US shoppers interested in going green

29 March 2010

CHICAGO: More than a third of US shoppers would pay a premium for environmentally-friendly goods, despite the pressures of the economic downturn.

According to a study by Mintel, the research firm, 35% of American consumers said they were willing to spend more on FMCG offerings boasting strong ecological credentials.

More specifically, it reported that only 21% of people that regularly bought organic food brands had cut back in this area, while around 20% had "switched" to cheaper options with the same ethos.

By contrast, 48% had increased their purchase levels, and Mintel predicted growth in the organic food and beverage sector as whole would stand at 20% over the period from 2010 to 2012.

This was in spite of the fact that the category saw its rate of expansion slow to 1.8% in 2009, compared with the improvement of almost a quarter recorded between 2006 and 2008.

"Organic food is a core lifestyle element for many people who may make cuts in other areas of their budget before they will turn away from organics," Mintel's report argued.

PepsiCo, the food and beverage giant, is one major organisation which has outlined an intention to place a greater emphasis on this aspect of its operations.

Procter & Gamble, the FMCG giant, similarly unveiled the "Future Friendly" initiative earlier this month, which will see it link a range of its brands with efforts to reduce water and energy use.

A recent study by Two Tomorrows, the consultancy, also suggested that Unilever and Danone were among the FMCG specialists making successful in-roads in implementing such an agenda.

Elsewhere, Mintel reported that "green" personal care products saw total demand rise by 1.2% in 2009, following on from the sales increase of 18% registered from 2006 to 2008.

To date, only a third of Americans have acquired organic or natural lines in this category, leaving considerable scope for the industry going forward.

"This segment is poised to resume rapid growth once consumer spending begins to recover from the current downturn," Mintel said.

Figures from its Global New Product Database also showed that new products with this kind of positioning accounted for just 5% of beauty and personal care launches in 2006, rising to around 10% in 2009.

"We expect to see a growing trend toward upscale green personal care products targeted to spas, salons and other high-end retail outlets in the coming years," said Haack.

However, Grail Research found in late 2009 that many manufacturers were not effectively reaching their target audience with "green" messages, suggesting a nuanced approach will be required.

Data sourced from Mintel; additional content by Warc staff