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Nov 18, 2022
With climate change becoming ever present in the media and our immediate environment, whether from air pollution or floods, it’s no surprise that people are starting to broaden the lens through which they view health and wellness. This shift in mindset is beginning to show up in consumer’s purchasing behaviors.
What NeilsenIQ calls “total wellness” is a well-rounded approach to health that consumers are beginning to prioritize in their purchasing decisions. Personal, physical health is balanced with attention to mental and emotional wellbeing, the health of others, pets and the planet. Sustainability and sustainable lifestyle choices are now connected directly with consumer health in their minds, meaning that these ideals increasingly define consumer expectations. What do consumers expect or want when looking at brands/products through a sustainability lens? Ultimately, this will come down to how consumers define Environmental, Social and Governance metrics, now commonly referred to as ESG.
ESG investing refers to the standards for a company’s behavior established by socially conscious investors to screen potential investments. A large ESG factor is environmental criteria: how a company safeguards the environment, including corporate policies addressing climate change. Social criteria are also included in ESG: how relationships with employees, suppliers, customers and the communities in which a company works are managed. Governance involves company leadership, executive pay, audits, internal controls and shareholder rights.
“We’re realizing the consumer has merged the idea of their personal health and that of their family, with the health of the planet and social responsibility. These three pillars are so closely intertwined and we’re seeing that connection come to life in the CPG space,” says Sherry Frey, vice president of total wellness at NielsenIQ.
Consumers are aware of environmental changes, and this knowledge impacts their purchasing decisions. In NeilsenIQ’s 2021 “Global Health & Wellness Study,” 78% of consumers said a sustainable lifestyle was important to them; 61% agreed that environmental issues are having an adverse impact on their current and future health; and 30% are more likely to buy products with sustainable credentials. Climate concerns such as climate change, water pollution, air pollution, food waste, plastic waste and animal welfare topped NielsenIQ’s Omnibus Survey in December of 2021. These values are already impacting products; upcycled design and waste-free engineering are taking the natural foods market by storm.
These environmental lenses are also impacted by an expanding definition of health and wellness that extends past the physical and into the mental, emotional and values-based realms. More than simply meeting basic nutrient needs, consumers are balancing desires that span from reactive actions to preventative ones. Immediate health threats require preparation of protective, urgent care. Consumers increasingly care about the physical and emotional wellbeing of themselves and their families and are taking concrete steps to prevent ailments and maintain wellness long-term. Many consumers utilize access to experts to seek the latest developments in innovation goals to meet theirs’ and their family’s goals. Further, more consumers are now thinking beyond their own community and families: advocating for environmental, ethical, humanitarian and philanthropic causes through their purchases. Questions of note include, “How do we take care of each other?” and “How do we take care of the planet?”
Consumers are responding most to efforts to reduce plastic, employ renewable energy sources, prioritize regenerative agriculture and leave a low carbon footprint by reducing waste. Fifty-three percent of consumers surveyed stated they want companies to reduce the amount of plastic in packaging if not avoid it altogether. At this point, recycling is more of a presumed act rather than an impressive target; 20 of the largest CPG (consumer packaged goods) manufacturers have already committed to utilizing only 100% recyclable packaging by 2030, and most consumers view recycling as a bare minimum. Moreover, consumers are looking at packaging to understand a company’s ESG claims: the information they need to feel comfortable making a purchase. They are unlikely to pull out their phones in the middle of the grocery store to Google a brand, so this information should be available on the product itself. Consumers are also becoming more knowledgeable about certifications like B Corp and Fair Trade—these are becoming necessary to stand out on the shelf. “We’re excited about increased shopper interest in sustainable certifications and we’re seeing that interest prove out through sales growth. Certified B Corp products are up 47% versus three years ago and fair trade products show 29% growth versus three years ago,” says Frey.
Additionally, consumers want companies to actively reduce the amount of CO2 emitted by production processes by limiting the amount of material that enters the landfill both during the creation of a product and after its consumption by shoppers. As brands work to catch the eyes of young consumers between the ages of 18-34, they must recognize this demographic’s interest in sustainability even if they have a lower-than-average income level. “While they do not spend as much money, their purchases are more intentional, and they share their favorite products with their peers. In time, they’ll make up the bulk of the market share, so it is worthwhile to catch their interest now,” Frey explains. These consumers recognize that the future depends on what brands and corporations are doing today. Yet this interest in sustainability is not reserved for this trailblazing generation alone, growth in interest in sustainability is taking place across all consumer demographics.
This interest in intentionality doesn’t stop at waste; consumers also are noticing brands that consider social responsibility a critical factor of wellness. While affordability is a major factor in consumer decision making, 69% consider a retailer’s regulations for fresh and healthy food to be available and affordable for everyone, not just themselves. Sixty-four percent will pay more for products that support communities and vulnerable groups, and socially responsible products saw a 22% sales growth in 2021. These metrics are strongest in the premiere fresh/natural grocery space, but warehouse and online options are increasingly supporting ethical brands as well.
Altruism—concern for the wellbeing of others—is increasingly important to consumers. NeilsenIQ’s health and wellness maturity curve study found that aging with dignity, mental health advocacy, social bonds, healthy eating for all and sustainable wellness are all values within which brands should seek to invest.
“We’re seeing consumer health needs change dramatically by age. Boomers are seeking products that support them in the graceful aging of their bodies and brains. For example, our consumer panel shows us consumers 55-64 outspend other groups on calcium and those 65-plus are spending 21% more than the panel average on mood supplements,” she adds.
This emphasis on diversity, equity and inclusion presents relevant brands with a greater opportunity to find their audiences. NielsenIQ found a notable increase in and faster growth for independent CPG companies with stronger consumer diversity. While consumer demographics for most natural products still skew white, independent manufacturers are helping these racial and ethnicity numbers increase, and this presents an opportunity for benchmarking how the industry is serving these ever-growing audiences. Social responsibility is a long-term trend with attributes consistently growing over the past three years. Money is being invested in reduced plastic, renewable energy, regenerative agriculture and low waste/carbon footprint.
NeilsenIQ’s “Unpacking New Consumer Outlooks on ESG” presentation, 2022.
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