It's Official: Customers Prefer Sustainable Companies
An authoritative new study finds that regardless of product category, brands with legitimate sustainability claims do better.
When we built the Barefoot Wine brand, we lived and died on the latest Nielsen ratings. So if you are in the packaged goods space, you want to pay careful attention to the latest Nielsen report "How and Why Sustainability is Gaining Momentum with Customers."
For the purposes of this report, Nielsen chose to study purchases of three of the most common fast-moving consumer goods, coffee, chocolate and bath products, because of their differences from each other. What they found was that products with sustainability claims generally outperformed the growth rate of total products in their respective categories.
For instance, based on sales for the 52-week period ending 3/24/2018, the weighted average of all three categories showed 3 percent more growth for sustainable products. Sustainable coffee 11 percent more, sustainable chocolate 2 percent more and sustainable bath products 13 percent more than the total of their respective categories.
In the case of coffee, brands advertising environmental sustainability can claim greater retail shelf placement because of increasing demand. Having built a retail brand ourselves, and having had to fight over precious shelf placement, we can attest that this is a very big deal. Better shelf placement generally means better sales.
According to the Nielsen report, "Brands that are able to strategically connect (sustainability) to actual behavior are in a good place to capitalize on increased consumer expectation and demand." The report adds, that "Sustainability claims on packaging must also reflect how a company operates inside and out."
In other words, customers want sustainable products from sustainable companies. This includes everything from labor practices to the environmental impact of their production. We caught up with Tim Grosse, who has written extensively on this subject and is the CEO and founder of E Squared Energy Advisors. He says, "This new consumer sustainability report from Nielsen reinforces what we have been advocating for in terms of sustainable energy programs and technologies that reduce the planet's carbon footprint."
He further states, "This is official validation for how energy and sustainability work together to boost your top-line revenue growth and your profitability at the same time. Your business can ride this tsunami wave by gaining market share from the rapidly growing number of environmentally responsible consumers or your business can lag the market and peers by ignoring this trend."
For years we have been saying consumers vote with their purchases. It's nice to see the world's most respected sales research and analytics company finally prove it and do so in terms that any company can understand, sales! With the rapid increase in climate-related news, damage and hazards to health, this new mega-trend can do nothing but accelerate.
The Fourth National Climate Assessment mandated by Congress a decade ago was just released. According to Tony Barboza of the Los Angeles Times, the report by 13 federal agencies found that climate change is now being felt in communities across the country. "It projects widespread and growing devastation as temperatures and sea levels rise with worsening wildfires and more intense storms bringing cascading harmful effects to our ecosystems infrastructure and society." The report calls for immediate steps to reduce carbon emissions.
In other words, consumers are already being affected by the purchases they have made in the past. They know they must change their spending habits now for the sake of their own health and that of their children. Oh, and that millennial market that everyone has been trying to crack? Who has the most to lose? The millennials of course! They and the next generations behind them will live the longest in an increasingly compromised environment.
As the Nielsen report concludes, "No matter what, sustainability is no longer a niche play: your bottom-line and brand growth depend on it."
But as Grosse says, "Energy efficient alternatives, such as chiller and HVAC optimization, LED lighting retrofits, and solar energy are a huge piece of the sustainability puzzle. With the recent price shifts, these technologies are very economical as well. In fact, many solutions provide almost immediate positive cash flow while dramatically lowering a company's carbon footprint." He adds, "Companies that embrace new energy technologies enjoy a triple-bottom-line win in productivity, profits, and planet."
So now, energy efficiency is not only desirable, it's sustainable, and it's doable!
The Nielsen report says "Unmet consumer needs exist across many categories. Strategically aligning your business and marketing strategy to meet that unmet demand will ensure that the next big sustainability wave is a market win for your brand."
It's time to jump on the energy and sustainability bandwagon now … or miss the boat!
Michael Houlihan and Bonnie Harvey, founders of Barefoot Wine, co-authors the NYT’s bestseller, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand, and The Entrepreneurial Culture, 23 Ways to Engage & Empower Your People. Both recommended by CEO Library for CEO Forum, the C-Suite Book Club, and widely used in school of entrepreneurship. Contact: firstname.lastname@example.org for keynote speaking, trainings or consulting.