Businesses must adapt to the times as consumers are voting with their wallets and Millennials, in particular, are demanding that companies put their money where their mouth is. But research continues to show few consumers who report positive attitudes toward eco-friendly products actually follow through with their wallets. In 2013, India banned all animal testing, then banned even the import of beauty products that engage in animal testing. Chart. Im seeing quite a few climate-friendly products at the supermarket. Fifty percent of global consumers are willing to pay more for goods and services from companies that have implemented programs to give back to society, according to a new study from Nielsen. We examined over 36 categories and more than 71,000 SKUs, which accounted for 40% of CPG dollar sales over the five-year period. I can attest to the fact that sustainability isn't just something I "sorta kinda" consider--it's one of the primary reasons I either buy or don't buy from consumer brands. In the US, this number is just over the global average at 61 percent. The U.S. sustainability market is projected to reach $150 billion in sales by 2021, according to Nielsen . In, Deloitte. Create a free account and access your personalized content collection with our latest publications and analyses. In a study byHorizon Medias Finger on the Pulse, 81 percent of Millennials expect companies to make a public commitment to good corporate citizenship.. When browsing beauty products, my first question is, "Is it cruelty-free?" Sustainability is a worldwide concern that continues to gain momentumespecially in countries where growing populations are putting additional stress on the environment, says Grace Farraj, senior vice president, Public Development & Sustainability, Nielsen. That said, some of those categories saw high growth in sustainability-marketed products sanitary napkins and laundry care were among the highest, at 150%. According to the report, sales of consumer goods from brands with a demonstrated commitment to sustainability have grown more than 4% globally in the past year, while those without grew less. Consumers are also willing to pay more for chocolate products that are free-from 'undesirable' or artificial ingredients, a subset of products that makes up 15.2% of the overall chocolate category . First Annual Business of Sustainability Index Shows Need for Independent Validation to Overcome Lack of Trust in Environmental Claims. In 2018, that number had risen to about 85% . lire aussi : According to Chicago-based Nielsen's 2019 "Protein Proliferation" report, 19% of consumers surveyed said that they intended to increase their consumption of meat and seafood more than any other protein group. Inherently skeptical, Millennials will punish companies on social media not deemed to be fully transparent as well as those that pay lip service to CSR and causes important to them. I don't dream of a world full of cheap lip gloss that was tested on animals; I dream of one in which that kind of beauty product is illegal everywhere, period. It's not just a morally good idea, either; it's lucrative. For example, one study found Spanish consumers were willing to pay 22-37 per cent more for green products, but Japanese consumers were only willing to pay 8 per cent to 22 per cent more for . Personal values indeed. Tech is close behind at 74%, while gas stations and convenience stores rank lower at 51% and 54% respectively. 75% of millennials are willing to pay extra for sustainable products.3Coffee cups, palm oil, and single-use plastics are some recent products to face public discussion, which leaves businesses rethinking both the sustainability of their materials and processes, and the environmental impact and recyclability of their products. Consumers expect more than ever from the brands they buy and increasingly are rewarding companies whose services and products are both good for them and good for society. As a result, e-commerce businesses that prioritize environmentally-friendly practices will likely see a competitive advantage. Consumer-goods brands that fail to take this into account will likely fall behind.. I recently spent $38 on a t-shirt from abrand I would trust with my life: Janne Robinson. On average, more than a one third (34 percent) of the population is willing to pay more for sustainable products or services, and those willing to pay more would accept a 25 percent premium on average. Commitment to either social value or the consumers community are also important (each influencing 43% and 41% of respondents, respectively). Marketers, operators, and merchants need to take the following steps: one, penetrate the right segment; two, unlock what motivates that segment to spend money; and three, act on strategies that build loyalty through ongoing consumer engagement. This behaviour isn't just limited to the wealthy in big economies. According to a recent survey, 73% of Gen Zers are willing to pay more for sustainable products. The study, which was designed to measure consumer attitudes towards sustainability, importance of sustainability and willingness-to-pay for sustainability, also focused on 17 different product/service categories of the following sectors: Consumer Goods & Retail; Automotive; Travel & Tourism; Energy/Utilities; Financial Services; and Construction/Home. Businesses must adapt to the times as consumers . A 2015 global survey by Nielsen found that 66 per cent of respondents were willing to pay more for sustainable goods. Millennials represent the consumer market of the future, and it behooves corporations to read the tea leaves. This likely depressed the growth numbers, as many brands have become more sustainable over time. This conventional wisdom has been used by many brands as justification for not making their products more sustainable. The Global Sustainability Study 2021*, conducted by global strategy and pricing consultancy Simon-Kucher & Partners, reveals significant global paradigm shifts in how consumers view sustainability and the associated generational differences in willingness to pay for sustainable products and services. Sustainability-marketed products are growing quickly in almost all CPG categories. 