CPG Can No Longer Afford to Harm the Planet

There was a time when investing in sustainable products could damage a company’s bottom line. Broadly speaking, the public didn’t care. The items weren’t considered that good. And government was responsible for environmental issues, not brands. Experts say this is no longer the case. Advances in technology, a better understanding of the topic and shifts in consumer demand have made planet-friendly products a priority for CPG manufacturers. “More and more, people are making the argument that without sustainability you can't even have a successful business,” said Vance Merolla, worldwide director of global sustainability at Colgate-Palmolive, which saw net sales climb 5% to $16.5 billion last year. Now, hardly a week goes by without one CPG company or another announcing a new initiative that diminishes its impact on the environment. In mid-January, Kraft Heinz revealed it’s developing a recyclable, fiber-based microwavable cup for its Mac & Cheese line. More recently, Nestlé declared that its Smarties confectionery brand has switched to paper packaging, eliminating 250 million plastic packs sold around the globe each year. At the same time, pressure to go green has become so strong that some firms no longer want to disclose information pertaining to their sustainability efforts because they hope the results will set them apart from the competition. In other words, the situation has evolved from brands wanting to do less bad, in a defensive sense, to brands taking an offensive approach to win more market share. Kyle Tanger, managing director and U.S. sustainability consulting leader at Deloitte, explained that five years ago his CPG clients would have encouraged him to share their strategies and innovations on the subject as great fodder for feel-good stories. Now, however, they don’t. “It actually makes me happy that I can tell you that I can't tell you,” Tanger said on the increasingly private nature of companies’ sustainability plans. A toothbrush to keep This week, Colgate-Palmolive is debuting Keep, a toothbrush made with a reusable aluminum handle and snap-on replaceable brush head. By only tossing out the head when the bristles become worn down—as opposed to the whole toothbrush—consumers can reduce plastic waste by 80%, according to the company. Colgate-Palmolive, which reports it controls 41% of the manual toothbrush market in the U.S., claims the equivalent of 400 million toothbrushes would avoid ending up in a landfill this year if every manual toothbrush user in the country switched to Keep. (Due to the small size of toothbrushes, most recycling facilities can’t process them. “What is recyclable doesn't necessarily get recycled,” Tanger said.) Keep by Colgate-Palmolive. Say versus do Countless surveys show modern consumers, especially younger demographics, favor items that have a small ecological footprint, if any. But other factors such as price, convenience and perceived quality can sometimes steer shoppers in a different direction when filling their basket. “It's those buts that we tried to address,” said Dana Medema, vp and general manager of oral care at Colgate-Palmolive, on the thinking behind Keep’s design. (The manufacturer's suggested retail price for a Keep handle and two heads is $9.99. A refill kit consisting of two heads: $4.99.) “No one wants trade-off, so you have to figure out how to create products where there is no trade-off,” Medema added. Gautham Vadakkepatt, an assistant professor of marketing at George Mason University, said that while a divide between intentions and actions still exists for consumers when it comes to choosing household staples, the gap is shrinking. “There's an increasing amount of people who want to buy sustainable products, and they're now willing to pay more of a price to buy it,” Vadakkepatt said. Sales numbers bear this out. A report from New York University’s Stern Center for Sustainable Business found that consumer packaged goods marketed as sustainable generated nearly 55% of the industry’s growth from 2015 through 2019, despite costing more and representing only 16% of the market. At Deloitte, Tanger said demand for the firm’s sustainability services has never been higher, and he only anticipates it to grow from here. “I could see us tripling or quadrupling our services in this area in a very short timeframe,” he said. “It's that hot.”

Sustainability News

Why CPG Companies Can No Longer Afford to Make Products that Harm the Planet

Consumer goods marketed as sustainable generated nearly 55% of the industry’s growth from 2015 through 2019

Paul Hiebert

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Paul Hiebert