Green-Marketing Revolution Defies Economic Downturn

Adage logo jpeg Advertising Age writes that not only are consumers still interested in buying green, but that companies are continuing to launch green products throughout 2009.

  • If pace of launches continues, 2009 will have 3x the amount of sustainable products released compared to last year.
  •  Interest in green products seems to have spread beyond the LOHAS community to other markets.


Posted Apr. 20, 2009
By
Jack Neff
AdAge

Green marketing is turning out to be surprisingly recession-proof.

Green light for green products jpegDatamonitor shows 458 launches so far in 2009 of package-goods products
that claim to be sustainable, environmentally friendly or
"eco-friendly." If that pace holds all year, it will triple the number
of green launches last year, which in turn was more than double the
number in 2007. Seventh Generation CEO Jeffrey Hollender said his
company's sales were up 50% last year and 20% in March year over year
despite Clorox, Church & Dwight and now SC Johnson entering the
space. "The good news is that in general these products are faring
better than most categories," he said. "A lot of people would be
desperate to have 5% growth."

Consumers are still buying sustainable lines despite their higher cost.
Nielsen Co. data show sales growth of organic food at 5.6% year over
year in December from a year ago, though that's down from the
double-digit pace of years past, and its SPINS tracking service showed
sales at natural-food stores up 10.9% to $4.2 billion last year. Though
growth slowed in the fourth quarter, it was still more than 7% in
December, far healthier than the rates at even top-performing grocery
retailers such as Walmart or Costco.

"It looks like this green trend is going to survive the recession,"
said Tom Vierhile, general manager at Datamonitor's Product Launch
Analytics.

"If you go back 10, 20, 30 years, other green movements ultimately have
had the air taken out of them by recessions," said Aric Melzel senior
brand manager at Kimberly-Clark's Scott paper company. "This one is
acting differently than we've seen in the past. In looking at national
tracking studies, it does appear that this time the green mind-set is
very much being more solidified."

'Respectful stewards'
Mr. Vierhile's read
is that the interest in green products has reached beyond the vanguard
of eco-enthusiasts. Indeed, Information Resources Inc. research found
sales of green products growing fastest in the 52 weeks ended Jan. 25
in a predominantly Hispanic segment labeled "respectful stewards" and a
predominantly white-male segment labeled "proud traditionalists." Sales
actually remained flat in the "eco-centric" segment with the highest
interest in green issues.

Part of the secret to green products' survival, Mr. Vierhile
said, is manufacturers' desire to save on commodity costs. What's also
helped is retailers — particularly Walmart — furthering the cause by
working to keep green products affordable, as well as the entry of
private-label and value-brand marketers into the category.

The test of whether green can really go mainstream is shaping up with a
new offering from Scott: toilet paper, paper towels, napkins and wipes
made from 40% to 80% recycled content. The launch is from a $2
billion-plus global value brand that reaches 41 million households, or
one in three U.S. consumers. You can't get more mainstream than that.

The premise is that consumers don't have to sacrifice either
performance or price to make a positive environmental impact, said Mr.
Melzel. The launch springs from research showing Scott's value-minded
consumers still want to minimize the environmental impact of their
products: 86% said they're interested and 41% said they're very
interested in products with recycled content. Mr. Melzel said he
believes recycled products can become a $500 million business, or about
5% of the $10 billion retail paper-products business in the U.S., up
from less than 1% today.

Walmart is looking to go Scott one better with White Cloud
private-label toilet paper from 100% recycled fiber. And while the
retailer hasn't been beating the sustainability drum in its PR efforts
as loudly as in the past, it has put some substantial weight behind its
Earth Month marketing and merchandising efforts, billed as bigger than
last year, with ads from Martin, Richmond, Va., touting 10 green
products for under $10 and rollbacks on products such as Clorox Green
Works and Procter & Gamble Co.'s Tide Coldwater.

Cleaners grow
K-C, which this month is launching Huggies Pure & Natural,
positioned as having more natural ingredients and post-consumer content
than other products, found one sure sign of consumer interest during
pre-launch buzz building. When Edelman, Chicago, reached out to 500
mommy bloggers about the product line, they generated close to 200,000
requests for samples, said Huggies Senior Brand Manager Tim Abate.

Sales of water-filtration devices and filters — which have
been positioned as a more eco-friendly alternative to bottled water by
Clorox Co.'s Brita and Procter & Gamble Co.'s Pur in recent years
— soared 22.2% and 15.2%, respectively, in the four weeks ended March
22, according to Information Resources Inc. data from Deutsche Bank,
continuing the torrid double-digit pace they've been on the past two
years despite the recession and relatively high price points.

Green cleaners, too, continue to grow as more mainstream manufacturers,
such as SC Johnson with its recently launched Nature's Source lineup,
pile into the category. Clorox Green Works became the best-selling
natural-positioned cleaning brand during its first year last year, said
Jessica Buttimer, global domain leader for the brand, and roughly
tripled an already robust green-cleaner-category growth rate of 35% in
2006 and 2007 to 108% in 2008. "In recent months, with the economic
downturn, we are seeing some slowing growth in certain product
categories where we've lapped our launch," Ms. Buttimer said. "But in
categories such as natural liquid dish soap, growth continues to be
strong at 143% [for the 13 weeks ended Feb. 22, relative to total
dish-soap growth of 7%]."

Seventh Generation's Mr. Hollender said he does believe bigger
players in the organic- and natural-products space are seeing their
growth slow. An informal survey he did of five players in the $150
million to $500 million sales range have seen year-over-year growth in
the single digits this year vs. double-digit growth last year — but
all were still growing, he said.

With more mainstream marketers expanding into more categories, Mr.
Hollender said, every consumer-package-goods category will soon have
some kind of green alternative. "Increasingly, it will be a choice
between light green and dark green," he said.

Four tips for green marketers

1. Combine environmental with economic sustainability.
Consumers define sustainability more broadly than the environmental
concerns marketers mainly have tended to focus on, and they care more
about social and economic issues such as poverty, employment and health
care more than environmental concerns by a substantial margin,
according to research by shopper-marketing agency Saatchi & Saatchi
X. The agency is pitching the idea that green marketing is tired but
that "blue marketing," which encompasses environmental with other
social causes, will work better.

2. Retailer support matters.
With 298 different environmental certifications for consumer brands,
consumers often don't know what to believe regarding green claims, said
Curtis Munk, VP-insights for shopper marketing at Saatchi X. As a
result, they look to retailers to be the arbiters, placing the most
trust in more-green-positioned retailers such as Whole Foods and Trader
Joe's, but also some others, such as Walmart, that have been working
hard to burnish their green credentials.

3. Opportunities remain.
Research by Nielsen's
concept-testing service Bases shows that environmentally focused
Lifestyles of Health and Sustainability consumers have above-average
purchase intent for personal care, pet products, and refrigerated,
shelf-stable and frozen foods but perceive only average current product
availability in those categories.

4. Address skepticism about price and quality more than
the actual green claims.

Bases
found more than 80% of consumers in all categories—including 89% of
those most inclined to buy green but also 80% of those unconcerned
about green claims—found green claims completely or somewhat
believable. Only 9% to 16% of consumers said they believe green
products aren't as green as claimed—fewer than half the proportion who
said they completely believe such claims. Yet a vast majority of
consumers said they believe green products cost more and don't perform
as well as others.

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