- 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. As CPG sales spiked during periods of pantry-stocking, dollar sales of sustainability-marketed products jumped 56% during the week that ended on March 15.
- Overall, from 2015 to 2019, sustainability-marketed products represented 54.7% of the total CPG market growth, even though they make up only 16.1% of its products. The report looked across 35 CPG categories, and on average, products with a sustainability claim also had a price premium of 39% compared to conventionally marketed products.
- When it comes to demographics, the report found that millennial, college-educated, higher income and urban consumers are more likely to buy sustainable products.
When consumers raced to grocery stores and cleared out shelves to stock their pantries during quarantines, many were still taking the time to buy based on sustainability, continuing a trend that has steadily increased in recent years and is on track to continue.
"Consumers recognize that they can influence brands to 'do the right thing,' and in these days of COVID-19, #BlackLivesMatter and climate change, doing the right thing has never been more important. Purchasing of sustainable products is a trend with staying power," Tensie Whelan, professor and founding director of the NYU Stern Center for Sustainable Business, said in a statement.
As reports continue to show this trend of consumers putting more value in food companies' ethical behavior — even if it means higher prices — more companies could take it into consideration when making future plans.
Larry Levin, executive vice president of Market and Shopper Intelligence at IRI, said in the report that sustainability-marketed products are key in winning over millennials and Generation Z. Leveraging that, Levin said, is an "opportunity to build long-standing relationships with these important segments."
The report tracked sales growth in a variety of food and beverage sectors from 2015 to 2019, including milk, yogurt, energy drinks, chocolate candy, coffee, salty snacks, crackers, bottled juices, natural cheese, cereal, frozen dinner entrees and fresh bread. In every category, the growth of products with sustainability claims outpaced that of the overall category. The biggest difference in sales was in sustainably-marketed carbonated beverages, soup and cookies. These products all grew more than 100% from 2015 to 2019 compared to their overall categories, each of which grew less than 10%.
This study is far from the only one showing similar results. In a survey from Kearney released in April, nearly half of consumers said the pandemic has made them more concerned about the environment. About 11% said they have shifted their purchases based on environmental claims within the past year.
Sustainability was a strong trend before the pandemic as well. A study from Nielsen in 2018 found almost half of U.S. consumers are likely to change what they buy to align with environmental standards.
Many CPG companies, including Nestlé, Lindt, Mars, Mondelez and Cargill, have made large investments in sustainability. Some are also working on sustainable paper packaging, like Diageo, PepsiCo and Unilever. However, many haven't followed through on their big promises. Greenpeace reported CPG companies have not shown any significant progress on their sustainability goals.
As studies continue to show increased consumer interest in more sustainable products, companies will likely step up their marketing on how environmentally friendly they are, and feel pressured to follow through on bigger sustainability pledges.