90% of US Shoppers Care About Food Brands’ Sustainability: Report
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An overwhelming majority of consumers in the US now believe that food businesses need to prioritise social and environmental responsibility.
So says a new report based on polling data from over 33,000 American food and grocery shoppers last year. Results showed that an increasing number of people are switching to brands due to perceived sustainability benefits.
Sustainability is key, especially for younger shoppers
Sustainability is an increasingly important consideration for shoppers in the food and grocery industry in the US, finds a new report by online research firm Glow. 70% of consumers now perceive environmental responsibility as “more important” compared to two years ago, while over half said sustainability is “very important”. Overall, over 90% see eco-friendliness as a key decision criteria in their food purchases.
The report also found that 64% of consumers in the US are willing to pay steeper prices for products that have a social impact, such as providing support for communities and causes that help vulnerable groups. In addition, nearly 8 in 10 said that they are more loyal and likely to make repeat purchases from these “purpose-driven” brands.
Sustainability-wise, the main issues consumers take note of when making food and grocery decisions include emissions reduction, protection of natural resources, and wildlife conservation.
The importance of sustainability is sharper among younger shoppers. While one-third of all Americans believe it is “very important” for brands to behave responsibly, the figure rises to 40% among Gen Z and millennials. In fact, the latter group now rank ESG concerns among their top 3 purchase drivers, with 10% of millennials placing this factor as their number one issue, ahead of product price and quality.
The data is based on Glow’s survey data from 33,000 US consumers between April and December 2022, as well as NielsenIQ’s product data and consumer panel insights. It has been published in Glow’s 2023 US Brand Sustainability Benchmark Report.
Similar findings about the importance of ESG, particularly with younger shoppers, were published in a recent EIT-Food commissioned study. It found 78% of those aged 18-24 believe that the current food system is not sustainable enough and a major cause of the climate crisis.
Eco-friendly brands make more money
Companies that perform highly on ESG have seen sales soar, according to the report. Glow’s Social Responsibility Score (SRS) tracks brands’ performance across 13 ESG metrics and also draws on consumers’ opinions of companies. A positive correlation between SRS and revenue growth was found.
Data showed that a two-point lead on the SRS scale corresponds to a 1% increase in revenue growth over 3 years, the data shows.
“Those who are leading in consumers’ minds are already reaping the commercial benefits and are best placed for future success,” shared Julia Collins, founder and CEO of Planet FWD. “It is vitally important for companies to contribute to supporting society and the planet…doing so is more than the right thing to do, it is good for business.”
Some of the brands named as the most responsible among US consumers include Dawn, Seventh Generation, and Love Beauty And Planet.
Similar results were obtained in NielsenIQ’s research, which showed that brands that convey a sustainability message on their product packaging have an annual growth rate that is 1.7% points faster than less eco-forward brands.
Cost is still an obstacle
While consumers are taking note of brands’ planetary impact more than ever before, one key barrier is price. Sustainable products are often more expensive, and the cost of living crisis has meant some consumers have been prioritising price over quality or eco-friendliness.
According to Glow’s survey, 70% of US consumers are “actively switching F&G brands to save money”. This is happening across all product departments, with over 6 in 10 reportedly “switching all/almost all” items in their baskets.
Some segments are less susceptible to trading down, with baby care topping the list of products consumers aren’t willing to compromise on in terms of quality, despite rising costs. This corresponds to the importance consumers place on transparency within the baby care department, whereas plastic waste is ranked a more important issue for household items.
In order to stay competitive amid an inflationary environment, analysts at Glow say that brands must “stand for something”. The report found that half of US shoppers have either started or stopped using a brand based on a company’s ESG behaviour, and that these practices are more prevalent among millennials with children.
Overall, the top ESG performing food and grocery brands as measured by Glow’s SRS are pulling in new customers from these purchase “switches” at twice the rate compared to the average across all tracked brands.
“All consumers are looking for ways to save money,” explains Mike Johnston, managing director of data products at Glow. “They will need a compelling reason why they shouldn’t walk away from your brand for a cheaper alternative.”
One of the ways in which brands stand out to consumers is their on-pack messaging.
“Consumers want to hear about what brands are doing to support people and the planet. And they want that information through credible sources, including close to point of purchase: on-pack and through digital discovery on retailer sites,” shared NielsenIQ’s VP of Total Wellness Sherry Frey. “Brands doing that well can be seen as sustainability leaders and reap the benefits in terms of growth.”
Still a way to go to meet sustainability expectations
While there has been a major push in the industry to move towards more sustainable practices, there remains room for growth and improvement in consumers’ eyes.
“The largest opportunity gap for brands in the US F&G industry exists in the environmental drivers,” states the report. “They are the most important but consumers are the least satisfied with the industry’s overall performance across them.”
According to Glow’s findings, over 30% of US shoppers are still unsatisfied with brands’ performance across the board on all environmental factors. The driver that shoppers see the most room for improvement is in emissions reduction and climate change, as well as wildlife protection, followed by supplier welfare in the governance sphere of ESG.
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