Research On 2015-2020 IRI Purchasing Data Reveals .
Center forSustainable BusinessSustainable Market Share Index Research on 2015-2020 IRI PurchasingData Reveals Sustainability Drives Growth,Survives the PandemicRandi Kronthal-SaccoTensie WhelanUpdated: July 16, 20201
Sustainable Market Share Index : Executive SummaryCenter forSustainable BusinessWe reviewed consumer purchasing of sustainability-marketed products in 36 CPG categoriescomprising 40% of the total CPG market* ( ). Our findings are: Sustainability-marketed products delivered 54.7% of CPG market growth (2015-2019) despite representing only 16.1% share ofthe category( ) in 2019, up 2.4 ppts vs. 2015 (Pgs. 5,6 ). Sustainability-marketed products grew 7.1x faster than products notmarketed as sustainable (Pg. 7). Sustainabilty marketed products continue to grow despite the COVID-19 pandemic (Pgs. 10-13). The market share of sustainability-marketed products aligns along a continuum based on perceived category functionality orefficacy (Pg. 15). Even in categories with low shares, shares of sustainability-marketed products increased. Sustainability-marketed branded products enjoy a significant price premium of 39.5%** vs. their conventionally-marketedbranded counterparts, with a widening premium of 5.3 pts vs. 2014 (Pgs. 17-20). Per capita, the top 5 states for purchases of sustainability-marketed products are NH, ME, MA,VT and CT (Pg. 22). Upper income, millennials, college-educated and urban consumers are more likely to buy sustainability-marketed products. Inaddition, Middle Income, Baby Boomers and Gen Xers contribute a significant percent of sustainable sales (Pgs. 24-27).2*Excluding alcohol and tobacco. **Weighted by Sustainable Sales of categories examined
Sustainable Market Share Index : Research QuestionsCenter forSustainable BusinessConsumer packaged goods (CPG) companies are responding to changing generationalexpectations, including for more sustainable product offerings, yet understanding of sustainablepurchasing trends is limited.The NYU Stern Center for Sustainable Business partnered with IRI, who provided the data probono, to assess the following:1. Have purchases of sustainable products increased over time?2. Have sustainable purchases been impacted by COVID-19?3. Are there specific product categories for which the purchases of more sustainable productoptions out- or under-perform less sustainable alternatives?4. What is the impact of price on purchases of sustainable products?5. Are there geographical differences in sustainable purchasing?6. What is the demographic profile of the sustainable purchaser?3Note: This study represents an updated and significantly expanded review of consumer purchasing first presented in March 2019.
Sustainable Market Share Index : Research Question 1Center forSustainable BusinessResearch Question 1:Have purchases of sustainable products increased over time?Research Result:Not only are sustainability-marketed products growing but they also are contributing to adisproportionate share of the CPG category growth.4
Sustainable Market Share Index : Sustainable Market ShareCenter forSustainable BusinessAnnual Share of SustainabilityMarketed ProductsAcross all categories studied, sustainability-marketed productsaccount for 16.1%* share of market ( ) in 2019, up from 13.7%* in2015.25%20%16.1%15%13.7%10%5%0%2015* Shares updated due to CSB & IRI re-categorizations; based on 36 categories examined20195
Sustainable Market Share Index : Contribution to GrowthCenter forSustainable BusinessDespite the fact that sustainability-marketed products are 16.1%* of themarket, they delivered 54.7% of the CPG market growth (2015-2019). Share of Market Share of Market stainability-marketed productsSustainability-marketed productsConventionally-marketed productsConventionally-marketed products* Shares updated due to CSB & IRI re-categorizations; based on 36 categories examined6
Sustainable Market Share Index : Growth RateCenter forSustainable BusinessSustainability-marketed products grew 7.1x faster than conventionallymarketed products, and 3.8x faster than the CPG market.Index (Base Year 2015 100)13012512046.9%115Sustainabilitymarketed4-YR CAGR:5.86%Total Market4-YR d d productsConventionallymarketed4-YR CAGR:0.83%7Note: Based on 36 categories examined
Sustainable Market Share Index : Category PerformanceCenter forSustainable Business150.00%** *** **Sustainability-marketed products130.00%110.00%Category*Note: Actual sales growth for sustainabilitymarketed products in these categories from2015-19 were 1019%, 901%, 545%, 449%,280%, 197% and 160%, aMpeilrT kowToelilsCu et TisspsuanedPPap e l at esrNapkinsCarSoFaapciabonalTteisdBe sueveragSk e sinCareSoupCoDiokshiDe e aermEninstrees-FZNaCeturearalClhWeig eesehtConBot rott leLaldunJudriceyDsetergentCracSakeForsl tyodSnanacdTrksashBagsChCoocff -30.00%Sanitary% Change in Sales (2015-19)In 90% of individual product categories, the growth of sustainabilitymarketed products outpaced the growth of their respective categories.* Paper towels, cups and plates, toilet tissue and paper napkins lost share to private label. Because we did not have visibility into private label to ascertain if there were claims regardingsustainability, we had to assume they were not marketed as sustainable. So, in fact, if private labels were making claims of sustainability (as we have observed they do on shelf), thesecategories may not have seen share decline of sustainability-marketed products .8