76% of Americans would switch their preferred packaged goods brand if they were offsetting carbon emissions. For years, researchers have examined climate-oriented consumption to see if it wins peoples support. More demand would mean more production and lower unit price costs. Small brands in this space are also attracting the bigger players attention Unilever has purchased brands with loyal followings such as Seventh Generation, Sundial Brands, and Pukka Herbs. That's why we're seeing a shift towards sustainable farming, farm-to-table, and organic botanical ingredients.". The future for CPG, and increasingly for other categories such as apparel, is sustainable. Brands can bring their CSR efforts to life through authentic storytelling. Defending and preserving our planet is not only the right thing to do, its good business. They wanted to know more about what influences how people feel about brands, and how those feelings impact buying behavior. Question: Socially conscious Consumers In March 2015, a Nielsen global online survey "found that consumers are increasingly willing to pay more for socially responsible products. Globally, sustainability is rated as an important purchase criterion for 60 percent of consumers. By almost any measure, Millennials place a premium on corporate social responsibility (CSR) efforts. But nearly 60% are unwilling to pay more money for that eco-friendly product. Deloitte. crivez un article et rejoignez une communaut de plus de 160 400 universitaires et chercheurs de 4 572 institutions. According to our Consumers Buy The Change They Wish To See in The World report, we found that natural and organic ingredients and certifications serve as the entry level point for nearly every market when it comes to sustainability attributes consumers are searching for. Nielsen's most recent Global Sustainability Report found that 66 percent of consumers said they were willing to pay more for sustainable brands, up from 55 percent in 2014. . Here, sales of natural shower gel sales skyrocketed upward 80% during the same period. Simon-Kucher & Partners, Strategy & Marketing Consultants: Simon-Kucher & Partners is a global consulting firm specializing in TopLine Power. Seventh Generation, Sundial Brands, and Pukka Herbs. To ensure the most secure and best overall experience on our website, we recommend the latest versions of. Environmental Choice New Zealand is the official environmental label body that awards certificates and lists environmentally friendly products for green homes or businesses. Academic research has consistently identified this gap between purchase intentions and behaviours. The survey is conducted among 48 percent of female and 52 percent male respondents. A fresh one is out from McKinsey & Company and Nielsen IQ - and the punchline is that making and And a report published in May by The Toy Association and Prodigyworks notes that millennial parents want the toys and. So while not all consumers will pay more for green climate-friendly products despite the best of intentions, we can slowly nudge them to make better choices for the planet. Are you interested in testing our business solutions? e-mail: rachel.pope@simon-kucher.com We help our clients achieve growth and profit targets by applying practical, evidence-based strategies. Image:Caleb Jones/Unsplash. how much more are you willing to pay compared to regular goods) when purchasing the following categories? Almost three quarters of the . Businesses that under-appreciate the need for CSR do so at their peril. 43% of consumers want brands to be more aggressive about showing sustainable products on-site to further personalize their shopping experience. Rudominers lifelong passion is using communication to foster social change. Products that had a sustainability claim on-pack accounted for 16.6% of the market in 2018, up from 14.3% in 2013, and delivered nearly $114 billion in sales, up 29% from 2013. Are consumers willing to pay more for these? Michele Koch I don't want to support companies that don't care about how the animals and/or workers are treated, and I do want to support those that do. Statista. Businesses must adapt to the times as consumers are voting with their wallets and Millennials, in particular, are demanding that companies put their money where their mouth is. A weekly update of the most important issues driving the global agenda. I don't dream of a world with 99 cent hamburgers available at any roadside fast food place. .chakra .wef-facbof{display:inline;}@media screen and (min-width:56.5rem){.chakra .wef-facbof{display:block;}}You can unsubscribe at any time using the link in our emails. Millennials make up the fastest growing force in the