Green. All-natural. Organic. In truth, the words mean completely different things. The fact is, however, that consumers are confused by them and often incorrectly use them interchangeably. In an attempt to cut through the confusion, some marketed have moved from general green claims to create products that have been certified by organizations such as the Natural Products Association (NPA). That’s because the global market for these products has reached $9 billion, according to Organic Monitor, which also estimates that sales will reach $14 billion by 2015.
Method’s newest eco-packaging innovation contains ocean plastic.
Moreover, demand for natural and/or organic products has spread to every region in the world—although the biggest demand for these products can still be found in Western Europe and North America. In fact, 70% of Americans seek green products—a percentage that is not expected to grow much higher, according to Shelton.
Best of all, there’s still plenty of room for growth, as Organic Monitor estimates that natural and organic products accounted for just 2% of global personal care product sales last year—although sales of these products is approaching 10% of the market in the US and Germany. No wonder why large cosmetic companies have been entering the natural market via new product development or acquisition. Henkel and Amore Pacific, for example, have introduced certified organic lines during the past year.
Room for Improvement
That same kind of activity can be seen in the household cleaning segment, too, according to Shelton. In September Ecover paid an undisclosed amount to acquire Method from San Francisco Equity Partners for an undisclosed amount.
“This transition marks a new chapter in the evolution of our business,” said Method co-founder Eric Ryan in a statement.
Industry analysts said the move creates the world’s biggest green cleaning company, with annual sales of $200 million. And although Ecover execs said both firms would operate independently, the acquisition gives the UK-based company a bigger footprint in the US.
Unfortunately, according to Shelton’s research, more consumers are disappointed with the performance of cleaners than any other green product category. More specifically, in Shelton’s 2011 green product satisfaction poll, home cleaning (12.9%) was the biggest disappointment for respondents, followed by lighting (10.4%), yard and gardening (8.7%), laundry/ dishwash (7.6%), renewable energy (7.3%) and paper products (5.9%).
Taking a closer look at cleaners, 46.1% of respondents were disappointed by all-purpose (glass and countertop) spray cleaner, followed by bathroom tub and shower cleaner (26.0%), toilet bowl cleaner (16.4%), carpet cleaner (5.9%), tile or linoleum floor cleaner (4.6%) and hardwood floor cleaner (0.9%).
And what were consumers’ biggest complaints about green cleaners? A whopping 92% said they didn’t clean well, while 30% weren’t confident that green formulas killed germs.
Products with Purpose
Why so much dissatisfaction with all things green? Perhaps, too many companies get it wrong right from the start. According to Marc Stoiber, a creative director and strategist who helps companies “futureproof” their brands, too many entrepreneurs start with ethics when they enter the green space.
“You have to fill a need,” he told Happi. “Creating products that are ‘good for the environment’ is not enough of a purpose for being.”
Some brand favorites are included in this Burt’s Bees holiday gift set.
“They created bottles that looked so darn cool that they jumped over a niche and tapped into an insight,” explained Stoiber. “People want to buy products that look good in their kitchens.”
One of the newest packaging innovations from Method involves the use of ocean plastic. For more than a year, company employees, along with local beach cleanup groups and volunteers, hand-collected more than one ton of plastic from the beaches of Hawaii. Working with Envision Plastics, Method engineers turned that plastic into the packaging for a dish and hand soap. The packaging contains a blend of recovered ocean plastic and post-consumer recycled plastic, a combination that results in a uniquely gray resin.
Despite misgivings about the efficacy of green cleaners, 48% of Shelton survey respondents were likely to try another green home cleaning product; which makes the opportunity for green cleaners obvious, said Shelton.
“Almost two-thirds of consumers are concerned about chemicals in products that come into contact with their bodies,” she explained. “(In 2012) we asked how concerned are you about chemicals in products that aren’t meant to be eaten, but might come into contact with your body in other ways? Sixty-five percent were concerned, 22% were neither concerned nor unconcerned and 13% were unconcerned.”
In what product categories were consumers most concerned about chemical content? Leading the way were household cleaners (63%), followed by laundry and dish detergent (53%), personal care items (48%), plastics (46%) and building products (45%).