Sustainable Market Share Index : Research Question 2Center forSustainable BusinessResearch Question 2:Have sustainable purchases been impacted by COVID-19?Research Result: Purchases of sustainability marketed products continue to grow in the face of thepandemic.9
WeeW kEe e ndW k E 01e e nd 05W k E 01- -20e e nd 12W k E 01- -20e e nd 19W k E 01- -20e e nd 26W k E 02- -20e e nd 02W k E 02- -20e e nd 09W k E 02- -20e e nd 16W k E 02- -20e e nd 23W k E 03- -20e e nd 01W k E 03- -20e e nd 08W k E 03- -20e e nd 15W k E 03- -20e e nd 22W k E 03- -20e e nd 29W k E 04- -20e e nd 05W k E 04- -20e e nd 12W k E 04- -20e e nd 19W k E 04- -20e e nd 26W k E 05- -20e e nd 03W k E 05- -20e e nd 10W k E 05- -20e e nd 17W k E 05- -20e e nd 24W k E 05- -20e e nd 31kEn 06- 20d 0706 2-1 0420Index vs Week of 1-05-20*Sustainable Market Share Index : 2020 Dollar Sales* Index vs 100Category Sustainability-Marketed Products Center forSustainable BusinessBoth sustainability-marketed and total category sales grew significantlyand similarly the week ending March 15thSustainability-Marketed Products and Total Category Index180.00160.00140.00120.00100.0080.0010
Sustainable Market Share Index : Sustainable Shares: COVID-19Center forSustainable BusinessShares of sustainability-marketed products grewsignificantly the week of March 15th and have continuedto maintain share through mid-JuneSustainability-Marketed Product n4dW05ee-1ks7End61410.00%11
-1.00Paper TowelsCoffeeWeight ControlToilet TissueSoapPaper NapSkin CareMilkFacial TissueFresh BreadHouse CleanerNatural CheeseYogurtChocolateBottled JuicesDish DetergentPet FoodCups and PlatesSalty SnacksDin EntreesVitaminsCarb BevLaundry DetToothpasteEnergy DrinksPet TreatsFood & Trsh BgLaundry CareFloor CleanersDiapersCrackersSoupSanitary NapCookiesDeodorantCerealShare change week ending March 15 vs. prior periodSustainable Market Share Index : March 15 share performanceCenter forSustainable BusinessPaper goods, skincare and food items drove thegreatest week to week share increases (week ending March 15 vs prior week).4.003.503.002.502.001.501.000.500.00-0.5012
Sustainable Market Share Index : YTD Sustainable Market ShareCenter forSustainable BusinessAnnual Share of SustainabilityMarketed ProductsSustainability-marketed products now account for 16.8% YTD, .6pts vs. 201925%20%16.13%*15%13.66%*10%* Shares updated due to CSB & IRI re-categorizations** January-June 15th, 202016.77%**5%0%201520192020 YTD**13
Sustainable Market Share Index : Research Question 3Center forSustainable BusinessResearch Question 3:Are there specific product categories where the purchases of more sustainable productoptions out or underperform less sustainable alternatives?Research Result: Yes. Categories that demand high functionality (e.g., detergent) do not have a largepercentage of sustainable purchases, but nevertheless experienced share growth. Conversely, categories with low functionality demands (e.g., dairy) have higher categoryconsumption.14
2019 Sustainability-Marketed Products Share ofCategorySustainable Market Share Index : Shares of Sustainable Products80%70%60%50%40%30%20% 5% Share5%- 20% Share 20% ShareDiapersCookiesSanitary NapkinsToothpasteChocolateLaundry CareLaundry DetergentPet TreatsPet FoodEnergy DrinksCarbonated BevTrash BagsCerealCrackersFresh BreadFloor CleanerSoupWeight ControlPaper TowelsSalty SnacksVitaminsFrozen DinnerDish DetergentHousehold CleanerDeodorantCups and PlatesPaper NapkinsToilet TissueYogurtFacial TissueMilkBottled JuiceSoapCoffeeNatural CheeseSkin CareCenter forSustainable Business10%sueYoguTortil etTissueil edgsBeveraEngeersgyDrinksPetFooPeLadtTundrry D e teryNapkinsCookiesDiPaapeper N irDennteerrgEnenttrees-FZVitamSainl tysSnPaacpekrT sWoweigelshtCont SkNainCtuaral C reheeseCoff ee0%15
Sustainable Market Share Index : Research Question 4Center forSustainable BusinessResearch Question 4:What is the impact of price on purchases of sustainable products*?Research Result: Despite significant price premiums, sustainability-marketed products grew far faster thanthe conventionally branded players and had lower price sensitivity in 2/3rds of thecategories examined.Analysis conducted was among branded players and excluded store brand/private label; based on 36 categories examined16
