Strength of Sustainability

SOCIAL RESPONSIBILITY CONTINUES to attract consumer spending, with double-digit market growth in sustainability-marketed consumer packaged goods. When the NYU Stern Center for Sustainable Business and IRI looked at CPG growth from 2015 to 2020, they found that sustainability-marketed goods are responsible for more than half of the growth. The mic drop came when their research found that this growth is continuing despite the COVID-19 pandemic.

The numbers? During a period of record CPG growth in 2020, sustainability-marketed products enjoyed a 16.8% dollar market share increase year-to-date, up 0.6 points versus 2019. CPG sales peaked due to pandemic-related shopping during the week ending March 15, 2020. Sustainability-marketed products experienced a 1.9-point share increase versus the prior week, and dollar sales increased 56% during the same period. Reflecting consumers’ immediate health and safety needs at the time, categories that experienced the most significant share growth that week include paper products and soap. The coffee category was also a winner as shoppers began to rethink their morning coffee runs. The surprise finding is that the weight-control-
products category also led.

Prepared for the Unthinkable

Preparation was a prime driver for CPG brands’ ability to capitalize on the strong demand.

Ahead of the global lockdowns aimed at reducing the worst impacts of the COVID-19 crisis, small and large CPGs in these categories were amplifying their sustainability programs and offerings.

In late 2019, packaged goods giant Unilever announced that one of its largest personal care brands Dove would reduce virgin plastic use. Moving to plastic-free packaging for its beauty bars and 100% recycled plastic bottles for other products will reduce Dove’s use of virgin plastic by more than 20,500 metric tons per year, which Unilever notes would be enough to circle the Earth 2.7 times.

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“At Dove, we are proud to have more than 100 initiatives ongoing around the world dedicated to tackling plastic waste,” says Richard Slater, Unilever’s chief R&D officer. “But as one of the biggest beauty brands in the world, we have a responsibility to accelerate our progress even further. By making this move, we aim to drive the global recycling industry to collect more waste plastic and make more recycled plastic available for use.”

As shoppers looked for reassurance, Dove had already established itself as a brand that cares about them and shares their values. In October 2019, Marcela Melero, Dove global skin cleansing vice president, explains:

“At Dove, we believe in care that goes further—for our consumers as well as our planet. We are passionately committed to being one of the brands making the biggest impact against plastic waste. We know we’re not perfect, but we can’t afford to wait. We’re working to have the biggest positive impact we can, as quickly as we can, and empowering others to do the same.”

Eco-responsible brand Dropps was already known for its compostable secondary packaging and its pioneering use of dissolvable pod packaging for cleaning products. So, Dropps decided to amplify its brand communications to educate consumers on sustainable packaging and to reinforce its eco-credentials. Just a few months before the WHO declared the coronavirus outbreak a pandemic, Dropps announced a partnership with Oceana—the international organization focused on protecting the world’s oceans—with a mission to make prevention the cure by addressing the issue of plastic pollution at the source. Central to this mission was the One Family, One Home, One Future platform, which lives on the Dropps website. The mini-site encourages consumers to help fight global plastic pollution and educates shoppers on the impact of their actions and choices. It also provides shareable content, including articles, infographics and interactive quizzes.

Sustainable Brands are Market Leaders

The investments in sustainability have proven to be good business. Researchers from NYU Stern Center for Sustainable Business and IRI found that from 2015 to 2019, eco-marketed products contributed 54.7% of overall CPG market growth while representing a 16.1% dollar share of the category in 2019. Additionally, across the 35 CPG categories examined, sustainability-marketed products enjoyed a sizable premium of 39% over conventionally marketed products on average. Notwithstanding the high premiums, sustainability-marketed products grew more than seven times faster than conventional products, demonstrating consumers’ strong preference for these products and their willingness to pay higher prices.

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Smart brands across categories recognize the importance of sustainability in signaling the premium nature of their products. It’s why fashion brands such as Ugg announced its package design strategy saved more than 1.7 million trees through material reduction and design adaptation.

When celebratory consumption brand Goodekind launched its Delta 8 THC Gummies, it chose packaging that reduces carbon emissions during shipping. Its 200-mg package is recyclable and reusable, and the 600-mg refill option is a lightweight mylar bag.

Upper Income and Highly Educated

The researchers say sustainable brands continue to attract shoppers in the upper-income brackets and higher education levels. Millennials, also known as Generation Y, continue to be more likely to buy sustainability-marketed products. “Leveraging the goodness of your company with compelling brand stories is an opportunity to build long-standing relationships with these important segments,” says Larry Levin, executive vice president, market and shopper intelligence, IRI. “Sustainability-marketed products are a key to winning with millennials and Generation Z.”

The millennial market isn’t the only group interested in sustainability-marketed brands. Researchers found that most sustainable purchases are actually attributed to Gen X and baby boomers.

When designing versioned packaging for locales, brand leaders will want to emphasize sustainability messages in these 10 states: New Hampshire, Maine, Massachusetts, Vermont, Connecticut, Colorado, New Jersey, Delaware, Rhode Island and Florida. Shoppers in these states spend more per capita on sustainability-marketed products than consumers in the rest of the U.S. (See graphic shared by IRI.)

Future of Sustainable Brands

Randi Kronthal-Sacco, senior scholar, marketing and corporate outreach, NYU Stern Center for Sustainable Business, opines, “It’s clear that brand managers who are not pursuing sustainability strategies will be increasingly left behind.”

Levin adds, “Leveraging the goodness of your company with compelling brand stories is an opportunity to build long-standing relationships with these important segments. In fact, the recently launched IRI New Product Pacesetters included three of the top 10 food and beverages and two of the top 10 non-foods as products that had sustainability positioning to win in the initial launch year. It’s a real testimony to see manufacturers recognizing consumer desires for sustainable products and consumers responding by driving sales of these products.”

Professor Tensie Whelan, founding director of the NYU Stern Center for Sustainable Business, explains, “Consumers recognize that they can influence brands to ‘do the right thing,’ and in these days of COVID-19, Black Lives Matter and climate change, doing the right thing has never been more important. Purchasing of sustainable products is a trend with staying power.”

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