McKinsey: "... walk down the aisle of any grocery or drugstore these days and you’re bound to see products labeled “environmentally sustainable,” “eco-friendly,” “fair trade,” or other designations related to aspects of environmental and social responsibility ... but understanding how customers respond to social and environmental claims is also important and has not been clear in the past."
In collaboration with NielsenIQ, McKinsey analyzed five years of sales data, covering 600,000 individual products in United States representing $400 billion in annual retail revenues. These products came from 44,000 brands across 32 food, beverage, personal-care and household categories.
The study primarily explores the correlation between ESG-related claims and sales performance, meaning that the actual causal relationship "consumers - ESG brands" or factors such as marketing investments or the “greenwashing” risk, i.e. the veracity of ESG-related claims for these products, were not analysed nor assessed. In that sense, recall here what the European Union has been doing with approximately 230 eco-labels offered there "Protecting consumers from greenwashing: new rules for sustainable, durable and repairable products".
American consumers are shifting their spending toward products with ESG-related claims, that averaged 28 percent cumulative growth, versus 20 percent for products that made no such claims.
In two-thirds of the categories, products that made ESG-related claims grew faster than those that didn’t. But shopping data alone can’t explain the reasons for such variances. In the children’s formula and nutritional-beverage category, for example, it’s possible that buying decisions reflect advice from doctors and that consumers probably won’t let ESG-related claims outweigh clinical recommendations.
See how the different claims have been impacting sales in United States:
least prevalent (such as “vegan” or “carbon zero”) grew 8.5% more than peers that didn’t make them
medium-prevalence (such as “sustainable packaging” or “plant-based”) had a 4.7% growth differential
most prevalent "commonplace" claims (such as “environmentally sustainable”) roughly 2% higher growth than products that didn’t make them
Click here for McKinsey full analysis. About the same topic, you can also hear the podcast "McKinsey on Consumer and Retail".
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