marketplace. Prosek Partners Products with a sustainability claim have continued to drive growth amid the pandemic, according to a new report from IRI and the NYU Stern Center for Sustainable Business. Paying attention to public opinion on specific brands in the news or on social media. Attitudes towards sustainability also vary by industry when measuring its importance as a purchase criterion, from 74 percent in Energy/utilities to 44 percent in Financial services. An online survey of more than 1,000 consumers took place in July and found 68% of respondents said they were willing to pay more for sustainable products. In this category, catering to consumer demand for a more sustainable shampoo not only benefits the environment, but it also bolsters the bottom line of companies smart enough to give them what they want. Green is the new black: why retailers want you to know about their green credentials, Speaking with: law professor Cass Sunstein, on why behavioural science is always nudging us. Consumers have some understanding of what makes a product sustainable but it is not necessarily a consideration when making a purchase Although the majority of consumers recognise what makes a product sustainable i.e. Please create an employee account to be able to mark statistics as favorites. According to Nielsen, 66% of all consumers are willing to pay more for sustainable brands. And as social media channels continue to burgeon, the voice of younger generations will only increase the demand for sustainability. Products must meet similar standards (ISO 14020 and ISO 14024). Globally, willingness to pay for sustainable products or services is highest in US (42 percent), with these the US also representing the highest average premium (37 percent premium). Indeed, one recent report revealed that certain categories of products with . Mr Harrison says, however, that customers are becoming more canny. For the US, 22 percent of consumers indicate major changes to the behavior, but that number jumps to 55 percent when including those who say theyve at least made some modest changes. Commercial research says 46% of consumers are more inclined to buy a product if it is eco-friendly. "Despite the fact that Millennials are coming of age in one of the most difficult economic climates in the past 100 years, they continue to be most willing to pay extra for sustainable offerings--almost three-out-of-four respondents," says Nielsen. ", Deloitte, Share of consumers who were willing to pay more for sustainable goods in China as of November 2022, by category Statista, https://www.statista.com/statistics/1367681/china-consumers-willingness-to-pay-more-for-sustainable-goods/ (last visited March 02, 2023), Share of consumers who were willing to pay more for sustainable goods in China as of November 2022, by category [Graph], Deloitte, January 18, 2023. In more than 90% of consumer packaged goods categories, sustainability-marketed products grew faster than their conventional counterparts. In one survey, 66% of all respondents, and 75% of millennial respondents, said they consider sustainability when making a purchase. 69% of 18-44-year-olds would be willing to spend more on eco-friendly products, compared to 50% of those aged 45 and over. In a free market economy, it is very difficult to force people to pay more for products. Surface Studio vs iMac - Which Should You Pick? Good Environmental Choice Australia is a similar organisation. For this reason, the demand for sustainable foods is growing in the market. Millennials gave an even more impressive showing, with 73 percent indicating a similar preference." For years, researchers have examined climate-oriented consumption to see if it actually wins consumer support. For more details, review our .chakra .wef-12jlgmc{-webkit-transition:all 0.15s ease-out;transition:all 0.15s ease-out;cursor:pointer;-webkit-text-decoration:none;text-decoration:none;outline:none;color:inherit;font-weight:700;}.chakra .wef-12jlgmc:hover,.chakra .wef-12jlgmc[data-hover]{-webkit-text-decoration:underline;text-decoration:underline;}.chakra .wef-12jlgmc:focus,.chakra .wef-12jlgmc[data-focus]{box-shadow:0 0 0 3px rgba(168,203,251,0.5);}privacy policy. From there, it becomes more specific and fragmented. In the past year alone, sales of consumer goods from brands with a demonstrated commitment to sustainability have grown more than 4% globally, while those without grew less than 1%. Shoppers once selected grocery products based simply on price or brand, but now attributes such as climate-friendly or eco-friendly are part of the consideration. World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use. Our eBook "What ESG means to you and your consumers in 2022" is designed to help "Our sustainability. Sustainable materials cost more to grow and manufacture, reputable third-party certifications add further costs and using organic materials is more expensive than alternatives such as mass-produced chemicals. not how pretty the blush is. Millennials want to know what companies are doing to make the world a better place. However, as demand grows for sustainable products and they become the expectation rather than the exception, sustainability will become table stakes and hygiene factors, said Jain. On a global scale, the percentage of consumers willing to pay a premium for. Tech is close behind at 74 %, while gas stations and convenience stores rank at... 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