Sales under the ethical Fairtrade label grew 12 percent in 2011 and are set to climb even higher this year as confectionary makers increasingly use Fairtrade cocoa and sugar in their products, the Fairtrade Foundation said Monday.

UK retail sales of Fairtrade cocoa surged 34 percent to 217 million pounds in 2011, according to figures issued by the foundation Monday.

The main Cadbury Dairy Milk brand has launched new variants and has switched its hot beverage products to Fairtrade, so that's a big driver, Ashish Deo, commercial director of the Fairtrade Foundation, told Reuters in a telephone interview.

Kraft Foods' Cadbury switched its Dairy Milk brand to Fairtrade in 2009 and in 2011 launched a new line called Chocos, which helped boost Fairtrade's share of the UK chocolate market to 12.5 percent by the end of 2011, up from 10 percent at the beginning of the year.

Fairtrade is a consumer label that covers a wide range of products including bananas, cosmetics and cotton and aims to help give workers in developing countries a better deal.

British retail sales of Fairtrade products overall were worth 1.32 billion pounds in 2011, up from 1.17 billion pounds in 2010.

Deo said the launch this year of Bubbly, a new Cadbury Dairy Milk brand of aerated chocolate, would increase Fairtrade's share of Britain's chocolate market further and said he saw a lot of room for expansion even after Maltesers - boxed chocolates made by Mars - switch to Fairtrade in May.

We will have three of the top five brands in the UK, so there are the other two brands to go after and there are also several sizeable brands in the top 10, so we have a long way to go in the chocolate category, he said.

STRONG SUGAR SALES

Growth in the Fairtrade chocolate market has fuelled a 21 percent increase in retail sales of Fairtrade sugar.

The sweet substance is now Britain's leading Fairtade-branded product, accounting for a third of the entire sugar market, with sales in 2011 worth 464 million pounds.

Britain's fourth biggest grocer, Wm Morrison Supermarkets, said it would convert to Fairtrade sugar supplied by Tate & Lyle Sugars, a unit of American Sugar Refining, in a move that will bring Fairtrade's share of the country's retail bagged sugar market to 42 percent, the foundation said.

Ice cream companies such as Ben & Jerry's are also boosting demand for Fairtrade sugar, while catering firms like Sodexo, Aramark and Compass have committed to using Fairtrade sugar, as have caterers at the Olympic Games in London this summer.

But sales of Fairtrade cotton fell by around 20 percent in 2011, according to Deo.

Cotton unfortunately has been one of the more challenging categories for us, he said.

There were a lot of sourcing challenges last year because the cotton crop was short, and countries like India had imposed export bans. A lot of Fairtrade cotton comes from India, so companies could not find alternative sources that quickly.

Newcomer Fairtrade gold, which was launched in early 2011, accounted for 0.03 percent of the ethical label's total sales. Deo said it would be around two to three years before sales of the precious metal really take off, because it was necessary to build up understanding among consumers first.

(Editing by Jane Baird)