Sustainability—the efforts to be environmentally friendly and good stewards of the earth—is important not just among consumers, but for corporate entities, as well. While many consumers regularly make personal choices that reflect their environmental focus, they expect the companies that they patronize to do the same.
While there are obvious benefits to both the planet and its people when companies in the snack and bakery industry engage in sustainability practices, there can also be auxiliary benefits to the company in terms of a willingness of some consumers to buy more and pay more.
NMI is a leader in consumer insights to the LOHAS (Lifestyles of Health and Sustainability) market. Since 2002, NMI has conducted an annual research study, which provides data regarding consumers’ attitudes and behaviors, including sustainability:
- LOHAS, 22 percent, proactively environmental
- Naturalites, 21 percent, environmental strivers with some price sensitivity
- Drifters, 24 percent, want to be sustainable but need easy solutions
- Conventionals, 18 percent, practical and conventional—looking for cost and environmental savings
- Unconcerneds, 15 percent, not involved
Naturalites, Drifters and Conventionals are collectively referred to as the “sustainable mainstream.”
The LOHAS segment represents 54 million U.S. adults. These are sustainability thought and action leaders. Their strong attitudes toward personal and planetary health drive not only their behaviors, but also influence other consumers. Nearly half (49 percent) of LOHAS consumers indicate a willingness to pay 20 percent more for products that have been made in an environmentally friendly manner (compared to 27 percent of the general population).
If we dig deeper, we find consumers are also willing to pay 20 percent more for a product that:
- Protects/preserves the environment (40 percent)
- Protects my/my family’s health (40 percent)
- Tastes better (38 percent)
- Supports/is fair to local and global workers and communities (35 percent)
- Aligns with my personal values, morals, ethics and/or beliefs (35 percent)
But when you combine all of these attributes into a food product, 68 percent of consumers say that they would pay a 20 percent premium, clearly indicating that while the basics of a food item (taste and health) are clearly important, other social and environmental issues have a significant impact on a consumer’s willingness to pay a premium price.
Consumers are also increasingly willing to reward companies that embrace environmental and societal initiatives with their buying behaviors. Those companies which keep sustainability as a focus are viewed in a more-positive light over the past six years, with 58 percent of people today saying that knowing a company is mindful of its impact on the environment and society makes them more likely to repeatedly buy their products (compared to 48 percent in 2009). This potentially increases trial, perceptions of quality and a greater willingness to spread positive information about the company.
Maintaining a strong environmental policy helps build consumer trust. Notably, half of consumers report that they trust food and beverage companies that follow practices that protect the environment and promote sustainability.
Utilizing a seal or certification mark is another way companies can clearly communicate their commitments. Over one-third of consumers indicate that a mark indicating environmental or social friendliness will increase the likelihood that they will buy it, an attitude that is significantly higher among LOHAS consumers (60 percent). Specifically, consumers are more likely to buy a product when they see the USDA Organic certification (41 percent), Non-GMO Project Verified (34 percent) and Fair Trade certification (30 percent). With high levels of confusion and skepticism, utilizing these strategies offers companies in snack and bakery an opportunity to provide clarity and transparency that can result in increased sales.
The opposite of this scenario also has an impact. Almost one in four consumers say that they have stopped purchasing products from a company after learning that the company did not practice environmental or social responsibility.