resuming the us sustainability agenda

September 30, 2021

RESUMING THE US SUSTAINABILITY AGENDA

A Better World Through Better Business

2© 2021 Information Resources Inc. (IRI). Confidential and Proprietary.

Randi Kronthal-SaccoSenior Scholar, Marketing & Corporate Outreach

NYU Stern Center for Sustainable Business

25+ Year CPG Career

• Kraft Foods: Director, Desserts Division

• Johnson & Johnson: Global VP, Women’s Health & Johnson’s Baby

• Rodan + Fields: Chief Marketing Officer

• Member, Board of Directors, GlobeScan


Sustainable Market Share Index™


Methodology

• Partnered with IRI on Point of Sale (POS) HH panel and E-market insights data

• Examined to date:

– 36 categories; 40% of total U.S. dollars volume, excluding alcohol and tobacco

– 5 years: January 2015 through December 2020

– Reviewed over 73,000 products

• Identified all SKUs for each category marketed as sustainable with on-package communication

(e.g., third-party certification, USDA Organic, no phosphates, plant-based, no-phthalates, FSC)

• Analyzed $ Sales Data

3




Research Question 1

Have purchases of sustainable products increased over time?

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


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.

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

13.7%

16.1%

2015 2019

Annual $ Share of Sustainability-Marketed Products


Sustainable Market Share Index™ Contribution to Growth

Despite the Fact That Sustainability-Marketed Products Are 16.1%* of the

Market, They Delivered 54.7% of the CPG Market Growth (2015 – 2019).

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

45.3%

54.7%

16.1%

83.9%

Sustainability-Marketed Products Conventionally-Marketed Products

$ Share of Market Growth

(2015 – 2019)

$ Share of Market

(2019)


Sustainable Market Share Index™ Growth Rate

Sustainability-Marketed Products Grew 7.1x Faster than

Conventionally-Marketed Products, and 3.8x Faster than the CPG Market

100

105

110

115

120

125

2015 2016

Sustainability-Marketed Products

2017

Category

2018 2019

Conventionally-Marketed Products

Total Market4-YR CAGR: 1.56%

Conventionally-Marketed

4-YR CAGR: 0.83%

Sustainability-Marketed

4-YR CAGR: 5.86%

Ind

ex

(Ba

se

Year

20

15

=1

00

)

Note: Based on 36 categories examined


Research Question 2

Have sustainable purchases been impacted by COVID-19?

Purchases of sustainability marketed products continue to grow in the face of the pandemic.





Total Growth

Category Growth Rates from Previous Year (35 Categories)

0.92% 0.74%

1.73%

2.86%

11.58%

2016 2017 2018 2019 2020



150

145

140

135

130

125

120

115

110

105

100

2020 Dollar Sales

Sustainability-Marketed Products and Total Category Sales Grew Significantly

and Similarly, With the Greatest Consumption Increase Occurring in March

Sustainability-Marketed Products and Total Category $ Volume by Month

36 Categories Examined

Index

off

ofJanuary

Category $

Sustainability-Marketed Products $

4 WE 2-23-20

4 WE 1-26-20

4 WE 3-22-20

4 WE 4-19-20

4 WE 5-17-20

4 WE 6-14-20

4 WE 7-12-20

4 WE 8-9-20

4 WE 9-6-20

4 WE 10-4-20


Sustainable Market Share Index™ 2020 Market Share

Sustainability-Marketed Products Now Account for 16.8% of Purchases

36 categories examined

13.7%

16.1%16.8%

2015 2019 2020

Annual $ Share of Sustainability-Marketed Products



* 36 categories examined / Not included in earlier share statements.

2020 Carbon LabelingSustainable Market Share Index™

Made with 100%certified renewable

electricity.


Research Question 5

What is the impact of price on purchases of sustainable products?*

Despite significant price premiums, sustainability-marketed products grew far faster than conventionally branded players and had lower price sensitivity in two thirds of categories examined.


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


How much more would you pay for sustainable products?



