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Center forSustainable Business

Sustainable Market Share Index™

Research on 2015-2020 IRI Purchasing Data Reveals Sustainability Drives Growth, Survives the Pandemic

Randi Kronthal-Sacco Tensie Whelan Updated: July 16, 2020

1

Center for Sustainable Business

Sustainable Market Share Index™: Executive Summary

We reviewed consumer purchasing of sustainability-marketed products in 36 CPG categories

comprising ~40% of the total CPG market* ($). Our findings are:

• Sustainability-marketed products delivered 54.7% of CPG market growth (2015-2019) despite representing only 16.1% share of the category($) in 2019, up +2.4 ppts vs. 2015 (Pgs. 5,6 ). Sustainability-marketed products grew 7.1x faster than products not marketed as sustainable (Pg. 7).

• Sustainabilty marketed products continue to grow despite the COVID-19 pandemic (Pgs. 10-13).

• The market share of sustainability-marketed products aligns along a continuum based on perceived category functionality or efficacy (Pg. 15). Even in categories with low shares, shares of sustainability-marketed products increased.

• Sustainability-marketed branded products enjoy a significant price premium of 39.5%** vs. their conventionally-marketed branded counterparts, with a widening premium of +5.3 pts vs. 2014 (Pgs. 17-20).

• Per capita, the top 5 states for purchases of sustainability-marketed products are NH, ME, MA,VT and CT (Pg. 22).

• Upper income, millennials, college-educated and urban consumers are more likely to buy sustainability-marketed products. In addition, Middle Income, Baby Boomers and Gen Xers contribute a significant percent of sustainable sales (Pgs. 24-27).

*Excluding alcohol and tobacco. **Weighted by $ Sustainable Sales of categories examined 2


Sustainable Market Share Index™: Research Questions

Consumer packaged goods (CPG) companies are responding to changing generational expectations, including for more sustainable product offerings, yet understanding of sustainable purchasing trends is limited.

The NYU Stern Center for Sustainable Business partnered with IRI, who provided the data pro bono, to assess the following:

1. Have purchases of sustainable products increased over time? 2. Have sustainable purchases been impacted by COVID-19? 3. Are there specific product categories for which the purchases of more sustainable product

options out- or under-perform less sustainable alternatives? 4. What is the impact of price on purchases of sustainable products?

5. Are there geographical differences in sustainable purchasing? 6. What is the demographic profile of the sustainable purchaser?

Note: This study represents an updated and significantly expanded review of consumer purchasing first presented in March 2019. 3


Sustainable Market Share Index™: Research Question 1

Research Question 1: Have purchases of sustainable products increased over time?

Research Result: Not only are sustainability-marketed products growing but they also are contributing to a disproportionate share of the CPG category growth.

4


Sustainable Market Share Index™: Sustainable Market Share

Across all categories studied, sustainability-marketed products

account for 16.1%* share of market ($) in 2019, up from 13.7%* in 2015.

25%

20% 16.1%

13.7% 15%

10%

5%

0% 2015 2019A

nnua

l $ S

hare

of S

usta

inab

ility

-M

arke

ted

Prod

ucts

5* Shares updated due to CSB & IRI re-categorizations; based on 36 categories examined


Sustainable Market Share Index™: Contribution to Growth

46.9%

Despite the fact that sustainability-marketed products are 16.1%* of the market, they delivered 54.7% of the CPG market growth (2015-2019).

$ Share of Market $ Share of Market Growth (2019) (2015-2019)

54.7% 45.3%

16.1%

83.9%

Sustainability-marketed products Sustainability-marketed products Conventionally-marketed products Conventionally-marketed products

6 * Shares updated due to CSB & IRI re-categorizations; based on 36 categories examined


Sustainable Market Share Index™: Growth Rate

46.9%

Sustainability-marketed products grew 7.1x faster than conventionally-marketed products, and 3.8x faster than the CPG market.

