Consumers are demanding a lot from brands on the sustainability front, and youth in particular seem apt to buy sustainable products. New research [download page] from IRI and NYU Stern’s Center for Sustainable Business indicates that this willingness is translating into sales.
Last year, sustainability-marketed products accounted for 17% dollar share of CPG sales, per the report. This represents a small rise from 16.8% the previous year and 16.1% in 2019, and a more noticeable uptick from 13.7% share in 2015.
More tellingly, sustainability-marketed products have accounted for almost one-third (32.1% share) of CPG market growth in the 2015-2021 period. These products have recorded a 6-year compound annual growth rate (CAGR) of 7.34%, more than double the 3.45% CAGR for the market overall, and almost triple the 2.76% CAGR for conventionally marketed products.
Most of these products show price premiums relative to conventionally marketed products, with these premiums ranging from 8-136%, per the report. The largest premiums (of at least 100%) are for sustainability-marketed products in the Carbonated Beverages (136%) and Cookies (116%) categories.
This price premium has decreased over time, though. After rising to a high of 39.5% (across 35 core categories) in 2018, the average price premium for sustainability-marketed products relative to conventionally marketed products declined to 29.3% last year and to 27.6% during the time period analyzed this year.
Sustainability has become much more important for new product development in recent years. According to the analysis, almost half (48%) of new CPG products in 2021 were sustainable, up from 37% in each of the 2 years prior, and up 20% points from 28% in 2017.
Accompanying consumer survey results contained in the report indicate that more than one-third of Gen Zers and Millennials have tried some more sustainable food and beverage brands that they haven’t purchased before, and close to 4 in 10 have tried more sustainable personal care brands that they haven’t bought before.
The survey also reveals that consumers tend to define sustainability more by environmental than social factors, pointing first to attributes such as renew, reuse, recycle and conservation.
For more, download the report here.
About the Data: The referenced consumer research results are from a June survey of 1,200 US consumers.
