Consumers seek brands aligned with their values for environmental and social impact.
The latest sustainability benchmark report shows that consumers increasingly care about the ESG performance of the brands they buy. Consumers are changing their spending habits to better align with their personal values, and brands that are brave enough to go and take the time to explain the depth of these issues and educate the market are leading and winning. With high consumer expectations, brands that align their ESG priorities with consumer expectations can take advantage of a growth opportunity, reduce risk, and improve their impacts on the environment.
The release of this inaugural sustainability benchmark report for the US Food & Grocery industry is a significant step forward for the sector. It demonstrates that consumers are increasingly aware of the impact that their purchasing decisions can have on the environment and society, and that they are actively seeking out brands that align with their values.
The report provides valuable insights into what consumers expect from F&G brands and highlights those that are leading the way in terms of sustainability initiatives. By providing benchmarks and practical direction, this report can help brands optimize their ESG programs and marketing activities, ultimately driving positive change towards a more sustainable future.
It’s encouraging to see the collaboration between Glow and NielsenIQ to develop this report, showcasing the importance of partnerships in addressing complex sustainability challenges.
Consumers’ ESG Considerations
Consumers increasingly care about the environmental, social, and governance (ESG) performance of the brands they buy, and new research shows that they are willing to switch to more sustainable options. Half of all U.S. consumers and 70% of millennials have already changed food and grocery brands based on ESG considerations. The research technology company, Glow, surveyed 33,000 U.S. adults to get their take on the ESG performance of more than 150 food and grocery brands. The results showed that consumers are changing their spending habits to better align with their personal values.
ESG Performance and Revenue Growth
Glow’s research found a positive correlation between ESG performance and revenue growth. Even in a troubled economy with a cost-of-living crisis, environmentally- and socially-responsible companies are seeing the economic benefits of standing for their values. In fact, 20% of consumers rank sustainability in their top three considerations when shopping at the grocery store, and 10% of millennials said sustainability is the single most important factor when making a purchase. For example, a $500M turnover brand that had a Social Responsibility Score (SRS) 10 points higher than their similarly sized competitor would, on average, expect to see an additional $25M in revenue over 3 years.
Sustainability is a Key Barrier to Change
While 70% of consumers are actively switching food and grocery brands to save money, many consider sustainability a key reason not to do so, particularly among younger shoppers. Consumers view sustainability differently based on the product. Plastic and waste issues are of greater importance in the household goods department, while health and wellbeing are a top concern for consumers when choosing beverages and beauty products.
Cost of living is a huge concern with almost 7 in 10 respondents actively switching F&G brands to save money and 65% of them switching all / almost all or a large number of products. Similar to the top ranked purchase drivers, the primary barriers to trading down were price and quality – in this case a lack of price saving or loss of quality. However, sustainability was a significant consideration for many, and of particular importance in Baby care where 1 in 5 cited it as the main reason they did not trade down. For Millennials it is an even more important reason to not trade down. In fact in Baby Care, Household and Dairy & Eggs it was the 2nd most important factor.
Consumer Expectations are High
U.S. consumers widely perceive the food and grocery industry as a leader in corporate sustainability, but the industry still faces significant barriers to meeting consumer expectations in a few key areas. For example, almost a third of responding consumers are dissatisfied with the industry’s efforts to reduce emissions, mitigate climate change, protect wildlife, and ensure the welfare of suppliers. This presents an opportunity for brands to re-engage with this growing segment of consumers and stakeholders.
85% of US residents surveyed believe that it is important for businesses to act responsibly when it comes to society and the environment. The F&G industry is deemed to be one of the industries leading the way to a more sustainable future. It ranks second of 20 industries measured in this research, behind supermarkets and convenience stores.
ESG Caught Consumers’ Attention
Across all categories, products with ESG-related claims on their packaging grew an average of 1.7% faster than those without. Labels and messaging associated with regenerative agriculture, plastic-free products, cruelty-free operations, water footprint, and renewable energy caught consumers’ attention the most.
The drivers that are most important in overall perception for Food & Grocery brands are:
- Reducing emissions & climate change
- Respecting & protecting natural resources
- Protecting wildlife and ecosystems
- Taking care of supplier welfare
Education is Key
Consumers want to understand the issues in more detail, to understand some of the science, and the lengths to which companies are going to solve these problems. Brands that take the time to explain the depth of these issues and educate the market are leading and winning. Consumers expect brands to behave responsibly, but younger consumers expect more. Individual consumers have a valid and clear opinion about brand ESG credentials. Two in three (66%) consumers had a strong opinion about the brands they were aware of, with the top brands performing almost twice as well as the bottom brands.
Conclusion
Consumers are increasingly willing to spend to align their purchases with their values. A range of studies, including multiple by Glow and NielsenIQ, showcase that attitudes and behaviour are changing for the better and progressive brands are benefitting.
(India CSR)
