Offering Ethicality & Sustainability in Food & Drinks

Overview
Catalyst
Summary
Table of Contents
Table of figures
Table of tables

THE FUTURE DECODED
INTRODUCTION: Ethical consumerism is influenced by numerous drivers and inhibitors
Consumers are pivotal to the growing influence of ethicality and sustainability in packaged goods
Ethical consumerism involves a mix of positive and negative behaviors, while sustainability is a more holistic term capturing a broader range of issues
Sustainability reflects wider global issues ranging from the natural environment to financial markets
Ethical consumerism is driven by a number of influences which are covered in detail in the TRENDS and INSIGHTS in this report
TREND: Environmental concerns among individuals are escalating globally
Knowledge of and interest in environmental issues is growing although gaps are also still apparent
Concern surrounding climate change rivals that of the economy and rising unemployment, even amid a deep economic crisis
Environmental concerns are causing consumers to reflect on their consumption levels
Key take-outs and implications: ethical and environmental issues will be a top priority for global consumers in the coming years which necessitates considerable industry focus too
TREND: Consumers are acting on ethical beliefs in their general product choices, but a disconnect exists between attitudes and actual purchase behavior
Consumers are reflecting on their own behavior in light of escalating ethical consciousness
But there is often a gap between stated importance of ethical issues and actual purchase behavior
Ethicality-aligned product features are typically lower down the list of behavioral influencers for both store and in-store food and beverage choices
Key take-outs and implications: strong interest in ethical and environmental causes is not fully matched by consumption behavior so there is no guarantee that consumers will consistently choose 'good companies'
TREND: Organic food spend growth is slowing, but the market evolution reflects the ongoing influence of environmentalism and health in directing consumer choices
Organic food consumption is still relatively infrequent in most countries, but has not been significantly hindered by the downturn
The strongest growth in the organic sector is concentrated in emerging markets
Key take-outs and implications: strong interest in ethical and environmental causes is not fully matched by consumption behavior
TREND: Growth in Fairtrade food and drinks is expected to supersede organic over the next five years
Awareness of Fairtrade is by no means universal, but the importance attached to it is generally high
Consumers are making more effort to support Fairtrade, but only a minority do so routinely
Fairtrade sales are still experiencing phenomenal growth across all regions
The ongoing growth and mainstreaming of Fairtrade is potentially dangerous to the value proposition
Key take-outs and implications: Fairtrade food and drinks will continue to establish a mainstream presence in the next five years, although care does need to be take not to overly commercialize the value proposition
INSIGHT: Animal welfare and livestock's environmental impact are important issues in ethical food and beverage consumption
Animal welfare is an important consideration for consumers, at least attitudinally
Consumers primarily opt for welfare-friendly food due to self-interest factors associated with product quality and health benefits
The role of livestock in climate change is an issue of growing focus
Key take-outs and implications: when it comes to issues of food production, consumers' stated concern is typically not matched by their behavioral response
INSIGHT: Environmental concerns drive heightened interest in regional/local food and drinks
Key take-outs and implications: locally-produced food and beverages tap into the growing sense of social responsibility among global consumers
INSIGHT: Packaging has emerged as a highly important issue in the sustainability debate
Sustainable packaging grows in importance as consumer awareness increases
Consumers are beginning to put their ideals to practice when it comes to reduced packaging
Recyclable and sustainable packaging is appealing for consumers as it offers a simple yet effective solution to address climate change
Key take-outs and implications: consumers feel that grocery packaging is excessive and are making consumption adjustments in response so producers must react to ensure packaging is more sustainable
INSIGHT: Ethical consumerism can have important implications for emotional wellbeing
Living an ethical or sustainable lifestyle is an important part of creating a feeling of wellbeing
Global warming is also directly associated with negative personal health effects
Key take-outs and implications: environmentalism and health are more inter-related than many realize
INSIGHT: Many factors impede the larger-scale adoption of ethical and sustainable food and beverages such as lack of perceived value, lack of trust, and limited choice