Inde

x (B

ase

Year

201

5 =

100)

130

125

120

115

110

105

100 2015 2016 2017 2018 2019

Sustainablility-marketed products Category Conventionally-marketed products

Sustainability-marketed 4-YR CAGR: 5.86%

Total Market 4-YR CAGR: 1.56%

Conventionally-marketed 4-YR CAGR: 0.83%

Note: Based on 36 categories examined

7

Diapers

Carbonate

d Bev

erages

Soap

Skin C

are

Cookies

T oothp

aste

Fresh B

read &

Rolls

Pet Tre

ats

Sanita

ry Nap

kins

Laun

dry Care

Fl oorC

leane

rs

Facia l T

issue

Dish Dete

rgen

t

Vitamins

Weig

htCon

trol

Crack

ers

Sal ty S

nack

s

F ood a

nd Tras

h Bag

s

Chocola

te Can

dy

Energy

Drin

ks

Pet Fo

od

Milk

Yogurt

Paper

Towels

Toilet

Tissue

Cups an

d Plat

es

Deodoran

t

Di nner E

ntrees

-FZ

Cereal

Bo ttled

Juice

s

Co ff ee

Househ

old C

leane

r

Paper

Napkin

s

Soup

Natural Ch e

ese

Laun

dry Dete

rgent


Sustainable Market Share Index™: Category Performance

In ~90% of individual product categories, the growth of sustainability-

marketed products outpaced the growth of their respective categories.

-30.00%

-10.00%

10.00%

30.00%

50.00%

70.00%

90.00%

110.00%

130.00%

150.00% Sustainability-marketed products

Category

% C

hang

e in

Sal

es (2

015-

19) ** * * *

*Note: Actual sales growth for sustainability-marketed products in these categories from 2015-19 were 1019%, 901%, 545%, 449%, 280%, 197% and 160%, respectively

* *

* Paper towels, cups and plates, toilet tissue and paper napkins lost share to private label. Because we did not have visibility into private label to ascertain if there were claims regarding 8 sustainability, we had to assume they were not marketed as sustainable. So, in fact, if private labels were making claims of sustainability (as we have observed they do on shelf), these categories may not have seen share decline of sustainability-marketed products .



Research Question 2:

Have sustainable purchases been impacted by COVID-19?

Research Result: • Purchases of sustainability marketed products continue to grow in the face of the

pandemic.

9

Week E

nd 01

-05-20

Week E

nd 01

-12-20

Week E

nd 01

-19-20

Week E

nd 01

-26-20

Week E

nd 02

-02-20

Week E

nd 02

-09-20

Week E

nd 02

-16-20

Week E

nd 02

-23-20

Week E

nd 03

-01-20

Week E

nd 03

-08-20

Week E

nd 03

-15-20

Week E

nd 03

-22-20

Week E

nd 03

-29-20

Week E

nd 04

-05-20

Week E

nd 04

-12-20

Week E

nd 04

-19-20

Week E

nd 04

-26-20

Week E

nd 05

-03-20

Week E

nd 05

-10-20

Week E

nd 05

-17-20

Week E

nd 05

-24-20

Week E

nd 05

-31-20

Week E

nd 06

-07-20

Week E

nd 06

-14-20


Sustainable Market Share Index™: 2020 Dollar Sales

Both sustainability-marketed and total category sales grew significantly and similarly the week ending March 15th

Inde

x vs

Wee

k of

1-0

5-20

* Sustainability-Marketed Products and Total Category $ Index

180.00

160.00

140.00

120.00

100.00

80.00

* Index vs 100 Category $ Sustainability-Marketed Products $ 10

8 Wee

ks End

2-23

-20

2019

Week E

nd 03

-01

Week E

nd 03

-08

Week E

nd 03

-15

Week E

nd 03

-22

Week E

nd 03

-29

Week E

nd 04

-05

Week E

nd 04

-12

Week E

nd 04

-19

Week E

nd 04

-26

Week E

nd 05

-03

Week E

nd 05

-10

Week E

nd 05

-17

4 Wee

ks End

6-14

End

Year


Sustainable Market Share Index™: Sustainable Shares: COVID-19

Shares of sustainability-marketed products grew significantly the week of March 15th and have continued

to maintain share through mid-June Sustainability-Marketed Product Share

24.00%

22.00%

16.13%

16.39%

16.87%

17.38%

19.32%

16.81%

16.86%

16.87%

16.53%

16.94%

16.94%

16.64%

16.40%

16.37%

16.18%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

11

Shar

e ch

ange

wee

k en

ding

Mar

ch 1

5 vs

. prio

r per

iod

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0.00

-0.50

-1.00


Sustainable Market Share Index™: March 15 share performance

Paper goods, skincare and food items drove the

greatest week to week share increases (week ending March 15 vs prior week).

