The ALDI SOUTH Group is strengthening the sustainability of its banana supply chain via a new approach to buying, which has been developed in partnership with strategic suppliers. This will see the implementation of more responsible purchasing practices and an increase in the transparency of production costs. These improvements to the buying process means that critical cost changes and fluctuations that impact all supply chain stakeholders can be better addressed together.
Cost transparency of production and supply chain
This year, ALDI has collaborated with key business partners to identify the cost factors that could be reflected in a joint and innovative open-book costing approach. By following a partnership approach, jointly setting adequate cost factors, and identifying suitable benchmarks, we can take into account critical price developments for all relevant costs (e.g., packaging, fuel or logistics).
ALDI’s sourcing based on the Fairtrade methodology
Customers, retailers, and producers all see Fairtrade as an expert and trusted organisation, and we saw an opportunity to use best practice to support our new approach. Fairtrade International regularly collects production costs from Fairtrade-certified banana producers. We will use the cost factors published annually by Fairtrade International for our price setting. This does not involve paying the Fairtrade minimum price for all our bananas, but only for the Fairtrade-certified bananas.
What it means is that changes to the cost factors underpinning the Fairtrade Minimum Price will be considered in our sourcing. Through this best practice measure, we help to protect workers and stakeholders at production level from the negative impacts of price fluctuations. This further ensures that the banana prices we pay to our suppliers are fairer and more accurately reflect sustainable production costs.
Long-term partnerships for shared responsibility
We are currently developing this more responsible purchasing model with our long-term strategic suppliers throughout 2022. From 2023 onwards, it will cover the majority of our banana buying volume and our plan is to expand it to additional business partners over time.
As our strategic suppliers support us in implementing new ways of buying, we commit to long-term partnership and to, at minimum, keeping the banana volumes they supply to ALDI stable. This gives them financial security and allows them to commit to longer-term sourcing and investments in sustainability with their producers.