A lack of specific knowledge is one important consideration impeding ethical consumerism
The price premiums often accompanying ethical products are an ongoing obstacle to larger scale adoption
The 'greenwashed' consumer has become more discerning and less trusting about declarations of ethicality and sustainability
Ethical shopping will sometimes be perceived as a hassle for time poor shoppers, which is why 'choice editing' has emerged as a credible retailing tactic
Key take-outs and implications: industry players need to be proactive in addressing the obstacles impeding ethical and environmental consumerism
INSIGHT: Propensity to buy ethical products can be characterized by important age and gender distinctions, but there is a degree of commonality across socio-demographics
Most consumers recognize the importance of buying socially responsible products, irrespective of age or gender
Female consumers are slightly more inclined to buy organic food and drinks on a frequent basis
Younger female consumers are making the most effort to buy fair-trade food and drinks
The benefits of reduced packaging resonate most for older consumers
Older consumers are most responsive to locally produced food and drink products
Attitudinal variances by age can be particularly marked in emerging markets where younger generations hold more cultural capital and are highly important agents of change
The advent of parenthood can have a profound impact on proclivity towards socially responsible products
Idiosyncratic personality traits can also help define the 'green' consumer segment
Key take-outs and implications: the appeal of various ethical and environmental benefits increasingly transcends socio-demographics albeit with nuances associated with the differing ethical issues

ACTION POINTS
ACTION: Ensure that more pertinent product attributes are not compromised for ethical benefits
Re-enforce the personal benefit by clearly communicating the 'win-win' scenarios when marketing ethicality and sustainability credentials
Sensory benefits in particular must not be core to the ethical proposition
Delivering ethics and convenience is a compelling benefit for time-poor, altruistic consumers
If you do have a real ethical/sustainability advantage be sure to use it to inspire customers and end consumers
ACTION: Market ethical products as a positive lifestyle choice
Stress individual choice along with environmental benefits and focus on the positive emotions
Recruit passionate advocates to leverage the viral effect that is possible with compelling sustainability-led product and marketing concepts
Communicate the positive and 'cool' aspect of ethical consumerism
Use ethicality and environmentalism to leverage brand authenticity
ACTION: Ensure ethical claims deliver on their promise and thus serve to engender consumer trust
Adopt a longer term dedication to a particular cause helps to re-enforce the integrity of the commitment
Be particularly attentive to brand trust indicators because it will influence the credibility (and effectiveness) associated with sustainability claims
Ensure that all sustainability claims are transparently well-documented and measurable
Be prepared to validate the scientific case behind each environmental and ethical claim
Ensure that ethical claims provide a complete picture of the environmental impact of a given product across the entire lifecycle
Marketing literature should be educational and engaging to spread awareness and create sustained interest
Tell a compelling brand or product story so that consumers are invested in the process
Embrace new communication platforms to help consumers make informed choices
Ensure flexibility in approach, especially in the more diverse, sizable emerging markets such as China
ACTION: Bring ethical consumerism to mass market, but be wary of over-commercialization
From the top-down develop strong corporate brands and ensure these brand values are reinforced by individuals throughout the company
Use leading/flagship brands to demonstrate a wider commitment to ethicality and sustainability but also recognize they will be help to higher scrutiny
Develop branded initiatives that enable consumers to more easily identify eco-friendly packages
Ensure that principles of ethicality are an important component of emerging market strategies
Embrace ethicality across all points of consumption: foodservice
Embrace ethicality across all points of consumption: retail
Consider acquisition as a more credible route to the ethical/sustainability market
Align with other industries and sectors where issues of ethicality and sustainability are also becoming pervasive

APPENDIX
Definitions
Supplementary data
Report methodology
Further reading and references
Ask the analyst
Datamonitor consulting
Disclaimer
List of Tables
Table 1: Consumer survey: the extent to which global citizens across 25 countries perceive global warming to be a serious problem, by country, 2007-2009
Table 2: Consumer survey: the extent to which global citizens across 25 countries feel that perceive that protecting the environment should be given priority over economic growth, by country, 2007-2009
