ethical products arguably possess a degree of recession resistance, offering Sara Lee a potential source of value-added sales in an otherwise tight market.

Sara Lee has announced that it intends to pursue a strategy in 2009 of increasing the sustainability of its coffee business by 30%. This equates to raising its purchased volume of certified coffee beans to 26,500 tons. In 2004 this figure stood at a mere 2,500 tons, illustrating the scale of growth in this area of Sara Lee's business.

This positive commitment to further investment in its sustainable strategy stands in stark contrast to the picture painted in Sara Lee's latest full-year profit forecasts, cut by up to 17%, with sales this year to date down 36% overall.

Sara Lee's plan reflects the argument that investment during a recession for CPG companies is an important long-term strategy for brand development as it can enable solid positioning in the post-recession marketplace.

Aside from ethical associations offering a positive "halo" effect for the company and its brands, ethical products also arguably offer a degree of recession resistance. This is because ethical consumers show greater commitment to their branded purchases than their more neutral peers. This suggests that during an economic downturn, ethical brands may fare better than non-ethical equivalents as their core consumer base has stronger ties.

Another important point is that consumers who already pay a premium for ethical products are less likely to be put off by recession ethical brands also crossover extensively with premium products and thus benefit in the same way in that dedicated consumers of premium brands tend to be less likely to trade down. Research by the Canadian Agricultural Economics Society supports this, showing that price-sensitivity is much lower among purchasers of Fairtrade products compared to that of non-Fairtrade consumers. Rising ethical prices would thus not automatically trigger a shift to cheaper non-ethical alternatives.

Clearly, there is still a risk that ethical brand growth may stall in a recessionary environment, as mainstream consumers will not be as likely to trade up. However, Sara Lee has a chance to court an intrinsically more stable consumer base and thus a more stable revenue stream, creating a solid basis for post-recession brand building. (Datamonitor via COMTEX)