4.00 C

erea

l D

eodo

rant

C

ooki

es

San

itary

Nap

S

oup

Cra

cker

s D

iape

rs

Floo

r C

lean

ers

Laun

dry

Car

e Fo

od &

Trs

h Bg

P

et T

reat

s E

nerg

y D

rinks

To

othp

aste

La

undr

y D

et

Car

b B

ev

Vita

min

s D

in E

ntre

es

Sal

ty S

nack

s C

ups

and

Plat

es

Pet

Foo

d D

ish

Det

erge

nt

Bot

tled

Juic

es

Cho

cola

te

Yog

urt

Nat

ural

Che

ese

Hou

se C

lean

er

Fres

h B

read

Fa

cial

Tis

sue

Milk

S

kin

Car

e P

aper

Nap

S

oap

Toile

t Tis

sue

Wei

ght C

ontro

l C

offe

e P

aper

Tow

els

12


Sustainable Market Share Index™: YTD Sustainable Market Share

Sustainability-marketed products now account for 16.8% YTD, +.6pts vs. 2019

25% uc

t 20%

of S

usta

inab

ility

-Pr

ods

15% 13.66%*

hare

rk

eted

10%

Ma

5%

Ann

ual $

S

0% 2015 2019 2020 YTD**

16.13%* 16.77%**

* Shares updated due to CSB & IRI re-categorizations 13 ** January-June 15th, 2020




Are there specific product categories where the purchases of more sustainable product options out or underperform less sustainable alternatives?

Research Result: • Yes. Categories that demand high functionality (e.g., detergent) do not have a large

percentage of sustainable purchases, but nevertheless experienced share growth. • Conversely, categories with low functionality demands (e.g., dairy) have higher category

consumption.

14

F ood a

nd Tras

h Bag

s

Carbonate

d Bev

erages

Energy

Drin

ks

Pet Tre

ats

Cookies

Paper

Towels

Pet Fo

od

Laun

dry Care

Chocola

te Can

dy

T oothp

aste

Diapers

Paper

Napkin

s

Cups an

d Plat

es

Vitamins

Sal ty S

nack

s

Weig

htCon

trol

Fl oorC

leane

rs

Fresh B

read &

Rolls

Sanita

ry Nap

kins

Crack

ers

Skin C

are

Soap

Bo ttled

Juice

s Milk

Facia l T

issue

Yogurt

Toilet

Tissue

Deodoran

t

Househ

old C

leane

r

Dish Dete

rgen

t

Di nner E

ntrees

-FZ

Cereal

Natural Ch e

ese

Co ff ee

Laun

dry Dete

rgent

Soup


Sustainable Market Share Index™: Shares of Sustainable Products

2019

Sus

tain

abilit

y-M

arke

ted

Prod

ucts

$ S

hare

of

Cat

egor

y

80%

70%

60%

50%

40%

30%

20%

10%

<5% Share Diapers Cookies Sanitary Napkins ToothpasteChocolate Laundry Care Laundry Detergent Pet Treats Pet Food Energy Drinks Carbonated Bev Trash Bags

5%- 20% Share Cereal Crackers Fresh Bread Floor Cleaner Soup Weight Control Paper Towels Salty Snacks Vitamins Frozen Dinner Dish Detergent Household Cleaner Deodorant Cups and PlatesPaper Napkins

>20% Share Toilet Tissue Yogurt Facial Tissue Milk Bottled Juice Soap Coffee Natural Cheese Skin Care

0%

15



Research Question 4: What is the impact of price on purchases of sustainable products*?

Research Result: • Despite significant price premiums, sustainability-marketed products grew far faster than

the conventionally branded players and had lower price sensitivity in 2/3rds of the categories examined.

Analysis conducted was among branded players and excluded store brand/private label; based on 36 categories examined 16


Sustainable Market Share Index™: Price Premium

Sustainability-marketed products enjoyed a sizeable price premium at 39%* over conventionally-marketed products, and increased +5.3 pts since 2014

50%

Sust

aina

bilit

y-M

arke

ted

Prod

ucts

’ Pric

e Pr

emiu

m v

s. C

onve

ntio

nally

-Mar

kete

d Pr

oduc

ts

45% 39.46% 40% 34.21% 35% + 5.3pts 30% 25% 20% 15% 10% 5% 0%

2014 2018 17

*Weighted by $ Sustainable Sales of categories examined; analysis excluded store brand/private label

