Many consumers, including pet owners, have traditionally expressed interest and favor for sustainable products but haven’t always been willing to pay the often higher cost. That pattern has seemingly started to shift in recent years, especially with the rise of millennials and gen Z as purchasing powers, and has extended to pet food. Yet, might a pandemic and ensuing economic meltdown halt that shift? New data shows perhaps not.
According to a webinar and information released by the NYU Stern Center for Sustainable Business, partnering with research firm IRI, consumer product goods (CPG) marketed with sustainability claims drove 54.7% growth from 2015 to 2019, despite accounting for only 16.1% of the sustainable CPG group. (The group studied was comprised of 36 CPG product categories, about 40% of the entire CPG market.) That growth was more than seven times higher than that for non-sustainable products.
The 36 CPG categories included pet food and treats. For pet treats, those marketed with sustainable claims saw about 70% sales growth from 2015-2019, compared to about 30% growth for treats without sustainable claims. (Though 30% is still very healthy!) With pet food, according to the IRI data, the presence of sustainability claims did not have an appreciable effect; sales of those products increased a little more than 10%, as did pet foods without such claims. Price points may have played a role there, though price sensitivity does not seem to affect sustainable pet foods or treats. (More on that below.)
In a survey conducted in 2019 by Mintel in partnership with Tree Top Ingredients, 28% of respondents said they’d like to see more sustainably sourced pet food, with the interest highest among 35-to-54-year-old pet owners, at 24%. Of course, interest and actual purchasing are two separate things – back to that traditional behavior pattern when it comes to sustainable products.
To gauge whether the pandemic and economy have affected sales of sustainably marketed products, NYU Stern and IRI conducted further research this year. They found that products in those 36 categories followed the same sales patterns as all other CPGs (including pet food): a huge spike mid-March, as consumers stocked up in the wake of stay-at-home orders, followed by a return to more normal levels.
That meant continued slight growth for the 36 sustainable categories, in addition to other CPGs. Yet the sustainably marketed products’ share of the entire CPG category has creeped up this year, reaching 16.8% to date despite the current situation.
Changes in share seems to be how the research tracked 2020 year-to-date performance. Given that pet food and pet treats each comprise a small share (less than 5%) of all sustainable CPGs, neither saw much change, but did maintain their shares.
Interestingly, other 2020 data from IRI, referenced by Jeannie Swedburg of Tree Top in a recent blog post, showed 22% of pet owners would like to see more sustainably sourced pet food. While this may seem to be a decrease from the 2019 survey Tree Top conducted, that was with Mintel; different research firms seem to have different methods of tracking sales and consumer interest, so it may not be an apples-to-apples comparison (not necessarily a decline from 2019 to 2020).
The NYU/IRI research delved into other details regarding sustainable products. For example, since 2014, the products have enjoyed a large price premium over “conventionally marketed” products, hitting 39.46% in 2018 (apparently, the most recent year this pricing data was available). Pet treats and pet food with sustainable claims far surpassed that average premium, with price premiums of 123% and 134%, respectively, over pet foods and treats without such claims. Only sustainable laundry care products (135%) and carbonated beverages (165%) saw higher premiums.
Conversely – and even better – pet food and treats were among the product categories least sensitive to price. As measured by the “difference in elasticity between sustainably marketed and conventionally marketed products” on a scale of -3 to +6 (with 6 being least sensitive), pet food registered at about 2.5 and treats, about 2. Only diapers and dinner entrees were much higher (close to 5), while food items like cereal, yogurt, fresh bread and rolls and natural cheese had numbers similar to pet food and treats. Yet another parallel between pet food and human food!
Breaking down the data by demographic groups, younger consumers, not surprisingly, were more likely to buy sustainable pet food and treats, with millennials indexing at more than 120 points (in other words, significantly more likely to buy). Yet gen X and baby boomers indexed at 80-120 for both product categories. The same was true for consumers with higher incomes and higher levels of education, though interestingly, those with some high school or less were significantly more likely to buy sustainable pet treats, according to the data.
NYU Stern said that in early 2021, it plans to release a report showing the full-year impact of the pandemic on sustainably marketed products, as well as the “impact of a narrowing price gap between sustainably marketed products and conventionally marketed products on volumes as well as a detailed analysis of price elasticity.”
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