Table 3: Consumer survey: the extent to which consumers are buying organic food and drinks, in 17 countries across Asia Pacific, Europe, Latin America, MENA and North America, by country, 2009
Table 4: Consumer survey: influence of natural/organic claims on food and beverage choices, in 17 countries across Asia Pacific, Europe, Latin America, MENA and North America, by country, 2009
Table 5: Consumer survey: the extent to which consumers are reducing usage or organic food and drinks products and ingredients because of the current economic downturn, in 17 countries across Asia Pacific, Europe, Latin America, MENA and North America, by country, 2009
Table 6: Organic food and non-alcoholic beverage spend in five Asia Pacific countries (US$m), by country and product format, 2004-2014
Table 7: Organic food and non-alcoholic beverage spend in eight major European nations (US$m), by country and product format, 2004-2014
Table 8: Organic food and non-alcoholic beverage spend in Saudi Arabia and the UAE (US$m), by country and product format, 2004-2014
Table 9: Organic food and non-alcoholic beverage spend in the US, Canada and Brazil (US$m), by country and product format, 2004-2014
Table 10: Consumer survey: the importance attached to choosing grocery products supporting Fairtrade, in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008
Table 11: Consumer survey: the extent to which consumers are buying fair-trade food and drinks, in 17 countries across Asia Pacific, Europe, Latin America, MENA and North America, by country, 2009
Table 12: Consumer survey: perceived influence of Fairtrade claims on food and beverage choices, in 17 countries across Asia Pacific, Europe, Latin America, MENA and North America, by country, 2009
Table 13: Consumer survey: the extent to which consumers are reducing usage of Fairtrade/ethical food and drinks products and ingredients because of the current economic downturn, in 17 countries across Asia Pacific, Europe, Latin America, MENA and North America, by country, 2009
Table 14: Fairtrade food and non-alcoholic beverage spend (US$m) in five Asia Pacific nations, by country and product format, 2004-2014
Table 15: Fairtrade food and non-alcoholic beverage spend (US$m) in Europe, by country and product format, 2004-2014
Table 16: Fairtrade food and non-alcoholic beverage spend (US$m) in MENA, by country and product format, 2004-2014
Table 17: Fairtrade food and non-alcoholic beverage spend (US$m) in the Americas, by country and product format, 2004-2014
Table 18: Consumer survey: consumers' perception of the extent of grocery product over-packaging, in 15 countries across Europe, Asia Pacific, South America and the US, by country and gender, 2008
Table 19: Consumer survey: importance of living an ethical or sustainable lifestyle in creating a feeling of wellbeing or wellness, in 15 countries across Asia Pacific, Europe, Latin America and North America, by country, 2008
Table 20: Consumer survey: agreement that people should be willing to pay higher prices in order to address global climate change in 25 countries, by country, 2009
Table 21: Consumer survey: the importance of protecting the environment, in 15 countries across Asia Pacific, Europe, Latin America and North America, by country, 2008
Table 22: Consumer survey: the extent to which protecting the environment has changed in importance compared to two years ago, in 17 countries across Asia Pacific, Europe, Latin America, MENA and North America, by country, 2009
Table 23: Consumer survey: perception of how well informed consumers feel about environmental issues, in nine countries in Western and Eastern Europe, by country, 2007
Table 24: Consumer survey: the extent to which personal carbon footprint/individual impact on the environment has changed in importance compared to two years ago, in 17 countries across Asia Pacific, Europe, Latin America, MENA and North America, by country, 2009
Table 25: Consumer Survey: the extent to which consumers agree that it is important to buy ethical or socially responsible products, in 15 countries across Asia Pacific, Europe, Latin America and North America, by country, 2008
Table 26: Consumer survey: the extent to which consumers agree that they have altered their purchasing habits to purchase more ethical or socially responsible products, in 15 countries across Asia Pacific, Europe, Latin America and North America, by country, 2008
Table 27: Consumer survey: the extent to which the range of organic products influences where consumers do most of their grocery shopping, in 17 countries across Asia Pacific, Europe, Latin America, MENA and North America, by country, 2009
Table 28: Consumer survey: the extent to which ethical policies of the retailer influence where consumers do most of their grocery shopping, in 17 countries across Asia Pacific, Europe, Latin America, MENA and North America, by country, 2009
Table 29: Consumer survey: influence of ethics or sustainability benefits on food and beverage product choices, in 15 countries across Asia Pacific, Europe, Latin America and North America, by country, 2008
