Intelligence and community for the low-carbon commerce era
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Intelligence and community for the low-carbon commerce era
The Sustainable Market Share Index™ Report is an annual analysis of consumer packaged goods (CPG) purchasing data in the United States, conducted by New York University Stern CSB in partnership with Circana (formerly IRI). The report assesses the performance of sustainable products in the U.S. and provides insights into changing consumer attitudes and behaviors.
The most recent report, released in April 2023, found that products marketed as sustainable now hold a 17.3% market share, up 3.6 percentage points compared to 2015 and 0.3 percentage points higher than the prior year—despite high 2022 inflation driving strong store brand performance.
Products marketed as sustainable grew approximately two times faster than products not marketed as sustainable and achieved a five-year compound annual growth rate of 9.43% versus 4.98% for their conventional counterparts.
Sustainability-marketed products delivered approximately one-third of all CPG growth, despite representing only a 17.3% share of the market. This suggests that consumers are increasingly interested in purchasing sustainable products and are willing to pay a premium for them.
The market share for sustainably-marketed private labels increased from 17.3% in 2021 to 18% in 2022. This indicates that nationally branded sustainable products may be less affected by inflationary trends leading people to buy more store-brand items.
According to the report, certain categories experienced an increase in their sustainably-marketed market share between 2015 – 2022, leading to their classification in a higher share cluster. The report categorizes sustainable market shares of different categories into three clusters: <5%, 5%-20%, and >20%. Toothpaste, diapers, and sanitary napkins moved to the 5% – 20% cluster, while weight control, soup, natural cheese, deodorant, floor cleaner, skincare, and soap moved to the >20% cluster.
The report also found that sustainability-marketed products tend to have a higher price point than their conventional counterparts, but this price premium has decreased over time as more companies enter the market and competition increases.
In 2022, the price premium for sustainability-marketed products averaged 27.6%, down from a high of 39.46% in 2018. The study’s authors attribute the narrower price gap to recent price increases on conventionally marketed products.
The report also reiterated the 2022 finding that carbon-labeled products delivered sales of +$3.4B in 2021, up from $1.7B in 2020. This suggests that carbon labeling is becoming an increasingly important factor for consumers when making purchasing decisions. However, the report also notes that there are challenges associated with carbon labeling, including the need for standardized methodologies and metrics for measuring carbon footprints. In addition, there is a risk that carbon labeling could become a “greenwashing” tool if companies use it to make misleading or exaggerated claims about their sustainability credentials. Overall, while there are challenges associated with carbon labeling, the report suggests that it is an important trend to watch in the sustainable product market and may become increasingly important as consumers become more climate-conscious.
Another key finding is that sustainability-marketed products tend to perform well across all age groups, but younger consumers are particularly interested in sustainability and are more likely to seek out sustainable options when making purchasing decisions.
The report also highlights some challenges facing companies looking to enter the sustainable product market. For example, there is no standard definition of what constitutes a “sustainable” product, which can make it difficult for companies to communicate their sustainability credentials to consumers.
In addition, there is often a trade-off between sustainability and convenience, with sustainable products sometimes requiring more effort or time to use than their conventional counterparts. This can be a barrier to adoption for some consumers. The report also notes that companies need to be transparent about their sustainability efforts and communicate them effectively to consumers. This can help build trust and loyalty among consumers who are increasingly interested in the environmental and social impact of the products they purchase.
The full 2022 Sustainable Market Share Index™ Report is available from NYU Stern here.