+ 5.3pts

Price Premium

Sustainability-Marketed Products Enjoyed a Sizeable Price Premium at 39%*

Over Conventionally-Marketed Products, and Increased +5.3 pts Since 2014

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

34.21%

39.46%

2014 2018

Sustainability-Marketed Products’ Price Premium vs. Conventionally-Marketed Products



-19%

-5%

3% 3%

14%18% 20% 21% 22% 22% 23%

28% 29% 32% 32% 35%42%

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

74%80%

100%

112% 114%

123%

134% 135%

-27%-33%

-58%

165%

2018 Sustainability-Marketed Products’ Price Premium / Discount

Price Premium by Category

Price Premiums Ranged From 3% to Over 150%. Only a Few Categories

Had a Price Discount vs. Conventionally-Marketed Products.


Sustainable Market Share Index™ Growth of Sustainable Branded Players

Among Branded Players, Sustainability-Marketed Products Grew Over 7x Faster than

Conventionally-Marketed, Indicating Consumers’ Willingness to Pay Higher Prices.

2.95%

21.37%

$ Sales % Growth (Ex-Private Label) 2014 – 2018

Conventionally-MarketedProducts

Sustainability-Marketed Products

7X


Sustainable Market Share Index™ Price Sensitivity

Difference in Elasticity Between Sustainability-

Marketed and Conventionally-Marketed Products

4

3

2

1

0

-1

-2

-3

Less Sensitive to Price More Sensitive to Price

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


Products Had Lower

Price Sensitivity in

Most Categories

Studied: Food Had the

Greatest Price Leverage


Research Question 7

How have sustainable products fared in e-commerce?

Products marketed as “sustainable” have outperformed conventionally marketed products in e-commerce. Hence, sustainability marketed products perform better online vs. in store





E-Commerce

7%9%

11%13%

18%

2016 2017 2018 2019 2020


E-Commerce Share of CPG (Excluding Alcohol and Tobacco)


Sustainable Market Share Index™ E-Commerce Performance

Sustainability-Marketed Products Grew Slightly Faster than Both the Category and Conventional Products

100

120

140

180

160

200

220

20202018 2019

Index (Base Year 2018 = 100)

Total Market

2-YR CAGR: 40%

2020 vs 2019: 59%


2-YR CAGR: 42%

2020 vs. 2019: +65%

Sustainability-Marketed Products Category Conventionally-Marketed Products

Conventionally-Marketed

2-YR CAGR: 39%

2020 vs. 2019: 57%


Sustainable Market Share Index™ Share Differences Online vs. In-Store

Shares of Sustainable Products Are Stronger Online Than In-Store In 75% of the Categories Examined

15.00

10.00

5.00

0.00

-5.00

-10.00

-15.00 Coff

ee

Deo

dora

nt

Dia

pers

Dis

hD

ete

rgent

Bott

led

Juic

eS

alty

Snacks

Sanitary

Napkin

sE

nerg

y

Dri

nks

Cookie

s

Cere

al

Vita

min

s

Laundry

Dete

rgent

Household

Cle

aner

To

oth

paste

Pet

Food

Chocola

te

Sou

p

Laundry

Care

Carb

onate

dB

ev

PetT

reats

Paper

Tow

els

Paper

Napkin

s

Skin

care

Fre

sh

Bre

ad

Natu

ralC

heese

Fo

od

an

dT

rash

Ba

gs

Cra

ckers

Milk

Toilet T

issue

Fa

cia

lTis

sue

Yog

urt

Fro

zen D

inner

Weig

htC

on

tro

l

Soa

p

Cups

and

Pla

tes

$ Share Difference Between Online Less In- Store




E-CommerceSustainable Market Share Index™


Research Question 6

What is the demographic profile of the sustainable purchaser?*


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


Sustainable Market Share Index™ Sustainable Market Share Index™

Demographic Cohorts

Generational Education Income

Over-Indexed Millennials College GraduatesAbove Average

Income

Average Gen X & Boomers Some College Middle Income

Under-IndexedSeniors &

Retirement

High School

or LessLow Income


What do you look for in sustainable products?