Table 30: Consumer survey: the influence of production methods on food and beverage product choices, in 15 countries across Asia Pacific, Europe, Latin America and North America, by country, 2008
Table 31: Consumer survey: the importance of choosing grocery products produced locally in the region you live, in 15 countries across Asia Pacific, Europe, Latin America and North America, by country, 2008
Table 32: Consumer survey: the propensity to buy locally produced food and drinks, in 17 countries across Europe, Asia Pacific, South America, North America and the Middle East, by country, 2009
Table 33: Consumer survey: influence of reduced packaging claims on food and beverage choices, in 17 countries across Asia Pacific, Europe, Latin America, MENA and North America, by country, 2009
Table 34: Consumer survey: the extent to which consumers are buying minimum or reduced packaging food and drinks, in 17 countries across Asia Pacific, Europe, Latin America, MENA and North America, by country, 2009
Table 35: Consumer survey: the extent to which consumers agree that organic food and beverages are worth paying a bit extra for, in 17 countries across Asia Pacific, Europe, Latin America, MENA and North America, by country, 2009
Table 36: Consumer survey: the extent to which consumers agree that fair-trade food and beverages are worthy paying a bit extra for, in 17 countries across Asia Pacific, Europe, Latin America, MENA and North America, by country, 2009
Table 37: Consumer survey: perceived trustworthiness of corporations' ethical declarations, in 15 countries across Asia Pacific, Europe, Latin America and North America, by country, 2008
Table 38: Consumer survey: perceived trustworthiness of food and beverage products claiming natural or organic ingredients, in 15 countries across Asia Pacific, Europe, Latin America and North America, by country, 2008
List of Figures
Figure 1: Corporate social responsibility remains a top-tier business issue for consumer companies
Figure 2: Ethical consumerism involves a mix of 'positive' and 'negative' consumer behaviors
Figure 3: Sustainability captures an even broader range of issues than ethical consumerism although there is considerable overlap
Figure 4: Ethical consumerism is influenced by numerous drivers and inhibitors
Figure 5: Numerous studies have shown that consumers in developing countries feel heightened responsibility for the environment
Figure 6: The importance of protecting the environment has grown for many global citizens in recent years
Figure 7: Consumers from high growth markets outside of Europe and North America tend to exhibit the strongest feelings about the need for strong corporate contributions to society & the environment
Figure 8: The extent people feel truly informed about environmental issues is lower than expressed concern
Figure 9: There is worldwide consensus that global warming is a serious problem
Figure 10: The majority of global citizens hoped that their own country would take a leadership in during the Copenhagen Summit
Figure 11: Despite being in a global recession in 2009, a considerable proportion of global citizens would sacrifice some economic growth to address environmental concerns
Figure 12: On a like-for-like basis, in only a few countries did individuals consider sustainability-led issues to be more of a concern than the economy in 2009
Figure 13: Sensitivity to environmental issues in the US varies considerably by political affiliation
Figure 14: Reducing consumption levels in order to improve the environment is an ideology that majorities of global citizens subscribe to-at least from an attitudinal perspective
Figure 15: Individual carbon footprint has become more important to nearly half of global consumers
Figure 16: Many global citizens are adopting a tougher personal stance about one's own impact on the environment which reflects a relatively pronounced belief that individual action can have an impact
Figure 17: Four different consumer segments reflect the approach and outlook individuals across countries adopt regarding their own personal impact on the environment
Figure 18: The disconnect that exists between ethical attitudes and actual purchase behavior has been widely reported in various research studies
Figure 19: The perceived importance of buying ethical products exceeds the willingness to change purchasing habits to buy such products
Figure 20: An overwhelming sentiment exists among Western and Eastern Europeans that corporations are not doing enough to address climate change
Figure 21: Very few consumers acknowledge that they are greatly influenced by a company's environmental friendliness
Figure 22: A marked gap exists in the stated influence of product quality versus ethical or sustainability factors when consumers across territories decide where to shop
Figure 23: Taste and flavor typically dictates consumers' food and beverage choices, with ethics and sustainability still a secondary concern for most
Figure 24: Although opinion is somewhat divided, US consumers lean towards the view that organically grown food is more healthful than conventionally grown food
