Traidcraft is recruiting a new CEO. As a shareholder, company pension scheme member, former employee, former director, former fairtrader, former retailer, occasional fundraiser and life-long supporter, I have more than a passing interest in who is appointed and, perhaps more importantly, what they go on to do.

Worth saying in advance that what follows is some tough thoughts that will not make easy reading for those who support or work for Traidcraft. They are written to start a debate about how we can all pull together to make Traidcraft better at what it does and more able to help those it was set up to help. They are not criticisms for criticism’s sake – they are challengers that customers, supporters, investors, staff and the new CEO need to face head on.

So here are five charts across four themes, that no one starting a new job wants to see about their new employer but clearly show where the priorities need to be for Traidcraft today.

1 UK Market Share

Fairtrade is booming. Thousands of new products have been launched over the last 10 years and 2014 is likely to be the year when Fairtrade certified sales pass £2 billion. So Traidcraft is booming too? Not so much. You could argue that Traidcraft’s UK fairtrade market share has fallen from just under 10% to 0.7%.(1)traidcraft_uk_market_share

Now there are many reasons why Traidcraft(2) has fallen short of the market growth – competition from the major retailers and product brands with very deep pockets, for example – but a more than 10 fold decrease in market share is a pretty poor performance in a growing market.

In previous decades Traidcraft was under funded and struggled to stay in business, but a successful share issue in 2003 put £3 million in the bank. With good credit from the bank and Shared Interest, Traidcraft had between £5 and £6 million to invest in growth. Apart from investing in some aspects of the physical infrastucture like a second warehouse and a new website, there has been little investment from that cash mountain. While that may have seemed prudent, it has left the business struggling for where future sales will come from.

Worth noting that if Traidcraft had grown with the market it would be turning over around £164 million with around £40 million in producer purchases – now that would be an impact.

Challenge: Traidcraft plc has the resources to invest heavily in growth. A good plan could unlock resources from the Regional Growth Fund and new shareholders. There is plenty of debt available to Traidcraft via Shared Interest and via the property assets it has. The property alone could be used to raise £1.5 million of debt to leverage the current equity. Traidcraft needs a plan to use that money in a bold, confident manner that fuels future growth and creates an environment for innovation to flourish.

2 UK Share Price

traidcraft_share_price_2008_to_2015Traidcraft has had several share issues since the first one in 1987. Each issue has been at or around a £1. If you invested a £1 in 1987 you would need the investment to be worth £2.56 for it to be worth same today as it was then. Traidcraft has only paid a small dividend in just four years (I think!) over those almost 3 decades and the share price today is around 22p. So your investment is worth 10% of what it was in 1987 or 20% if you invested in the 2003 share issue.

Oddly this share price is nothing to do with the real value of the business. Currently with around 5 million shares in circulation the net value per share is around 90p – so why are they selling for 22p? The share price reflects the lack of liquidity in Traidcraft shares as there are hundreds wanting to sell, but few people in the market to buy. While the move to list Traidcraft on Ethex will work well if they raise new capital, it seems to be doing little but depressing the share price currently.

Challenge: The current directors, like many before, have their hands tied by lack of distributable profits. They seem happy that Ethex could potentially help existing investors, but the company’s investment news page on Ethex hasn’t been updated for 16 months. Seems like working with Ethex to open new opportunities for existing shareholders is not a high priority. The solution? Once Traidcraft is back in the black – a single year of modest profits would do it – commit to using a proportion of future profits on share buy backs. Any future fundraising will need confidence in a way of selling your shares – growing that trust now and repaying the loyalty of people who have invested in Traidcraft with little return over three decades seems an important priority.

Buy backs increase liquidity in shares, no doubt increasing the share price and creating more value shareholders who don’t want to sell. Seems to be a winning idea all round.

3 Profits

As point 2 makes clear, no profits and your hands become tied over what you can do going forward. And the picture from the last 6 years is not pretty. Looking at the profits in £’000s, we can see the net profits from the last 6 years are around -£200k.traidcraft_plc_profits
I think the business suffers from shareholders who have not driven harder for profits. Within the alternative trade sector, profits are sometimes seen as a dirty word – but a modest profit is key to long term sustainability. In fact, what does it say about fair TRADE if we are trading out of charity rather than to make a fair profit for everyone in the supply chain?