Despite these moves by marketers and regulators, all parties involved may not see a big return on their investments. That’s because, according to research by The Shelton Group, most Americans won’t pay more for green products.
“Most mainstream consumers have no concept that it costs more to make a product green,” explained Shelton, who noted that US consumers come in four varieties when it comes to shopping for green/organic products. “Actives” make up 21.7% of the population—this group will pay more for green products. However, neither “Seekers” (33.5%) nor “Skeptics” (24.9%) will pay more for a green product. Worst of all, according to Shelton, are the “Indifferents” (19.9%), who aren’t even aware of the green product category.
Plus, Shelton noted that “two-thirds of the US population is concerned about water usage. But less than a third actually does something about it.”
Clearly, then, knowledge alone isn’t enough to convince consumers to spend money on green products. To get consumers on board to the benefits of using green personal care products, Shelton said the industry must do more to shame consumers into making the right choice. After all, she noted, 50 years ago it was perfectly acceptable to most Americans to toss their trash out the car window when they traveled. To create real behavior change, companies must move people from automatic behavior to conscious choice; make the problem visual and give them specific actions to take.
Although Shelton doesn’t expect the percentage of Americans seeking green products to go much higher than 70% of the population, there are plenty of marketers out there who are rolling out green formulas.
Leading the way is Clorox. The No. 1 bleach maker and household cleaning product marketer is also a frontrunner in the natural product category thanks to its acquisition of Burt’s Bees a few years back. This year, the company rolled out Güd, a line of natural personal care products designed for the 20 year-old women. The Güd line includes hair, skin and body care products.
Güd is one of the newest names in natural personal care.
Today, his dedication has helped the company create a range of wellness and personal care, including an anti-aging skin product called Plant Stem Cell Renewal Complex. Offered in All Over Treatment ($130) or Targeted Treatment ($55) formats, the topical complex features ingredients from a proprietary biotech process that allows for the selection and reproduction of antioxidant-rich plant stem cells cultivated in the purest lab, without the use of soil. This process provides access to rare, highly active plant stem cells with antioxidant concentrations at least 1,000 times that of plants in nature, according to the company.
The proprietary blend of antioxidant-rich plant stem cells from edelweiss, coneflower and pennywort are formulated at the highest potency for maximum efficacy, making it a powerful agent to fight the visible signs of aging—reduce fine lines and wrinkles, diffuse age spots, even skin tone and reduce redness and other skin discolorations. In addition, the plant stem cells are free of genetic modifications, environmental contaminates, heavy metals, pesticide and toxins.
Last quarter, Rechelbacher’s Intelligent Nutrients rolled out Lip Delivery Antioxidant Gloss ($24), a USDA certified organic, gluten-free lipgloss that combines “powerful colorful antioxidant chemistry and nutritious food ingredients with a high Oxygen Radical Absorbance Capacity (ORAC) value. The formulations feature the brand’s Antioxidant Intellimune Seed Oil Complex, which battles oxidative stress and aids in fighting pre-mature aging, while delivering “delicious” moisture and shine with a certified organic aroma and flavor blend of agave, caramel, coconut, raspberry and vanilla. Shades currently include Purple Maize and Clear Vanilla Frosting, and a new color, Cranberry, is due out next month.
Recently, Intelligent Nutrients netted the highest rating (9.5 out of 10) in Organic Monitor’s assessment of more than 50 international brands of natural cosmetic products. According to Rechelbacher, the rating reinforces the need for transparency in the organic beauty industry and. He said that Intelligent Nutrients is committed to teaching consumers that every personal care products that is put on the body and every food consummed is safe and nutrious.
Last month, Intelligent Nutrients opened its first retail location with a 1,000-square-foot spot in Minneapolis’ Mall of America. The store includes the latest gadgets to help consumers keep up with what’s available from the comfort of their iPads as well as includes a private back room for hair services, including blowouts and scalp massages and treatments. Complimentary energy reading services will also be offered, which calculate client’s energy levels with a biofeedback machine before and after sampling Intelligent Nutrients products. Company execs say another site is being discussed, and may open in New York next year.