Figure 25: The propensity to purchase organic food and beverages is considerably less common than the conscious efforts made to eat healthily or buy food and beverages on the basis of value-for-money
Figure 26: The comparatively small organic markets in China, South Korea and India are expected to grow rapidly over the next five years
Figure 27: Among the countries covered, Spain and Sweden are expected to show the most growth in organic food and non-alcoholic beverages over the next five years
Figure 28: The organic markets in Saudi Arabia and UAE are comparatively small but both exhibit strong growth potential
Figure 29: The enormous organic market in the US will grow at a slower rate than in Brazil and Canada
Figure 30: Awareness of Fairtrade varies markedly across the globe with Europe leading the trend
Figure 31: Initiatives such as the Fairtrade Foundation's "Big Swap" campaign promote awareness and trial of Fairtrade alternatives
Figure 32: The propensity to purchase Fairtrade food and beverages is considerably less common than the conscious efforts made to eat healthily or buy food and beverages on the basis of value-for-money
Figure 33: Australia and Japan dominate Fairtrade food and beverages in the Asia Pacific region
Figure 34: Fairtrade market growth in Sweden will continue to outpace the rest of Europe over the next five years
Figure 35: Fairtrade products in MENA still only represent a small fraction of the food and beverage category
Figure 36: The bulk of Fairtrade sales came from the US, however major growth will come from Canada in the next five years
Figure 37: Europeans attach considerable importance to the protection of farmed animals
Figure 38: US citizens' concern about the humane treatment for farmed animals is pronounced, but lower than other personal issues such as cost of food and personal finances more generally
Figure 39: Few Europeans are highly knowledgeable about animal farming practices in their given country
Figure 40: Campaigns such as Freedom Food's latest drive to help improve farm animal welfare will further lead to consumers thinking more about what they buy and what they eat
Figure 41: In many European nations, the fact that animals are better treated is often de-prioritized as an issue of importance when buying food products produced in a more animal friendly manner
Figure 42: Ethicality can be an important route to creating a perception of quality and in giving consumers feature-driven incentives to increase their willingness to pay (WTP)
Figure 43: In recent years, a spate of campaigns have been highlighting the relationship between animal farming and climate change
Figure 44: A notable segment of consumers are actively limiting their meat consumption
Figure 45: More than a quarter of consumers across 17 countries substantially decreased their meat consumption in 2008-09
Figure 46: Environmental considerations are not the core driver for meat reduction
Figure 47: The propensity to regularly buy local food and drinks is generally a lot lower than the attitudinal importance attached to the issue
Figure 48: Localism in food and beverage buying is still comparatively uncommon despite becoming a more prominent issue in recent years
Figure 49: Sustainable packaging can be identified narrowly or broadly and is one of a multitude of issues that must be addressed in packaging as a growing number of trends simultaneously shape consumers' packaging expectations
Figure 50: Public awareness and interest in sustainable packaging is fueled by a plethora of communications focusing on the issue
Figure 51: Consumers are not willing to compromise hygiene and protection for environmental benefits
Figure 52: Buying minimum or reduced packaging food and drinks is uncommon in the context of other purchasing habits, but now has noteworthy prevalence in many markets
Figure 53: Consumers are putting their beliefs into practice in the case of reduced packaging food and drinks
Figure 54: Sustainability-led packaging innovation can take many guises
Figure 55: The majority of European consumers employ environmentally friendly measures that either require little effort or offer cost savings
Figure 56: US consumers favor environmental measures that are convenient or save them money
Figure 57: The pursuit of products with environmental and/or ethical credentials can have health connotations which is why the 'ethical wellbeing' trend should be recognized by industry players
Figure 58: Ethicality and sustainability are associated with a sense of wellbeing
Figure 59: Emerging market consumers are particularly likely to believe that environmental problems are having a negative impact on their health
Figure 60: Global warming is associated with a lower quality of life, especially among emerging market consumers
Figure 61: Ethical wellbeing is a compelling opportunity providing impetus for strategy defining social marketing initiatives
Figure 62: Carbon footprinting is not a universally recognized, let alone understood, term
