Sustainable products are on a lot of peoples’ minds. Companies are making them and consumers are buying them.
A new Sustainability and the Consumer report from newly merged data firms IRI and The NPD Group, along with the NYU Stern Center for Sustainable Business (CSB), states that sales of sustainably marketed products have grown 2.7 times faster than conventional products, up 7.34% since 2015. Conventionally marketed products are up 2.76% since 2015. In 2021, about 50% of new products were sustainable, up 20 percentage points from 2017. Additionally, 93% of consumers have either increased their purchases of sustainable products or maintained their sustainable purchase habits over the past year.
“Each year, our research with IRI shows increasing interest in sustainability marketed CPG products, showing that sustainability has become a lasting priority for consumers,” said Randi Kronthal-Sacco, senior scholar, NYU Stern Center for Sustainable Business, in a statement.
When selecting products, 77% of consumers believe that sustainability is an important factor in deciding which products to purchase, up from 69% in 2021. Forty-four percent of consumers said the top reason they ultimately buy sustainable products is for their environmental impact.
While sustainable products represent just 17% of total CPG sales, they drove one-third of all CPG growth in the past year, this despite their premium pricing in today’s inflationary environment, said the report.
“Because our research with CSB shows a growth of sales and interest for sustainable products year over year, it’s no surprise that we’ve seen successful new product launches incorporating sustainable benefits increasingly since 2017,” said Joan Driggs, vice president, Content and Thought Leadership for IRI, in a statement.
The report found that consumers define sustainability more by environmental vs. social factors. Seventy-nine percent said they associate sustainability with renewing, reusing and recycling, and 66% said conserving (as with fuel, water, energy and land). Gen Z and millennials associate the term sustainability with environmental factors more than older consumers. Of the consumers surveyed, 44% said they are concerned about environmental impact, for example climate change, and 40% expressed concern about more sustainable options being available.
It was also indicated that many consumers are intentionally shopping with retailers that support sustainability—27% of shoppers seek out retailers that carry sustainable products, and 17% of shoppers seek out retailers that are devoted to sustainable business practices. As for Gen Z and millennials, 32% choose retailers that carry sustainable products and 20% choose retailers devoted to sustainability.
“Challenges such as supply chain disruptions and inflation have made it difficult for brands and manufacturers to identify which shopping behaviors are real trends and which are a temporary response to market conditions,” said Kronthal-Sacco.
When shopping online, 84% of consumers feel that sustainability of products is important, but 69% said that finding sustainable products when shopping online is “sometimes easy” and 17% said finding sustainable products online is “typically easy.” Furthermore, when online shopping, half of consumers want a list of ingredients, half want to know where the item was made and half want information about the recyclability of the packaging.
Additionally, Gen Z and millennials are “more likely to try these new products than older generations,” said Driggs. Of the Gen Z and millennials surveyed, 35.7% said they have tried sustainable food or beverage brands that they haven't purchased before vs. 23.9% of older generations; 37.6% of Gen Z and millennials have tried sustainable personal care brands vs. 20.2% of older generations; 27.1% of Gen Z and millennials have tried sustainable household products vs. 22.3% of older generations; and 33.2% of Gen Z and millennials have not tried new sustainable products vs. 54.9% of older generations.
IRI recently merged with The NPD Group to create a global technology, analytics and data provider. The NYU Stern Center for Sustainable Business (CSB) provides education and conducts research regarding sustainability.