Is a buyer more likely to purchase a product if it has an ESG claim? Do some sustainability claims resonate more than others? Is the claim less significant if it comes from a large, established brand? McKinsey and NielsenIQ conducted a study spanning five years, from 2017 to June 2022, to answer these and other questions by analyzing the actual spending behavior of American consumers. The overall trend was clear: in two-thirds of the categories analyzed, products that made sustainability-related claims grew faster than those that did not.
The first objective of the study Consumers care about sustainability and back it up with their wallets was to determine whether, over this five-year period, products that made one or more ESG-related claims on their packaging outperformed products that made none. In the last five years, products with sustainability claims accounted for 56% of all growthapproximately 18% more than expected at the beginning of the analyzed period.
In terms of compound annual growth rate (Cagr), products with ESG-related claims had a 1.7 percentage point advantage over products without these messages. Products that make ESG-related claims currently account for nearly half of all retail sales in the categories examined.
Data covered 600,000 individual product SKUs representing $400 billion in annual retail revenue. These products come from 44,000 brands in 32 different categories.
Products with sustainability claims accounted for 56% of all growth
Both large and small brands saw growth in products making ESG-related claims. In 59% of all categories studied, smaller brands that made these claims achieved growth disproportionate. But in 50% of the categories, so did the larger brands that made these claims.
What about newer products versus established ones? Newer claim-filers outperformed their newer non-claim-filer counterparts in only 32% of categories.
Besides, no evidence was found that a particular statement was consistently associated with greater growth. However, less common complaints were associated with greater growth than more frequent complaints. This would demonstrate that claims can be a means of differentiation.
Products that featured multiple types of claims grew about twice as fast as products that featured just one. In almost 80% of the categories analyzed, the data showed a positive correlation between the growth rate and the number of different types of complaints related to sustainability.
The analysis detected 93 claims related to sustainability, from vegan to ecological and biodegradable
In the analysis 93 different ESG-related claims were identified, expressed in terms such as cage-free, vegan, ecological and biodegradable, printed on the packages of these products. The claims were divided into six classifications: animal welfare, environmental sustainability, organic farming methods, plant-based ingredients, social responsibility and sustainable packaging.
The research points to some ideas that companies could consider when trying to advance their ESG commitments, such as ensuring that product claims support an overall ESG strategy with significant environmental and social impact across the portfolio.
In addition, it is committed to companies developing a product design process that includes ESG-related claims linked to cost engineering; that invest in ESG through existing brands and new, innovative products; understand sustainability-related dynamics specific to each category and brand and embrace the holistic and interconnected nature of ESG by creating products that address multiple consumer concerns.
2024-04-05 09:05:36
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