# WhoCares Who Does 2022 p
Is inflation stalling the green momentum in FMCG?
Issue 4 | September 2022
Is inflation stalling
the green momentum in FMCG?
Issue 4 | September 2022
Challenging times in a changing landscape
The spotlight may not be on the climate, but the time is now for brands to act.
Welcome to the fourth edition of Who Cares? Who Does? The world has come a long way since its first edition. When we started this report in 2019, plastic waste was high on the media agenda, and the ‘Blue Planet’ effect was in full force.
When we look at the landscape today, the issue might not be as visible in the press, but we have a core group of 18% of the population for whom reducing their waste is a firm habit – we call this group Eco Actives. There has been a proliferation of choices for refills, recycled, and recyclable plastic packaging. We see meat alternatives in stores in European markets, and more local, natural, and organic products in Latin America, attracting our most environmentally conscious shoppers. Government legislation in the EU has banned many single use plastic items and some markets, like France, are going further, with a wider range of banned products.
But what we see here is also a mixed story. Our most environmentally conscious group has declined when compared with the figures during the pandemic, driven by other concerns such as war and financial issues taking precedence. Stalling momentum in the green space from brands and governments is also not making environmentally conscious living as accessible and prominent as it should be. But this group presents a huge financial opportunity for brands, and we still project that numbers of Eco Actives will increase over the next five years.
Despite the number of Eco Actives falling, they are still worth $376 billion to the FMCG industry.
They also remain the group of shoppers most supportive of new brands and formats in the green space and are likely to be early adopters of any initiatives being launched.
However, there is still a long way for brands and retailers to go in helping shoppers make sustainable choices. People are still being asked to compromise in terms of quality, price, and convenience – and in many countries and categories there are no real green alternatives. Getting the equation right to help close the value-action gap is ever-more critical, as economic concerns get more pressing for consumers.
Who Cares? Who Does?
is one of the largest globally consistent reports, reaching 99,000 respondents over 24 countries. This annual study connects consumer attitudes and actions to real shopping behaviour across all the categories in the FMCG space.
In the next few chapters, you will discover
How the global population stacks up in terms of actions on sustainability. You will see how attitudes have changed and the factors impacting consumers’ decisions
The large and growing opportunity that environmentally conscious consumers offer, and the vast unmet needs of this group
How sustainable products are evolving – and which brands are winning out
What brands can be doing to truly make a difference and see long-term success.
Who Cares, Who Does is a globally harmonised survey across 24 markets on our household purchase and usage panels.
Belgium, Brazil, Chinese Mainland, Colombia, Central America, Chile, Czech Republic, Ecuador, France, Germany, Great Britain, Hungary, India, Ireland, Italy, Mexico, Netherlands, Peru, Philippines, Poland, Portugal, Slovakia, Spain and the US.
Took place between
May - June 2022
How has the population shifted?
See how we categorise the population – and how world events have led to changing attitudes and priorities across the globe.
Reintroducing our Eco Segmentation
Our Eco Segmentation sits at the core of Who Cares? Who Does?. It divides the global population into three distinct consumer groups based on their plastic waste footprint.
We segment people based on the actions they take to reduce plastic. The actions we look at are everyday activities, from using a refillable water bottle to avoiding fruit and vegetables wrapped in plastic packaging.
While it can be argued that plastic is only one factor in the complex landscape of sustainability, we have found that actions in plastic reduction are well correlated with other sustainability-driven actions, such as eating less meat, buying second-hand items, and seeking out natural and organic products.
Additionally, reducing plastic waste is an area where we, as people, have some level of personal control – and taking action in this way is not directly linked to saving money (compared to, say, reducing car use, which would skew our findings).
The evolution
of Eco Actives
For the first time in the report’s four-year history, we have seen numbers of Eco Actives, the most sustainable shoppers, decline when compared to the previous year.
Eco Actives dropped by 4% in 2022 compared to 2021 and 2020 – while Eco Dismissers rose by 7% to 44% of the global population.
This is an unprecedented shift – and amidst a growing urgency for climate action, it may come as a surprise. But all is not lost. While the number of Eco Actives have indeed dropped compared to pandemic figures, they still remain above 2019 levels.
