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Coconut oil companies ramp up sustainability efforts

Demand for coconut oil has put supply chains under pressure over the past few years, leading some food manufacturers to seek assurances of sustainable sourcing.

Over the past two years, companies including BASF, Cargill, Procter & Gamble (P&G) and the German corporation for international cooperation (GIZ) have expanded a consortium intended to ensure coconut oil is produced sustainably, with the support of the Rainforest Alliance and working with local farmers to help prepare them for certification.

The rise of coconut oil has been meteoric. In the UK alone, annual sales increased from around £1 million in 2014 to £16.4 million over the next three years, according to research group Kantar Worldpanel. Much of coconut oil’s popularity has been driven by direct-to-consumer sales, as many western consumers have added it to the range of fats and oils they use in their own kitchens, but manufacturers also have brought the trendy oil to supermarket shelves in products like crisps and snacks.

However, demand for coconut has put pressure on supply. The UN Food and Agriculture Organization has found that despite increased planting of coconut palms over the past decade, overall productivity is down, due to pests, disease and ageing plantations. Meanwhile, one in 20 products in the supermarket contains some kind of coconut product, such as coconut oil, fibre, milk or water, according to the Dutch non-profit organisation Fairfood. It says coconut oil often appears in foods without consumers even being aware of it, as it makes ice cream melt less quickly and keeps biscuits crunchy for longer. It is also used in baby food, chocolate, sauces, sweets and coffee creamer.

In the Philippines, where most Dutch coconut originates, 56% of coconut farmers and 40% of employees live in poverty. But just as companies have started to increase their sustainability efforts to tackle figures like these, the peak of consumer interest in coconut oil may have passed. Spot prices reached a record high in late 2017 and have been falling ever since. The oil is unlikely to retreat back into insignificance, as coconut oil is now an everyday product for many westerners, whether used in coffee, in manufactured foods, or as a sweet-tasting tropical oil for roasting vegetables – but its status as a trendy superfood ingredient appears to be on the wane.

Part of its decline is likely to do with concerns over its health credentials. It contains more saturated fat — 82% — than butter, palm oil or lard, and although much has been made of two studies linking medium chain triglycerides (MCTs) with fat burning, the oil contains just 14% MCTs. What is more, the professor behind the studies has condemned the coconut industry’s whimsical interpretation of her research.

For food manufacturers, however, coconut oil remains a functionally useful and tasty ingredient. As consumers and companies alike become increasingly aware of the provenance of their foods, coconut industry moves to ensure sustainable supply and fair wages for workers answer strong and growing demand among the wider food industry for transparent supply chains.