Lack of shareholder pressure to receive even a 2% dividend means that other issues become priorities for the business – most shareholders are very interested in the social dividend – is Traidcraft making the world a better place? The most important proxy indicator of that is purchases from developing country producers. More purchases mean more incomes and producers secured.


If we look at the two graphs you will see a direct correlation between Traidcraft profits and purchases. The more Traidcraft makes, the better it is for producers.

Challenge: How can Traidcraft’s various stakeholder groups get comfortable with the PLC making a profit? Profits are crucial to fair returns for those who provide the businesses capital, bigger orders for producers and an even better story to other businesses that a fair business is still a profitable business. So time to set realistic profit targets for the next few years and actually hit them.

4 Back the right channel!

which_channelThe current picture of sales by channel is not very promising either. There is no growth or declining sales in every channel.

Fair Traders are slipping back year by year. These sales have been the engine of business previously, but times are tough. Fairtrade items are much more widespread so do you really need to buy them at the back of church on a Sunday? And then there is the fact that church attendance is falling and so churches selling Traidcraft items is falling too. This is compounded as the denominations that are shrinking fastest are the ones where Traidcraft has historically been the strongest.

Tough being a Christian business when Christianity is in decline. But fair trade is not a solely Christian concern. Outside of the obvious detractors like the Adam Smith Institute, there is almost universal agreement that fair trade is a good thing whatever your moral framework. Growing sales outside of the Church is key.

The other surprise is web sales which have fallen in the context of web sales in general growing at 20% year. Traidcraft has many advantages of scale that should make growing on the web easy compared to the biggest and smallest retailers. and yet Traidcraft sales are falling back.

Challenge: There is only one sure fire channel for success – online. Investing in online brings predictable returns and Traidcraft has the resources to invest. Even better is that online has the highest gross margin of teh channels Traidcraft sells in and so the opportunity to increase profits is there too. Of course much effort will be needed on the range to allow new product categories to be tested and supported.

And fair traders? Now is the time to breathe fresh impetus and new life into a great scheme. Time to focus outside of the church – there are organisations that are growing that could be gateways to more sales. The Green Party for example has more than doubled its membership from 20k to 50k in one year with next to no investment. Simply by being clear about its message, people are signing up in droves.


So with five graphs and four challenges, in my view, there is plenty for a new CEO to do. What Traidcraft needs is an inspirational leader with a sound plan. The loyalty of staff, producers, shareholders and customers is not in question. They are are all eagerly waiting to push hard on a new growth strategy. The relevance of Traidcraft today is more obvious than it has ever been. Corporate ethics and trust seem at an all time low with issues like Rana Plaza and corporate tax evasion showing that having a CSR policy is not enough. Traidcraft lives and breathes a different way of doing business.

Traidcraft often calls itself a pioneer brand to signify that it has veracity and purpose in its history. Isn’t it time to stop looking backwards and start talking about what Traidcraft will become rather that what it has been? The language of pioneer almost sounds like a spoilt teenager feeling usurped when younger siblings start taking the limelight. Time to forget what others are doing and focus on what make will make Traidcraft distinctive tomorrow.

I’d love to know what you think. Comment below and let’s start a debate so that by the time a new CEO has been appointed, we have crowd-sourced a forward looking, ambitious strategy.



(1) traidcraft_uk_market_share_tableThe Market Share stats are based on the the total fairtrade certified sales in the UK and Traidcraft’s total sales in the UK. These are not directly comparable as Traidcraft sells many items which are not certified. However, the growth of the fairtrade market has made some big opportunities for the fair trade companies but few have been able to take them.

The raw for this analysis is sourced from Traidcraft plc accounts and the Fairtrade Foundation Annual Reports.
(2) Traidcraft consists of three organisations – Traidcraft plc, The Traidcraft Exchange (a UK charity), The Traidcraft Foundation (a non-trading UK charity that exercises some degree of control over the other two organisations. This article is entirely about the plc. It is the combined organsiation’s engine and and proof of concept. It needs the biggest changes to weather the current storm.