Green brands evolve

25 April 2011

NEW YORK: Companies such as Clorox, Procter & Gamble and Method Products are taking divergent approaches to building green brands.

Clorox rolled out the pioneering Green Works range in 2008, and saw it post revenues of over $100m in its first 12 months, before witnessing a contraction to roughly $60m a year.

Heidi Dorosin, vp, marketing, of Clorox's cleaning division, told the New York Times that this was probably at least in part a result of the fact overall category sales had declined 3% in the recession.

Price perceptions might also have exerted a deleterious effect, and Clorox now ensures the cost charged to shoppers is never 20% more than typical rivals.

However, David Donnan, a partner at consultancy AT Kearney's consumer products practice, identified a gap dividing attitudes and behaviour.

"Every consumer says, 'I want to help the environment, I'm looking for eco-friendly products,'" he said.

"But if it's one or two pennies higher in price, they're not going to buy it. There is a discrepancy between what people say and what they do."

Research by Sanford C Bernstein & Company based on Nielsen Company data covering nearly 4,300 items in 22 segments, and excluding Wal-Mart sales, supported such assertions.

It reported demand for eco-friendly lines fell at a faster pace than most consumer goods categories from March 2006 to March 2011.

Stephen Powers, an analyst at Bernstein, added smaller challengers had proved stronger than established firms.

"You see disproportionately negative impact from products like Green Works, out of the big blue-chip companies that have tried to layer a green offering on top of their conventional offering, and a relatively better performance from the niche players," he said.

"In terms of the big players like Clorox, there's no doubt that they've de-emphasized the brands relative to their early aspirations, and that's reflective of what they are seeing from the consumer."

In apparent evidence of this, Clorox slashed the adspend behind Green Works from $25m in 2009 to $1.4m in 2010, per Kantar Media.

SC Johnson's Nature's Source, unveiled in 2009 and housing environmentally-focused extensions of ranges including Windex and Scrubbing Bubbles, also cut its entire $15.4m ad budget in 2010.

Elsewhere, Arm & Hammer Essentials multi-surface cleaner, made by Church & Dwight and allowing customers to refill existing bottles with cartridges, was withdrawn after less than three years on store shelves.

"Arm & Hammer Essentials cleaners may have been ahead of their time," Bruce Fleming, Church & Dwight's chief marketing officer, said.

"We haven't given up on launching innovative, earth-friendly products; we've just taken a step back to think about how and when consumers will be ready."

More positively, Method Products, combining ecological cleaning credentials and striking design, saw sales, excluding discontinued lines, rise 20% last year.

Eric Ryan, one of the firm's co-founders, suggested "pure play" operators retain an advantage measured against bigger corporations.

"If you were a hardcore 'X' user and the green brand came out and it was on sale, you gave it a shot, but you really weren't committed to the movement," he said.

"We brought in the early adopters that were committed to either making a shift for the environment or for the health of the home environment, and we've built it over time."

Len Sauers, Procter & Gamble's vp, global sustainability, revealed research conducted when many green offerings first appeared showed "not many people bought them."

P&G's eco-friendly detergent Tide Coldwater has been promoted more on the basis of saving money by reducing energy expenses, and has seen sales climb 24% in the last year as a result.

The company estimates between 15% and 20% of shoppers may pay a price premium, or accept a loss in performance, for eco-friendly goods, but 70% would not.

Data sourced from New York Times; additional content by Warc staff