s e ste

r gs l l es s e s es ns t k se t ces

Coffee s t s s d e s s ks cks Mi s

Soap p s s t oen nen a ressu

e r r ee gen l oll tr r n oolSou t rur

owe eackenca aan a e e a an ee t

Cookia tki kiiYogam ar pagg p n an r el

y Cnaad & R i

shB ri

oco aCeo t Fap apd Jur t

Dia o lrr rey D hps &

P rne e od t Tht C eveeki r T ly Sit l C r El T d Cr N t

y Nt r Pet rVi e leS h C ndrC TooDe Peagy D e

shD h Ce aa t e d Brre g lll

Pap r auottne ho r d T eci nFlooaap aiu We u DinS rr a tt

shBnd LB euse iE a Ci anFP

Foods anD tN aau S ono eL H r bF r

Ca


Sustainable Market Share Index™: Price Premium by Category

2018

Sus

tain

abilit

y-M

arke

ted

Prod

ucts

’ Pric

e Pr

emiu

m/D

isco

unt

Price premiums ranged from 3% to over 150%. Only a few categories had a price discount vs. conventionally-marketed products.

175% 165%

150% 134%135%

123% 125% 112%114%

100% 100%

80%74% 75%

56% 50% 42% 46% 47% 49% 50% 50%

14% 18% 20% 21% 22% 22% 23% 28% 29% 32% 32% 35%

25% 3% 3%

0%

-5%-25% -19%

-33%-27% -50%

-58%-75%

18


Sustainable Market Share Index™: Growth of Sustainable Branded Players

Among branded players, sustainability-marketed products grew over 7x faster than conventionally-marketed products, indicating consumers’

25% willingness to pay higher prices. 21.37%

$ S

ales

% G

row

th (E

x-P

rivat

e La

bel)

2014

-201

8

20%

15%

10% 7X 5% 2.95%

0%

Sustainability-Marketed Products Conventionally-Marketed Products 19

Diapers

Dinner E

ntrees

Cereal

Pet Food

DishDete

rgent

Pet Trea

ts

Fresh B

read and

Roll

s

Natural

Che

ese

House

holdClea

ner

Energy D

rinks

Weig

ht Con

trol

Carbona

ted Beve

rages

C ookie

s

Choco

late

Yogurt

Crackers

Coff ee

Salty Snac

ks

Bo ttled

Juice

s

Sanitary

Napkins

Soup

Milk

Deodo

rant

Paper T

owels

Facial T

issues

Vitamins

Skinca

re

Laun

dry C

are

Cups &

Plates

Laun

dry D

eterge

nt

T oothp

aste

Fl oorC

leane

rs Soap

F ood Tras

h Bags

Paper N

apkins

Toilet

Tissue


Sustainable Market Share Index™: Price Sensitivity

Sustainability-marketed products had lower price sensitivity in most

Diff

eren

ce in

Ela

stic

ity b

etw

een

Sust

aina

bilit

y-M

arke

ted

and

Con

vent

iona

lly-M

arke

ted

Prod

ucts

categories studied: Food categories had the greatest price leverage.

6 Less Sensitive to Price More Sensitive to Price 5

4

3

2

1

0

-1

-2

-3

Price sensitivity is the % change in volume due to a 1% change in price. 20




Are there geographical differences in sustainable purchasing?

Research Result: • Yes. The top 5 states in terms of per capita* basis spending of sustainability-marketed

products are New Hampshire, Maine, Massachusetts, Vermont, and Connecticut; the bottom five are Mississippi, Utah, Texas, Alabama and Kentucky

• Measured by state-wide purchases, however, California, Florida, Texas, New York, and Pennsylvania top the ranking in terms of total sustainable dollars spent due to the size of the states.

21*STI: PopStats; based on 36 categories examined


Sustainable Market Share Index™: Geography

22




What is the demographic profile of the sustainable purchaser*?

Research Result: • Millennials, upper income, college-educated and more urban cohorts are more likely to

buy sustainability-marketed products. • Baby Boomers, Gen Xers, upper and middle income, college educated and urban cohorts

account for the bulk of the sustainable dollars spent.

Analysis conducted using IRI HH panel data; based on 35 categories examined 23


The younger the household, the more likely they were to buy sustainability-marketed products. However, most sustainability-marketed product purchases came from

Sustainable Market Share Index™: Generational Cohorts

Gen X and Boomers.

Total CPG Sustainable Sales

Composition

Millennials 25%

Generation 32%X

Boomers 33%

Seniors & 10%Retirees

Index 120+ Index 80-120 Index <80 24

Chart read as: Millennials purchased a significantly higher percent (>1.2x) of their Carbonated Beverage purchases on sustainability-marketed products, than did Average HHs.


The higher the education, the more likely they were to buy sustainability-marketed

Sustainable Market Share Index™ : Household Education

products. Most of the sustainability-marketed product sales came from College graduates or those with some college education.