Aveeno introduced the Pure Renewal hair care collection, which is said to gently lift away impurities and provide balanced cleansing and conditioning, according to the company. Formulated with sulfate-free cleansers and without the use of parabens or synthetic dyes, the range features Active Naturals Balancing Seaweed Extract that cleanses hair without over drying. Natrasurf Technology—naturally-derived from potato starch—helps to minimize the amount of cleansers, while still producing the lathering and foaming sensation that consumers expect in hair care.
Another noteworthy launch is from Suki. The company debuted Delicate Hydrating Oil, a botanical body hydrator that soothes and helps protect dry skin while providing deep nourishment to the skin cells, according to the company. The weightless, non-greasy formula absorbs quickly. Rose petals, packed with antioxidants and essential fatty acids, along with apricot kernel oil, rich in vitamins A and E, blend perfectly with cold pressed fruit oils, to soften and soothe the skin.
The new Pomegranate Clarifying/Pore Minimizing/Mattifying Toner from Korres is designed for oily to combination skin features 99.0% natural content and is made with 15% pomegranate water and natural astringents. Witch hazel water and Alpine willow herb extract help to refine the appearance of pores, while salicylic acid conditions skin, according to the company.
Babo Botanicals is expanding its line of gentle cleansers.
Finally, Eminence Organic Skin Care is expanding its Organic Beauty Collection with six new SKUs. Products include the Vanilla Latte Tinted Moisturizer SPF 25, a nourishing day cream with a sheer sun-kissed glow for lighter skin tones; and versatile Antioxidant Mineral Foundations created with açai berry, green tea and rosemary to protect skin.
The launch of these lines and many more like them underscore the fact that marketers will continue to roll out natural or organic products, regardless of whether or not consumers are willing to pay a premium for them. It’s all part of a bigger trend of consumers turning away from mass consumption, according to Stoiber, who pointed out that Patagonia’s sales actually rose during the recession as consumers opted for quality over quantity.
“People are switching toward products that are better for them,” insisted Stoiber. “People are waking up to be more responsible.”
Natural & Organic Sales Slow Down in Europe
• Sales of natural and organic personal care brands are growing at a single-digit pace in Europe, down from double-digit gains, according to Organic Monitor, which blames the slowdown on the debt crisis impacting retailers and consumer expenditure.
To combat slower growth rates, leading brands are targeting new distribution channels for growth. According to Organic Monitor, brands are making most inroads in drugstores, pharmacies, beauty retailers and department stores. Specialist retailers, the traditional channel for natural and organic brands, still comprise most sales however, with 40% market share. Although many supermarkets and hypermarkets have launched private label ranges, the market share for mass market retailers remains below 10% at the European level.
The UK market has been the most adversely affected by the financial crisis. Revenues have been increasing by about 6% a year since the crisis started in 2008. The harsh retail environment has led many UK natural and organic brands to target export markets for growth. For example, many British brands have made significant inroads in the Nordic market, according to Organic Monitor. Some like Bulldog have gone further afield, exporting to the US and Australia as well as to parts of Europe.
Germany, with the largest market for natural and organic personal care products, is showing sluggish growth this year. The country also leads in terms of market share; natural and organic products comprise 7% of total personal care products. Private labels have had most success in the German market. Alverde of DM drugstores is the third leading natural brand, with more than 300 products.
The French market has posted the most new product launches in recent years. Many large cosmetic companies have introduced natural and organic lines. L’Oréal is marketing a range of products under popular brands, such as Garnier, Ushuaïa, Biotherm and Mixa. Other multinationals, including Henkel and Unilever, have also developed certified organic lines for the French market. Although mass market distribution has increased significantly, the channel comprises less then 15% of natural and organic personal care product sales, according to Organic Monitor.
Rising competition from new brands and slowing market growth rates are pushing brands toward new channels. Dr. Hauschka is targeting high-end outlets, including beauty retailers and department stores. PHYTS is focusing on para-pharmacies, while Primavera is targeting the spa channel. Many are taking the direct route and opening concept stores. Korres and Melvita are frontrunners with their international retail networks.