Source: NCP Survey; May 2021

54% 46%

49%43%

34% 28%

28% 23%

Defining Sustainability

Minimizing Carbon Footprint / Greenhouse Gasses

Minimizing Exploitation of Natural Resources

Commitment to Conservation

Commitment to Using Renewable Resources

BOOMERS / GEN X

MILLENNIALS



24% 18%

22%18%

29% 21%

31% 21%

Defining Sustainability (cont’d)

Minimizing Negative Environmental Impact

Minimizing Carbon Footprint of Person, Company, Product

Associates Plant or Bio-Based with Sustainability

Associates Ethically Sourced Products with Sustainability

BOOMERS / GEN X

MILLENNIALS


Practicing and Living Sustainability


BOOMERS / GEN X

MILLENNIALS

63% 54%

29%21%

More Likely to Buy Reusable Water Bottles

More Likely to Buy Products With Specific Sustainability Characteristics (e.g., Organic, Recycled)


Sustainability in Everyday

Shopping Decision

BOOMERS / GEN X

MILLENNIALS


Sustainability is Important in Grocery Items

Sustainability is Important in Personal Care Items

Sustainability is Important in Everyday Household Items

27% 21%

31%20%

29% 21%



25% 14%

29%21%

19% 13%

Living Sustainable Lives

BOOMERS / GEN X

MILLENNIALS

Seeks Out Retailers Devoted to Sustainable Business Practices

Seeks Out Retailers Carrying Sustainable Products

Buys Grocery or Household Items if They Are More Sustainable



21% 14%

39%29%

20% 12%

47% 38%

COVID-19 Proves to Be Life

Changing for Sustainable Living

BOOMERS / GEN X

MILLENNIALS

Environmental Responsibility Became More Important

Buying More Sustainable Products During COVID-19

Can Afford More Sustainable Products Now

Will Continue to Buy More Sustainable Products



18% 13%

43%35%

43% 36%

34% 20%

Online Shopping

and Sustainable Living

Considers Online Shopping More Sustainable

Says Packaging is Excessive for Online Purchases

Will Consolidate Online Purchases to Minimize Waste

BOOMERS / GEN X

MILLENNIALS

Wants to See the Estimated Greenhouse Gasses /Carbon Used in Manufacturing


Note: 2109 data. Source: NYU Stern Center for Sustainable Business, based on IRI data across 36 CPG categories.

Sustainability Remains an

Important Attribute, Driving Plant-

Based Products

*NPP Firsts – Top 10 Product with Plant-Based Meat

Alternative and Hemp Product

*

*

36 Food &

Beverage

Pacesetters Have

Plant-Based

Attributes; 32 Are

Vegan


10th Beyond Sausage was the 10th highest

selling new edible product in 2020

$53MM Year 1 sales reached $53MM

42% Year 1 distribution reached 42% by the end of the first year

1.6% After a year of tracking, 1.6% of total U.S. Households

tried Beyond Sausage; up to 2.6% to date

47% Over half of triers were satisfied, as 47% returned

and purchased again within the first year

35%of Beyond Meat Buyers are “True Believers;”

11% of the Total U.S. Population are “True Believers”

May not match New Product Pacesetters metrics exactly due to Nestlé launch dates; Total US – MULO; Tracking start: 9.8.19


Native Personal Care Products Check All the Boxes With Gen Z:

• Appealing packaging

• Marketed in gender-sensitive / neutral way

• Feels authentic

• Is a brand that understands what I need

• Is a brand I want to know more about

• Cares about the environment and sustainability

• Supports a cause(s) I believe in

Making the ConnectionsClean Ingredients, Cruelty

Free, Simple Messaging

Source: IRI report, Understanding Gen Z https://www.iriworldwide.com/en-us/insights/publications/generation-z-and-cpg-retail-marketing


Your Feedback is Important

Please Complete a Brief Survey

How did we do?


Contact Us for More Information

Randi Kronthal-SaccoSenior Scholar, Marketing & Corporate Outreach,

NYU Stern Center for Sustainable Business

[email protected]

Larry LevinExecutive Vice President,

Market and Shopper Intelligence, IRI

[email protected]

mailto:[email protected]

mailto:[email protected]


Registered Users Get New

Thought Leadership from IRI’s

Research, Data & Analytics Experts

www.iriworldwide.com/en-US/Insights/Subscribe

be the first to know…

http://www.iriworldwide.com/en-US/Insights/Subscribe


C-Suite Conversation Series on COVID-19-Related Topics

10 conversations recorded to date!

IRI Thought Leadership Delivers

Insightful, Provocative Insights

Industry-Leading Client Engagement and Thought Leadership, Reshaping How Our Client Executives Perceive Us

40 reports published to date!

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Emerging-POV-Part-5-COVID-19-Vaccine-1-22-2020-vFF.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Demand-Curve-Part-14-VMS-2-25-2021-vF.pdf

resuming the us sustainability agenda

Documents