Eco Actives are currently worth over $376bn to FMCG. Eco Considerers are also worth $766bn – and are not a group to be forgotten when brands are considering their environmental credentials and brand growth. When we total the global population that have at least some interest in sustainability, this amounts to $1.14 trillion in spending. It is clear that, despite fluctuations, the environmental angle for products and categories is still rich territory for any brand to target.
But these changing dynamics in group sizes are not the whole story. To fully understand the picture, we must view the trends through both a micro and macro lens.
The global picture
The drop in Eco Actives compared with pandemic levels is not a universal story – though it is certainly a global trend.
When we break the data out to a country level and home in on the Eco Actives, we see a varied outlook. Some markets have heavy drops of five per cent or over; Spain tops the list, but joining the group are Ireland, Portugal, and India. On the opposite end of the scale, France, the US, and Colombia are outliers with flat or growing Eco Active groups.
We will look at the stories of France and Colombia in the next chapter and analyse how and why they bucked the trend.
What is shifting the sustainability story?
When we analyse the countries with the largest decline in Eco Actives, we see them focused on concerns on the economy and the war in Ukraine.
Amidst a difficult world climate, from conflict to political instability to spiralling costs and inflation, environmental issues have dropped down the priority list for many people in their day-to-day worries. It is perhaps unsurprising that against these very prominent and present issues, that sustainability and its more long-term negative effects are not being prioritised.
And we are living in a post-pandemic era, which has its own effects. As lifestyles have got busier, more people are back to work and social lives are back on track, people don’t have the time they may have had during government and state-enforced lockdowns. The means a return to seeking convenience over plastic-free items: we have seen people buying fewer refills, avoiding plastic less and buying plastic drinks bottles more, which may be a symptom of this ‘back to normal’, time-poor lifestyle, as we experienced pre-Covid. There is also the added hygiene factor that comes with single-use items off the back of the pandemic, from masks to coffee cups.
Economy vs. environment: the cost of conscious consumption
There is evidence to suggest that economic struggles are making it harder to act sustainably. In fact, 45% of people said that they agree or strongly agree to the statement “I have found it harder to act sustainably recently due to social or financial constraints”. By contrast, only 15% disagreed with the statement.
Shoppers are likely, in a tough financial climate, to have less money to spend on sustainable products which are often priced at a premium. And when budgeting is front of mind, choosing discounts, volume over price, and cheaper alternatives become front of mind, and take precedence over a product’s sustainability credentials or packaging.
Fundamentally, many plastic-free brands and products come at a price premium or are only available in specialist shops or online. For many, it can be hard to control household spend when visiting a wide range of stores and channels compared to doing a larger, one-stop shop. As such, when people shop in bigger supermarkets instead of local markets and smaller stores, they are met with fresh foods wrapped in plastic. Supermarkets also tend to offer a wide range of convenient ready-to-eat goods which are also heavily packaged.
Lead from the front
and people will follow
Another reason for the drop off in Eco Actives could be some disillusionment with the progress made so far in fighting the climate crisis.
This is a group that thrives on optimism, yet we found that there is cynicism among them regarding how far brands are going, and how much brands truly care about the environment.
Over 50% agreed that all companies only care about profits and eco claims are just another marketing tool.
Overall, the places where the most people felt brands were concerned with profits rather than the environment came from Germany, Belgium, and Spain – countries which also saw some of the largest drops in Eco Actives. This suggests that pessimism could be reducing people’s desire to act.
A key factor in setting Eco Actives apart from other groups is that they are more likely to strongly agree with the statement ‘I feel I can make a difference to the world around me through the choices I make and the actions I take’. 31% of Eco Actives strongly agreed with this statement, compared to only 8% amongst the Eco Dismissers. But for Eco Actives to make these choices, they must be available to them in the first place.
The message consumers are sending to brands is clear: be the standard bearer for sustainable products and shoppers will stand behind you.
The Eco opportunity
Eco Actives are a huge market that brands are under servicing. But how big is the opportunity? And is it worth the investment?
A race against the climate clock
The dip in the percentage of Eco Actives reduces our expectations for growth for the group compared to previous years. To gain a more comprehensive idea of how this segment might grow, we have created two projection scenarios: one optimistic, the other pessimistic. Both these views predict a rise in the number of Eco Actives over the next five years.