Composition*

Post Graduate 17%

School

Graduated 33%College

Some 25%College

Graduated 16%High School

Some High School or 2%

Less

* 7% had no female present

Index 120+ Index 80-120 Index <80

Chart read as: Female HH who attended Post Graduate School purchased a significantly higher percent (>1.2x) of their Carbonated Beverage purchases on sustainability-marketed products, than did Average HHs.

25


The higher the household income, the more likely they were to buy sustainability-

Sustainable Market Share Index™ : Income Tiers

marketed products. Upper/middle income made up the highest percent of sustainability-marketed product dollars spent.


Composition

Upper 38%

Middle 39%

Lower 22%


Chart read as: Upper Income Households purchased a significantly higher percent (>1.2x) of their Carbonated Beverage purchases on sustainability-marketed products, than did Average HHs.

26


The more urban the residence, the more likely the purchases of sustainability-

Sustainable Market Share Index™ : Urbanicity

marketed products. County A accounted for just under half of the total CPG sustainability-marketed dollars spent.


Composition

44%

30%

26%


Coun

ty C

/D

Coun

ty B

Co

unty

A

Chart read as: County A purchased a significantly higher percent (>1.2x) of their Carbonated Beverage purchases on sustainability-marketed products, than did Average HH’s.

27


Additional Research Planned

Early 2021, the NYU Stern Center for Sustainable Business will release: • The full year impact of COVID-19 on sustainability-marketed

product purchases. • The impact of a narrowing price gap between sustainability-

marketed products and conventionally-marketed products on volumes as well as a detailed analysis of price elasticity.

28


About the NYU Stern Center for Sustainable Business

The NYU Stern Center for Sustainable Business was founded on the principle that sustainable business is good business; delivering better financial results while protecting the planet and its people. We aim to help current and future business leaders embrace proactive and innovative mainstreaming of sustainability, resulting in competitive advantage and resiliency for their companies as well as a positive impact for society.

Randi Kronthal-Sacco is a Senior Scholar, Marketing and Corporate Outreach for the NYU Stern Center for Sustainable Business. Ms. Kronthal-Sacco was a senior executive at Johnson & Johnson and is a Stern alumna.

Tensie Whelan is a Clinical Professor at NYU Stern and Founding Director of the NYU Stern Center for Sustainable Business.

Please contact [email protected] or [email protected] with any comments or questions. 29

mailto:[email protected]

mailto:[email protected]


Acknowledgments

The NYU Stern Center for Sustainable Business would like to thank the IRI organization for the generous donation of its data.

A special thank you to IRI’s Larry Levin, Executive V.P., Market and Shopper Intelligence. We also are grateful for the support of Jeanne Livelsberger, Executive Vice President and co-Leader of IRI’s Market and Shopper Intelligence Center of Excellence, and Sheila Noojibail, Vice President and leader of IRI’s Shopper Intelligence Platform.

We would like to acknowledge the research support of NYU Interns Dorea Novaez, Alexandra Walstad, Samuel Wallace, Ethan Ou, Jessica Tou, Patrick Wu, and Anirudh Dave as well as market research consultants Elena Kanner and Biren Shah.

30


Appendix

31


Methodology

Data:

• IRI Point of Sale and HH panel data in all measured channels in U.S. excluding alcohol and tobacco

Selection Criteria:

• 36 categories examined held the largest dollar volume; in a few cases, smaller categories were included to ensure fair representation of all major CPG segments

• 73,293 products reviewed; products with 0.00 dollar share of category were not considered unless identified as organic.

• Due to lack of visibility into private label product claims, private label was not included as sustainability-marketed, with the exception of organic private label in the food categories.

Sustainability-Marketed Products Determination:

• Identified all skus for each category marketed as sustainable with on-package communication, e.g. 3rd party certification (e.g. USDA Organic), containing organic ingredients, no phosphates, no phthalates, etc.

• Sustainability determination focused on the product itself, not the recyclability of the package.

• A very conservative approach was adopted. For example, the following was not considered sustainable:

• Natural with no other sustainable identification

• Recyclable packaging

Other Assumptions/Information:

• Products that were deemed sustainability-marketed in 2018 were considered sustainability-marketed in 2015. This likely depressed the growth numbers.

• We made no attempt to assess if products marketed as sustainable were, in fact, sustainable. Instead, we focused on whether the marketing of a product as sustainable would drive purchase.

32All estimates and analysis in this paper based on Information Resources Inc., data are by the authors and not by Information Resources, Inc.

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