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New Research Finds Sustainability Driving Market Growth in Consumer Goods

Apparel and textile companies have increasingly touted their sustainable business practices and products, and a new survey shows they were wise to do so.

The NYU Stern School of Business’ Center for Sustainable Business and data analytics company IRI released the findings of a new U.S.-based study on sustainable product marketing, which shows those less impactful products are responsible for more than half of the growth in consumer packaged goods since 2013.

The Stern School are IRI also established the Sustainable Share Index, an analysis of consumer purchases of products that are marketed for their sustainable attributes. The research found that sustainability marketed products delivered 50.1 percent of market growth from 2013 to 2018, while representing 16.6 percent of the consumer packaged goods market in dollar sales in 2018. The center analyzed data from across 36 product categories, representing approximately 40 percent of consumer package goods sales, excluding tobacco and alcohol.

“Across industries, companies are beginning to recognize that sustainable business is good business,” Tensie Whelan, professor at NYU Stern and founding director of Stern’s Center for Sustainable Business, said. “Results from this research reinforce the idea that embracing sustainability leads to better business results. We are excited to launch the Sustainable Share Index and look forward to continuing our research in the years to come.”

While the study focused on packaged goods in the food, personal care products and household products sectors, the results and analysis seem pertinent to the fashion industry, and falls in line with findings from other sustainability studies.

More than two-thirds of respondents to a recent 2019 Retail and Sustainability Survey survey from CGS, a provider of business applications, enterprise learning and outsourcing services, said they consider sustainability when making a purchase, and are willing to pay more for it.

And as they enter the consumer purchasing market, the study also found that Gen Z shoppers make up some of the most socially conscious buyers, with 68 percent having made an eco-friendly purchase in the past year. The survey found  that 34 percent of respondents said they would pay 25 percent more for products considered sustainable. And more and more U.S. companies are implementing more eco-friendly processes and products, according to CGS, which cited as an example Patagonia’s development of Woolyester, a material that blends wool, polyester and nylon to use approximately 50 percent of waste materials.

“The benefits of sustainability cannot be ignored,” said Randi Kronthal-Sacco, senior scholar for marketing and corporate outreach at Stern’s Center for Sustainable Business, who led the research initiative. “In fact, this groundbreaking research shows the significant impact that sustainable products have on overall category growth.”

The survey defined and determined sustainability marketed products based on identification with on-package communication or third party certification; and containing organic ingredients and no phosphates or no phthalates. Sustainability determination focused on the product itself, not the recyclability of the package.

Key findings showed that across all categories, sustainability marketed products generated $113.9 billion in sales in 2018, a 29 percent increase compared to 2013. The category is forecast to reach $140.5 billion by 2023.

What’s more, products marketed as sustainable grew 5.6 times faster than conventionally marketed products and 3.3 times faster than the overall consumer packaged goods market. In more than 90 percent of individual product categories examined, the growth of sustainability marketed products outpaced total category growth.

The survey found that sustainability marketed products account for 16.6 percent share of market in 2018, up from 14.3 percent in 2013.

“The results of this research show that sustainable products play a key role in consumer decision-making and we know this is particularly important to millennials and Generation Z,” Robert I. Tomei, president of market and shopper intelligence at IRI, said.

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