The most pessimistic scenario assumes that the growth in the previous two years was largely boosted by the pandemic lockdowns and slower ways of living. The optimistic scenario assumes that this year is a blip due to the war and a significant increase in levels of global inflation.
The climate crisis is not an issue that is going away, as a society we must reduce plastic waste and find ways of taking sustainable action. There is, however, significant headroom between peoples’ aspirations and their actions. With more support from governments, retailers, and brands we can close the gap and beat the climate clock.
Success stories
France and Colombia
Two countries that saw their number of Eco Actives grow and Eco Dismissers decline were France and Colombia. These markets both have a higher-than-average concern around climate and environmental issues compared to the global population.
The issue of waste management and reduction is still being covered extensively in local media and this is a result of active government legislation coupled with momentum from brands and retailers. The fact that this remains front-of-mind in these countries means consumers are more compelled to act.
Governments in both countries have introduced new laws banning a significant number of single-use plastics which has generated public and local media discourse. In France rules such as ensuring drinking water is available in public places has had the desired knock-on effect of more people carrying refillable containers. It's one of the only countries to see more people using refillable water containers – up by 5 percentage points compared to 2021.
But governmental activity is not working alone. A major initiative making the plastic reduction case more visible is through the work of Grupo Exito in Colombia, a department store company who are working with Unilever to launch recycling facilities in at least 18 sites across five cities (their SOYRE initiative). This has raised the profile of recycling and has made positive action on sustainability more accessible for many people.
How good intentions are a great opportunity
We are still seeing a large value-action gap when it comes to packaging.
The majority of people still have good intentions – which means there is a lot of headroom to be made in helping people to close this gap. This offers brands an opportunity. If we look at plastic packaging, 62% of people are trying to buy environmentally friendly packaging, yet only 24% are regularly avoiding buying plastic. There is a clear unmet need, with 38% of shoppers wanting to do more.
This value-action gap is worth $991 billion to the FMCG industry.
In many supermarket categories, people have no real alternatives to unrecyclable soft plastic. In times of economic hardship and high petrol prices, it becomes even more challenging for people to be shopping around different stores to find plastic free or refill products. Many retailers are simply not stocking this type of product.
In essence, consumers want to do more. And brands are now perfectly placed to help meet this need. To make plastic-free alternatives more available and more cost-effective. To consider refillable packaging. To create recycling initiatives and recyclable products. The need is there, and the stage is set. Will brands seize the opportunity?
Prioritising product: how sustainable offerings are evolving
We have already seen how spending habits are changing. But how can brands use affordable, high-quality products to leverage the value-action gap and give shoppers a reason to buy?
As we have already stated Eco Actives still make up 18% of the population and spend $376 billion annually on FMCG products, making them both sizeable in population terms and significant spenders.
They have shown themselves to be open to innovative formats – from leading the early adoption of refills, to continuing to champion start-ups and local brands with planet and people positive messaging. This makes them an exciting group to pitch new concepts and brands to; and many of the sectors they disproportionately support, such as plant-based products, have seen great growth.
Within every market we see strong representation for smaller brands, BCorps and independent start-ups, demonstrating that Eco Actives can be adventurous and open to new brands when seeking green benefits.
We found last year that the brands most strongly appealing to Eco Actives showed the strongest growth. But the landscape has become more challenging for some of the larger brands who have previously performed well with Eco Actives. Now, as new entrants join the space, shoppers are no longer convinced by the value equation these larger brands offer in the context of tightening budgets. This can provide us with some watchouts, as well as inspiration for our future growth strategies.
In Great Britain, the top 20 performing brands amongst Eco Actives come at a cost, with an average price premium in their category of 175 index compared to the average. Our analysis has found that FMCG brands with price points more than 10% above the average in their category see market share decline, indicating that the premium market is a challenging arena to play in.
Another reason for tougher sales for leading sustainable brands is increased competition. Dairy alternative producer Alpro, for example, saw strong growth last year. But this year growth has stalled, and sales are declining. The level of competition within dairy alternatives has expanded significantly with Tesco online (the largest online FMCG retailer in GB) stocking over different products from nearly 20 brands. This extra choice has helped the category grow from 62.1% penetration in 2021 to 65.6% in 2022, meaning two thirds of British shoppers are now buying dairy alternatives every year.
