Market View: What is Sustainability and What Is it Worth?

April 21, 2015
Just because some people are begging for sustainability in products does not mean they will pay for it or give up other attributes to get it.

Every consumer I talk to is in favor of sustainability. However when I've asked 20 people what it means I got 20 different answers.

In my research, I asked people to tell me how important sustainability was for a specific product: milk. In an unaided fashion, it was almost never top of mind. When I gave the participants a list of attributes and asked which were important, it was rated reasonably high. However, when I used statistical techniques such as Discrete Choice Experiments that require consumers to trade off other attributes like price, taste or quality, sustainability dropped to the bottom of the list.

Consumers are all in favor of a sustainable food supply as long as they don’t have to give up anything that is really important to them to get it. “Sustainably raised” had only 40 percent of the impact compared to the impact of the No. 1 attribute.

I've tried to find out what type of sustainability consumers would value and pay more for but I have discovered this may be one of the most complex consumer attributes to describe; it seems to be in the same category as “quality.” That is, different people define sustainability in different ways, and they place differing amounts of value on each way.


What I find most interesting is the interaction between sustainability and many other commonly used food marketing concepts. For example, I find the very people who are strongly against the use of GMOs are also strongly in favor of less use of pesticides, herbicides and water. Yet, one of the major advantages of GMOs is they require less use of pesticides, herbicides and water.

Another example is the use of hormones to increase milk production in cows. Many consumers who claim to be strongly in favor of sustainability find milk from treated cows to be objectionable. Yet, getting milk from treated cows is a very sustainable practice. Since productivity per cow is increased, they require less feed, less energy use all around and they produce significantly less gas. (Which is probably a bigger advantage for the farmers who live nearby than consumers.

The issue is: What is sustainability in the minds of consumers and how should we best communicate it? Sustainability in the U.S. is not an attribute or benefit that most consumers are willing to give up other benefits for. Thus, if the product is sustainable but not tasty or convenient, taste and convenience will win out. Of course, there are niche markets where people are committed to sustainability, and will trade off other attributes or pay more for the product -- but these are niche markets. Which does not mean these niches are unprofitable. As I have always said, “There are riches in niches.”

However, one should not assume that if you do focus groups with 25 people in two states and the participants say sustainability is important that you should shout it from the roof tops and place it on every label and billboard. Our study had more than 3,000 people, and we found that few people in the group would trade most attributes for sustainable attributes.

Target your product to the consumers who actually value the attribute. If you sell some products that are sustainable and some that do not meet that criteria, it demeans the products that are not sustainable. I discussed this issue previously with GMO-free cereals. When General Mills sells GMO-free Cheerios on the same shelf as all of its other cereals, what does that say about the products that are not GMO-free? GMO-free must be good for you or the company would not mention that on the label. Then, are all the other General Mills cereals not good for you?

This seems to be what food processors are doing. For example, using the Mintel New Product database, between 2013 and 2014 sustainable claims include three of the top 12 claims that new products had on the front of packages.

Put on the label what your consumers value and would be willing to pay for. Just because some people are begging for sustainable products does not mean that when push comes to shove they will actually pay for it or give up other attributes to get it.

In order to be good marketers, many brand managers are trying to differentiate their products, but the real marketing rule is to find a differential advantage. It is only an advantage if consumers are willing to pay for it.

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