Sustainable Market Share Index : Price PremiumCenter forSustainable BusinessSustainability-Marketed Products’ PricePremium vs. eted products enjoyed a sizeable price premium at39%* over conventionally-marketed products, and increased 5.3 pts since 201450%45%40%35%39.46%34.21%30% 5.3pts25%20%15%10%5%0%20142018*Weighted by Sustainable Sales of categories examined; analysisexcluded store brand/private label17
Sustainable Market Share Index : Price Premium by CategoryCenter forSustainable Business2018 Sustainability-Marketed Products’ PricePremium/DiscountPrice premiums ranged from 3% to over 150%. Only a few categorieshad a price discount vs. conventionally-marketed 00%74%75%50%25%3% 3%14%18% 20% 21% 22% 22% 23%28% 29% 32% 32%35%42% 46%47% 49% 50% 50%80%56%0%-25%-50%-5%-19%-27%-33%-75% -58%rssssse t e rsdseppesertlsoltslknt e nt ks es ksntrsrsalins ar e els in sM i ea ne e es o ra Bag ape on tr a ne So a er e So u o gu late Rol colat p as cke pkin u ice off e tre e o kie r ea Fo o Car r ag epk in c To w ita m t er ge t er g Dr in issu n achildP &aCYC En Co t T e t dr y vea Na d JhehrCk rtoSlToCDCNseye&thVSoleldCeP nrehD y D er g cia a ltyaC ToldrCPerD Tr aBepeup s eapea ry ttlr En Faeig looshnnh o tu rSLa tedPanit BoCu h BrndPaFWDi un dDise Naa18aausnSseLaHoFrodr boFoCa
Sustainable Market Share Index : Growth of Sustainable BrandedPlayersCenter forSustainable Business Sales % Growth (Ex-PrivateLabel) 2014-2018Among branded players, sustainability-marketed products grew over 7xfaster than conventionally-marketed products, indicating consumers’willingness to pay higher -Marketed ProductsConventionally-Marketed Products19
in Dianepr E e rsntreeC sereD Pe a listFhD ooetderPe geFrt T ntesrehatBrea Yo sdgN a n u rtatdHuRC ou s ral C ollsarehbo h oeena ldste Cl edeBe a neEn ver rer agW gy esei Drgh int C ksontC rolookC ie srackCho erscolateSa Colty ff eBo Sn eacttleFl d J ksoouSa r C icele sniatary neNa rspkinsSoupMDeo ilkdorantPape So aFa r To pcia l welsTissueVita smS inLa kin sFo un caro d dry eTr C aarC sh eupBasPa & P gspelar N te sapLaTkun oo insdr thpyD asteeTo t ergile e ntT tissueDDifference in Elasticity between Sustainability-Marketedand Conventionally-Marketed ProductsSustainable Market Share Index : Price Sensitivity6Less Sensitive to PricePrice sensitivity is the % change in volume due to a 1% change in price.Center forSustainable BusinessSustainability-marketed products had lower price sensitivity in mostcategories studied: Food categories had the greatest price leverage.More Sensitive to Price543210-1-2-320
Sustainable Market Share Index : Research Question 5Center forSustainable BusinessResearch Question 5:Are there geographical differences in sustainable purchasing?Research Result: Yes. The top 5 states in terms of per capita* basis spending of sustainability-marketedproducts are New Hampshire, Maine, Massachusetts, Vermont, and Connecticut; thebottom five are Mississippi, Utah, Texas, Alabama and Kentucky Measured by state-wide purchases, however, California, Florida, Texas, New York, andPennsylvania top the ranking in terms of total sustainable dollars spent due to the size ofthe states.*STI: PopStats; based on 36 categories examined21
Sustainable Market Share Index : GeographyCenter forSustainable Business22
Sustainable Market Share Index : Research Question 6Center forSustainable BusinessResearch Question 6:What is the demographic profile of the sustainable purchaser*?Research Result: Millennials, upper income, college-educated and more urban cohorts are more likely tobuy sustainability-marketed products. Baby Boomers, Gen Xers, upper and middle income, college educated and urban cohortsaccount for the bulk of the sustainable dollars spent.Analysis conducted using IRI HH panel data; based on 35 categories examined23
Sustainable Market Share Index : Generational CohortsCenter forSustainable BusinessThe younger the household, the more likely they were to buy sustainability-marketedproducts. However, most sustainability-marketed product purchases came fromGen X and Boomers.Total CPGSustainable s33%Seniors &Retirees10%Index 120 Index 80-120Index 80Chart read as: Millennials purchased a significantly higher percent ( 1.2x) of their Carbonated Beverage purchases on sustainability-marketed products, than did Average HHs.24
Sustainable Market Share Index : Household EducationCenter forSustainable BusinessThe higher the education, the more likely they were to buy sustainability-marketedproducts. Most of the sustainability-marketed product sales came from Collegegraduates or those with some college education.Total CPGSustainable lege33%SomeCollege25%GraduatedHigh School16%Some HighSchool orLess2%* 7% had no female presentIndex 120 Index 80-120Index 8025Chart read as: Female HH who attended Post Graduate School purchased a significantly higher percent ( 1.2x) of their Carbonated Beverage purchases on sustainability-marketed products, than did Average HHs.