But dairy alternatives aren’t the only arena in which competition is booming. In a similar vein, brands such as Ecover and Method which helped create and develop the Eco cleaning sector in GB must now contend with a huge range of smaller brands and even Private Label Eco lines.
This shows that the sustainability sector in FMCG is a vibrant space full of new brands and an area where retailers are willing to take a chance with stocking smaller start-ups to expanding their offer in this area. The next wave of innovation needs to look at affordability and products that save money.
What sustainability concerns are impacting Eco Active purchasing?
Motivators for people to become more conscious in their consumption habits are diverse.
Local food is popular with shoppers across the world, with 44% of the global population frequently choosing products marketed as locally sourced or produced.
Across different continents, we see varying levels of engagement with 41% in Europe, 42% in Latin America and rising to 63% in Asia. When we ask what is driving this, respondents say that their primary motivation is to support local farmers and fishermen (62% highlighting), and this was especially high in Europe (72%). The next highest reason was for better quality taste (54%), and this was the most important point for Asian buyers.
Local brands resonate well with Eco Actives and they tend to over index with this audience segment. An interesting case is the Spanish brand Ecocesta, which has reached 6.1% penetration (and 10.6% with Eco Actives) and is growing at 22% in value year on year. With the slogan ‘Democratising organic food’ it has a mission to make locally sourced food available and affordable for a wide audience.
The second most significant purchase consideration is natural products. Personal care items (cosmetics and hygiene products etc.) and home care products (laundry detergents and cleaning products etc.) branded as containing natural ingredients are an overwhelmingly popular arena for Eco Actives to assert their buying preferences.
Globally, around one third of shoppers choose natural personal and home care products, but this rises to over half (56% for personal care, 54% for home care) for Eco Actives. France and Mainland China have the strongest affinity with natural products with >40% choosing this option frequently for both homecare and personal care in France, and >50% in Mainland China.
But what does this mean for brands? And how do other shoppers feel about greener home and personal care products?
The Health/
Environment formula
We have seen how there is real appetite amongst shoppers for more sustainable options. Natural and Eco homecare is well-established across Europe and is establishing itself more in Latin America in recent years, and natural personal care products are also a staple across the world. Natura is a key brand that over indexes with Eco Actives in multiple Latin American markets and in Mainland China one of the standout brands was Darlie which is positioned around its use of traditional herbal ingredients.
Amongst people who frequently buy natural products, health benefits, environmental impact and taste or quality are the most common reasons to purchase. And nearly half (46%) of shoppers choosing these products cite both health benefits and environmental impact as motivators. Whether developing new products to meet these two considerations, or re-positioning existing products, the potential for brands to grow their revenue and market share is clear.
However, the real sweet spot is if businesses can capitalise on the combination of environmentally sustainable products that provide tangible health benefits and that are also considered to do the job better than a non-natural brand.
The reality is that most brands are not doing this now, with only 19% of those that choose natural products saying that they ‘do a better job’ than less sustainable options. This rises to 38% for natural personal care. Eco Actives are more likely to think that natural personal care is better quality with 46% selecting this. Asian shoppers also show a high affinity for natural ingredients (62% of those choosing frequently think its better quality).
The importance of combining health, environment and quality is not just a key point for beauty and homecare. One brand seeing strong growth in France is the tea brand Clipper. It is bought by 9.5% of French shoppers and 13.1% of Eco Actives and is growing 12.5% year on year in value.
Clipper’s slogan is ‘Natural, Fair and Delicious’, and its fully recyclable or compostable packaging means it ticks many of the boxes for sustainable shoppers.
Polarised by
plant-based products
Shoppers across the world are turning to plant-based products, with 18% of the global population frequently choosing meat and dairy substitutes. And the emerging interest in the sector is seen by growing sales figures across Mainland China, The Netherlands, Peru, Spain, and The Philippines. But how do brand strategies differ across these markets in encouraging shoppers to choose sustainable, plant-based alternatives?
