Green Products In This Economy
Green Products are they a boom or bust in this economy? That is the question of many in the green business industry. A new consumer research report from Mintel brings a mixture of both dampened growth and an optimistic future with some cautionary words.
Consumer interest for green products is holding steady at 36% according to Mintel. Though not the tripling of interest experienced in the previous year, it shows that interest has not declined and is expected to grow as the economy improves.
Last year the buzz was that people would pay more for green products. This remains true but the dynamics have changed. 54% of respondents say that they would buy more green products but believe that they are too expensive. They are only willing to spend a little extra for them but there is a condition to that purchase.
“Today’s shopper is looking for value,” comments Marcia Mogelonsky [senior research analyst at Mintel]. “Value doesn’t mean just low prices, but cost is definitely a factor. True value includes health and safety benefits, quality, convenience, appeal and trust, all at a reasonable price. Companies who provide those benefits, as well as appease shoppers’ green sensibilities, will enjoy success despite the recession.” http://www.businesswire.com/news/home/20090220005581/en
Mintel forecasts a growth in green products through 2013 of 19%, however expects the recession to impact sales through 2009. Green/ eco/ environmentally friendly personal care and household cleaner markets are expected to perform especially well in the near future.
Steven Boles at Red Green and Blue provides a cautionary note to businesses entering or competing in the green marketplace.
No stimulus or tax cut will increase green product spending in this economic climate unless the prices are brought in line with everyday goods. An expected shift in recession-era consumer spending to ‘best-value’ products may be the catalyst that is needed to bring the price of green products down. The need to survive what could be a prolonged downturn might be enough to end the era of premium pricing of these products. If the product is truly green and eco-friendly, they should be using less energy to make the product, less packaging to contain the product, and less fuel to ship the product. These operational cost savings should provide the necessary room to adjust prices downward.” http://redgreenandblue.org/2009/03/05/can-green-get-more-lean/
Last year these cost savings could have created a wide profit margin for companies. Having said that, many companies that entered the arena as a trend and not as a sustainable opportunity did not take advantage of these additional cost saving, planet saving, and socially agreeable suggestions because they packaged, shipped, and manufactured the products in the same conventional way they have for years.
It is time to rethink and embrace sustainability as a business philosophy not just a trend if you want to survive in this market, maintain your foothold and grow with the coming green wave.
Matthew Rochte is a sustainability consultant working with company management to navigate and realize the opportunities in taking their company green and grow sustainably. http://www.OpportunitySustainability.com
© 2009 Matthew Rochte, Opportunity Sustainability, share with attribution
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Matthew Rochte, LEED AP 
In response to a comment made on Stephen Boles article I offered the following thoughts in this unpublished (as of the time of this post’s publishing) comment.
Lori brings some valuable concerns regarding educating the consumer on the true cost of conventional products and I agree that needs to occur. I see that as a concurrent issue rather than an either/or.
Having said that those companies in the green market place now are struggling with whether or not jump ship, closing their doors, or rethinking their strategies. The greenwasher companies are jumping ship from this market and that’s fine by me. However, as a sustainability business consultant, I’m concerned with helping the companies that “get it” survive and thrive despite the economy. Stephen Boles in this article is speaking to this audience.
How do you survive in this economy if you are a green company? Many of these companies need to rethink their strategies and tactics to ride out this recession and if done correctly will blossom and leap-frog the competition post recession.
I see Boles statements about what a green product “should be” as a wake up call to green companies, many of whom have not looked at sustainability efficiencies in their own business. They have only looked at the product and not at their business systems and behaviors which could save their business. He says “The need to survive what could be a prolonged downturn might be enough to end the era of premium pricing of these products.”
“No stimulus or tax cut will increase green product spending in this economic climate unless the prices are brought in line with everyday goods.” Boles’ statement is simply reflective of the Mintel report findings about current consumer behavior.
If these companies don’t survive then Lori’s arguments about low cost labor and materials and green-washing will be in full force post-recession without the educational and proven value of truly green companies. That would be disastrous!
Boles is right, “These operational cost savings should provide the necessary room to adjust prices downward.” These operational cost savings can provide the opportunity for these companies to survive, grown and succeed. All companies ought to be looking into the systems and behaviors to find more sustainable ways of operating to survive and thrive in this economic and future climates.
Matthew Rochte
Sustainability Consultant
http://www.OpportunitySustainability.com
Copyright 2009 Matthew Rochte, share with attribution