Sustainable Market Share Index : Income TiersCenter forSustainable BusinessThe higher the household income, the more likely they were to buy sustainabilitymarketed products. Upper/middle income made up the highest percent of sustainabilitymarketed product dollars spent.Total CPGSustainable SalesCompositionUpper38%Middle39%Lower22%Index 120 Index 80-120Index 8026Chart read as: Upper Income Households purchased a significantly higher percent ( 1.2x) of their Carbonated Beverage purchases on sustainability-marketed products, than did Average HHs.
Sustainable Market Share Index : UrbanicityCenter forSustainable BusinessThe more urban the residence, the more likely the purchases of sustainabilitymarketed products. County A accounted for just under half of the total CPGsustainability-marketed dollars spent.County A44%County B30%County C/DTotal CPGSustainable SalesComposition26%Index 120 Index 80-120Index 80Chart read as: County A purchased a significantly higher percent ( 1.2x) of their Carbonated Beverage purchases on sustainability-marketed products, than did Average HH’s.27
Additional Research PlannedCenter forSustainable BusinessEarly 2021, the NYU Stern Center for Sustainable Business will release: The full year impact of COVID-19 on sustainability-marketedproduct purchases. The impact of a narrowing price gap between sustainabilitymarketed products and conventionally-marketed products onvolumes as well as a detailed analysis of price elasticity.28
About the NYU Stern Center for Sustainable BusinessCenter forSustainable BusinessThe NYU Stern Center for Sustainable Business was founded on the principle thatsustainable business is good business; delivering better financial results while protecting theplanet and its people. We aim to help current and future business leaders embrace proactiveand innovative mainstreaming of sustainability, resulting in competitive advantage and resiliencyfor their companies as well as a positive impact for society.Randi Kronthal-Sacco is a Senior Scholar, Marketing and Corporate Outreach for the NYUStern Center for Sustainable Business. Ms. Kronthal-Sacco was a senior executive at Johnson& Johnson and is a Stern alumna.Tensie Whelan is a Clinical Professor at NYU Stern and Founding Director of the NYU SternCenter for Sustainable Business.Please contact sustainablebusiness@stern.nyu.edu or rkrontha@stern.nyu.edu with any comments or questions.29
AcknowledgmentsCenter forSustainable BusinessThe NYU Stern Center for Sustainable Business would like to thank the IRI organization for thegenerous donation of its data.A special thank you to IRI’s Larry Levin, Executive V.P., Market and Shopper Intelligence. Wealso are grateful for the support of Jeanne Livelsberger, Executive Vice President and coLeader of IRI’s Market and Shopper Intelligence Center of Excellence, and Sheila Noojibail,Vice President and leader of IRI’s Shopper Intelligence Platform.We would like to acknowledge the research support of NYU Interns Dorea Novaez, AlexandraWalstad, Samuel Wallace, Ethan Ou, Jessica Tou, Patrick Wu, and Anirudh Dave as well asmarket research consultants Elena Kanner and Biren Shah.30
Center forSustainable BusinessAppendix31
MethodologyCenter forSustainable BusinessData: IRI Point of Sale and HH panel data in all measured channels in U.S. excluding alcohol and tobaccoSelection Criteria: 36 categories examined held the largest dollar volume; in a few cases, smaller categories were included to ensure fair representation of all major CPG segments 73,293 products reviewed; products with 0.00 dollar share of category were not considered unless identified as organic. Due to lack of visibility into private label product claims, private label was not included as sustainability-marketed, with the exception of organic private label in thefood categories.Sustainability-Marketed Products Determination: Identified all skus for each category marketed as sustainable with on-package communication, e.g. 3rd party certification (e.g. USDA Organic), containing organici
Center for Sustainable Business Sustainable Market Share Index : Executive Summary We reviewed consumer purchasing of sustainability-marketed products in 36 CPG categories comprising 40% of the total CPG market* ( ). Our findings are: Sustainability-marketed products . delivered 54.7% of CPG market growth
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