In Spain, where nearly 19% of the population choose plant-based products, shoppers’ sustainability considerations focus on positive health implications and animal welfare concerns. Barcelona-based B-corp, Heura, is a prime example of this, with the brand reaching 2.9% market penetration. Heura’s meat alternatives place emphasis on the brand’s Mediterranean heritage and its commitment to creating healthy, easy-to-cook plant-based products.
Cost is another significant consideration in consumers choosing meat alternatives, with good quality plant-based products often coming at a premium. But in The Philippines, shoppers say that plant-based meals are not only tastier but also more affordable. Veega, an emerging brand in this market, has found success by tailoring products to the Filipino palate and manufacturing the products locally.
This presents a lucrative opportunity for brands to diversify product ranges to meet this demand – great tasting, reasonably-priced plant-based products. But while demand is growing, there is also significant pushback against meat alternatives. In contrast to all other sustainability concerns, plant-based alternatives also have the highest percentage (29%) of people globally stating they do not plan to buy these products.
Countries with strong meat industries have presented a particular resistance to these sustainable alternatives, with rejection levels of 61% in France and 50% in Chile. With more investment in meat products, there are fewer options available on the supermarket shelf for shoppers in these countries to try. Amongst those that choose plant-based products, only 20% actually say they make tastier meals so the unwillingness to sacrifice taste for health or the environment is likely to be another factor.
To tap into this appetite and unlock revenue, brands must consider how they position their products as seen to be tastier than traditional meat products.
Rather than asking shoppers to compromise on lower-quality, more expensive alternatives, successful brands such as Heura and Veega are meeting consumer desires to have more choice of products that are perceived as tastier and can be bought at cheaper prices. But how else can brands do more in helping consumers make greener choices?
Making sustainable choices easy, rewarding, and meaningful
Encouraging shoppers to choose sustainable products requires investment by brands to make these choices easy, rewarding, and meaningful.
Refillable products are a key case study for understanding the importance of removing access barriers to sustainable choices. In GB, 49% of people occasionally choose to use refills, meaning there is significant desire amongst shoppers to try a more sustainable option. But those who frequently use refills only make up 18% of the population.
Finding refillable brands can prove a challenge as shoppers will often need to buy online from a specialist retailer, or choose a larger, more well-stocked store. If buying refills is not easy, shoppers will not be inclined to choose them. This is evident in household cleaning refills in GB where only 2.5% of the population are purchasing refills. While this figure is up from 2.4% in 2021, it is clear that growth is flattening in this space.
There are also significant price discrepancies between refills and more traditional products. Taking liquid soaps as an example, while the price per-litre is often lower for refills than traditional products, brands are using deep price promotion on smaller quantities to make it more economic to stock up on multiples.
To truly change consumer behaviour, brands must ensure greener choices gives shoppers a sense of reward. Currently, recyclable PET containers are often swapped with non-recyclable soft plastic for refills and even with other recyclable formats shoppers only save 20-75% of plastic compared to recycling traditional products. Convincing shoppers to frequently purchase refills relies on creating a tangible reward in terms of a significant plastic reduction that has a positive environmental impact.
This is also an area we could see rapid change as new formulas emerge. One brand growing fast using a refill format is Godreij Protekt Mr Magic from India grew from 8.2% to 9.4% penetration in 2022 despite the Hand & Body wash category declining post-Covid.
We also see plastic free refill brands with competitive price points starting to pop up in Latin America such as YVY in Brazil who make homecare products in a capsule format. Many are currently using a straight-to-shopper subscription model which enables brands to reach their audience directly and bypass retailer gatekeepers. We can expect to see more of these brands on shelves in the future where they could be taking share from more traditional cleaning brands.
Evolving
environmental concerns
As outlined earlier, after local and natural ingredients, packaging and plastic use are also significant purchase considerations, with 25% of shoppers choosing refillable products over single-use plastic, and 23% choosing products made from recycled plastics.
And we see that packaging made from recycled materials is becoming more mainstream with 73% of people claiming to occasionally buy products with recycled packaging.
Bottled water is one market where we see sustainable packaging labelled prominently. In the US the most common benefit shoppers looked for was ‘recyclable plastic’ with 46% actively seeking this on labels. Bottles ‘made-from recycled plastic’ was a close second with 40% of shoppers keeping an eye out for this benefit.