Figure 63: Consumers understanding of what Fairtrade means varies considerably
Figure 64: The escalating value consciousness among consumers has also resulted in brand switching which further heightens the pressure for ethicality-led brands to exude value
Figure 65: Asian consumers exhibit a distinct willingness to pay higher prices to address climate change
Figure 66: Global consumers are generally more willing to pay more for organic over fair-trade products
Figure 67: Reflecting widespread skepticism, less than one in five consumers believe that corporations embrace green initiatives primarily because they genuinely care about the environment
Figure 68: Over one-quarter of consumers are skeptical of corporations' ethical claims
Figure 69: When consumers feel there is too much choice and many rely on habit to direct what they buy, it can have e negative impact on the adoption of ethical alternatives such as Fairtrade
Figure 70: Consumers across the globe are largely welcoming of retailer 'choice editing', at least in theory
Figure 71: The notion that is important to buy ethical or socially responsible products is not significantly influences by age or gender
Figure 72: The most senior age cohort is least likely to buy into the benefits of organic food and drinks
Figure 73: 25-34 year old consumers are most likely to regularly buy fair-trade food and drinks
Figure 74: The appeal of reduced packaging food and drinks increases with age
Figure 75: Locally produced food and drinks were purchased most often by 50-64 year old consumers
Figure 76: While ethicality and sustainability credentials do influence food and beverage choices, manufacturers and retailers must not lose sight of the wider hierarchy of purchase influences
Figure 77: UK-based Ganic Aroma Water capitalizes on the important but seldom-exploited sense of smell to promote its range
Figure 78: Using partially or wholly recyclable stock is a particularly effective way to not only communicate environmental credentials, but also achieve a visual and tactile sense of old-world charm
Figure 79: Formulation is the most common route to genuine innovation among food and beverages tagged as natural, organic or Fairtrade
Figure 80: Ethically-aligned products should not overlook the strong appeal of convenience
Figure 81: A real ethical/sustainability advantage can be used to inspire customers and end consumers
Figure 82: Ethical products can effectively tap into the desire to purchase in line with one's expressed values
Figure 83: The GoodGuide iPhone application gives users access to product ratings and quality checks for over 70,000 items, as well as instant recommendations based on what's important to them
Figure 84: Using high-profile names to promote a cause helps ensure wide visibility among consumers
Figure 85: Environmentalism is not just hip, it also has genuine luxury value
Figure 86: Three important commonalities represent the crossover between ethical/environmental consumerism and authenticity
Figure 87: There are four reasons why trust and ethos based branding are of increasing importance
Figure 88: PepsiCo was among the first companies to provide consumers with an absolute number for a product's carbon footprint
Figure 89: Bloomsbury & Co's Climate Change Chocolate communicated its sustainability benefits in terms that consumers could relate to
Figure 90: Truly embracing sustainability means evaluating an entire business structure
Figure 91: Wal-Mart has implemented numerous initiatives to improve operational and supply chain efficiency
Figure 92: Nestle's manifesto of 'Creating Share Value' involves demonstrating responsibility across the entire supply chain
Figure 93: 479° Popcorn goes to considerable lengths to validate its environmental credentials
Figure 94: Allow consumers to "connect" with the source of your products
Figure 95: Equal Exchange has implemented an education program to raise awareness of core issues concerning food production and global trade
Figure 96: Many companies including Innocent drinks (below) now include a breakdown of their carbon footprint, allowing consumers to compare brands based on sustainability issues
Figure 97: Del Monte has a dedicated section within the company website emphasizing its commitment to environmental and social responsibility
Figure 98: Guayaki details consumers' positive impact on the environment across several stages of the product life cycle
Figure 99: Your Pure Honey engages consumers by allowing them to become personally involved in the brand story
Figure 100: The danonecommunities website is a dedicated vehicle for communicating the company's CSR model
Figure 101: Sustainability needs to be anchored in the wider corporate brand philosophy to enhance credibility
Figure 102: Sustainability has an important role internally within an organization, in particular employees
Figure 103: Home Depot's Eco Options demonstrate the company's commitment to the environment and sustainability
Figure 104: Opportunities exist to align or partner with ethical products and services from other industries

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