In previous years we saw a larger gap between the two needs, showing an increased need for a more circular supply chain is becoming more widespread among shoppers.
The carbon
consideration
Carbon Neutral is another emerging area for sustainable brands. This year 11% of people frequently bought products with reduced carbon footprint labels (a similar level to last year), with Eco Actives 5x more likely to buy these products than Eco Dismissers.
Eco Actives in the US were the most engaged in this area with 42% frequently looking for Carbon Neutral products. One brand performing well in this space with Eco Actives, and the market overall, was vegan food brand Cauldron from GB who are growing 4% year on year. They brand products with ‘Carbon Neutral’ claims on their packaging – a helpful tool to stand out from other meat alternatives in an increasingly competitive market.
So, why are we not seeing faster growth in this space considering climate change is the most common environmental concern? Availability and education. Only 25% of shoppers have ever seen ‘Carbon Neutral’ products on the supermarket shelves. In Brazil, this figure reaches 67%.
Typically, brands claim carbon neutrality through a combination of reducing energy in their production and carbon offsetting. But the transparency of how offsetting schemes work are often unclear and shoppers cannot know how effective the scheme is. While there are a number of industry-wide labelling schemes in development right now, carbon neutral claims are still relatively unseen in FMCG, and adopting them could help set your brand apart with Eco Actives (if you can back the claims up, of course.)
Creating a competitive advantage - the time to act is now
Brands cannot afford to take sustainability concerns for granted. The time to act is now. But what are the actions to take that will create a competitive advantage and help brands thrive?
Shape and sustain the collective momentum
With the sustainability news agenda waning, brands must keep a foot on the pedal with greener choices and ensure that moments of collective interest are not wasted. While the number of Eco Actives are lower than last year, these shoppers still comprise a vast segment of the FMCG industry (worth over $376 billion per year globally). To tap into this audience, brands must be willing to lead the charge on more sustainable choices.
Concern on the environment and awareness of the need for action is still broad across the globe. We have seen when governments make new laws, or the media conversation shifts, there is a direct impact on how people think and act on sustainable choices. New brands are constantly emerging, offering better prices and challenging traditional formats and brands resting on the status quo will be caught out.
For brands to really move the needle, they must reposition greener choices from marginal alternatives, to mainstream shopping staples.
Eco Actives are
your early adopters
Eco Actives have a strong track record in identifying brands in the market that have a sustainable proposition in terms of better packaging, local sourcing and natural ingredients. We know that health benefits and environmental sustainability are a powerful combination for earning consumer loyalty and this is especially true for Eco Actives, who consistently buy brands at this intersection. By meeting these two considerations, products will appeal to a substantial proportion of consumers.
But to do this effectively, brands must be bold enough to place importance on both considerations and not shy away from the multiple benefits of sustainable products. We have seen with Heura how highlighting nutritional value and taste alongside the environmental impact of switching to meat-free alternatives has cut through the noise in Spain and achieved high growth and market penetration.
Consumer appetite for these products is clear – but to benefit, brands must claim this space now and meet shoppers in how they pursue sustainable options. Understanding Eco Actives better can give brands a head start on which products and formats will perform better with the wider population.
Innovate to inspire conscious change
Your product meets the right sustainability criteria with shoppers, you have analysed the market opportunities, but what is stopping you from cutting through consumers’ consciousness and winning brand loyalty? Quality and price.
Looking at meat-free alternatives, only 20% of shoppers choose plant-based products because they make for tastier meals. In home care products, only 19% believe that products containing natural ingredients are more effective at cleaning.
And with 45% of shoppers stating they have found it harder to act sustainable recently due to financial constraints, it is only natural that people are choosing cheaper, more effective, or tastier products.
The stalling growth in refills shows the challenge where the current offering is not meeting enough needs to move to the mainstream, but also how innovation can move the sector forward.
New formats and lower price points are driving penetration for brands across the world, not just in the US and Europe, such as the example we saw earlier of Godreij Protekt Mr Magic in India. It’s clear the opportunity is global. It’s up to brands to develop the right products. Are they up to the challenge?
Food for thought
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Who Cares? Who Does?
2019
Who Cares? Who Does?
2020
Who Cares? Who Does?
2021
