Transcript Natural Marketing Institute

Increasing Your Private Brand’s
Marketability through the Value of
Sustainability
June 11, 2015, 8:00 a.m. – 8:50 a.m.
Joe Berman, Manager, Price Chopper Supermarkets
Scot Case, Vice President, NMI (Natural Marketing
Institute)
Carl Jorgensen, Director, Daymon Worldwide, Inc.
Chris Ratto, Director of Sustainability, Albertsons Safeway
Increasing Your Private Brand’s Marketability
Through the Value of Sustainability
• What does Sustainable Sourcing
entail?
• What is the global context for
Sustainable Sourcing?
• Why should my company consider
Sustainable Sourcing?
• How does Sustainable Sourcing
improve the value proposition,
marketability and brand identity of
my product?
• How can Sustainable Sourcing drive
category growth and increased
sales?
• Where can I begin?
What Does Sustainable Sourcing Entail?
•
Relatively new and current topic in the industry.
•
All companies engaged view this space as evolutionary.
•
Stakeholders across the supply chain involved.
•
Product Attributes:
– Product production/manufacturing, extraction or harvesting method and impacts
– Packaging and transportation impacts
– Combined emissions and water footprint
– Product lifecycle: Cradle to Grave or Cradle to Cradle
– Waste across all of the value-streams
•
Method of managing resources (product, product input and people) that ensures access to
those resources now and for future generations!
•
Traceability, transparency, product country of origin, legality, labor and human rights and associated
3rd party certifications.
•
High Impact Commodities: Coffee, Cocoa, Seafood, Beef, Sugar, Soy, Fiber (Pulp and Paper), and
Palm Oil.
The Global Context for Sustainable Sourcing
•
Population Growth: 9.6 billion by 2050. This
will produce significant challenges!
•
Rapidly approaching economic and ecological
tipping points associated with food
production, harvesting processes and
ecosystem carrying capacities.
•
United Nations has projected a global water
availability shortfall of 40% in the next 15
years.
•
70% of the global potable water supply is
used for agricultural purposes.
•
Assuming UN population growth projections,
global agricultural production will need to
increase an additional 70% to feed 9.6 billion
people by 2050.
Why Source Sustainably?
•
Risk management:
– Supply Chain Resiliency: product/material/resource availability
– Stock value
•
Reputational asset development:
– Private brands are unique (Protect and Grow them!)
•
Transparency and traceability:
– Maintained consumer trust and loyalty
– Preparedness, response, recovery and prevention.
• Food Safety Magazine 2015
•
Core values, corporate social responsibility commitments and business ethics
•
Improved sales, increased profits and shareholder values
•
Regulatory compliance
Improved Value Proposition and Product Brand
Identity
•
Where does my food come? Sustainable
Sourcing is traceable and transparent!
– These product criteria are some of the
top consumer concerns about food.
•
“Transparency and traceability have
become part of the cost of doing business.
To consumers, it’s about bottom line
integrity” – Hartman 2013
•
Traceable and transparent products build
consumer trust and brand loyalty.
•
9 in 10 consumers globally (86%) say
“ingredient transparency is extremely
important or very important”. - 2013
BBMG
•
Sustainable sourcing communicates a
broader commitment to corporate social
responsibility.
Driving Category Growth and Increased
Incremental Sales
• 55% percent of consumers across 60
countries say they would pay more
for products made by companies that
are committed to positive social and
environmental impact. - 2014
Nielsen.
• Year-over-year analysis show an
average annual sales increase of 2%
for products with sustainability
claims on the packaging and a lift of
5% for products that promoted
sustainability actions through
marketing programs. - 2014 Nielsen
Where Do I Start!?
•
Existing conditions analysis
– Category, Specification and
Standards
– Determination: How can
improvements to existing conditions
be easily implemented?
•
Determination of costs, benefits, risks
and opportunities associated with
implementation.
–
SWOT Analysis (Strengths, Weaknesses,
Opportunities and Threats)
•
Signature Items or Categories
•
High Impact Commodities
– Use FMI’s Free Sustainable Sourcing
Guide for High Impact Commodities
•
3rd Party and NGO Engagement
– Eco-labeling
– BMP and Policy Development
Trends, Challenges and Opportunities in Sustainability
© 2012, Natural Marketing Institute
June 11, 2015
9
Consumer Perspective
78%
©2015, Natural Marketing Institute
“It's important for companies to not just
be profitable, but to be mindful of their
impact on the environment and society.”
10
Consumer Perspective
% general population indicating…
“Knowing that a company is mindful of its impact on the environment and
society makes me…”
more likely to try more likely to buy
their products or their products
services
repeatedly
58%
53%
+2.0%*
+2.4%*
*CAG (Compound Annual Growth) 2009-2014
©2015, Natural Marketing Institute
11
Consumer Perspective
% general population indicating…
“Knowing that a company is mindful of its impact on the environment and
society makes me…”
more likely to talk less concerned
with my friends with the price of
and family about their products
the company
45%
30%
+2.6%*
+4.3%*
*CAG (Compound Annual Growth) 2009-2014
©2015, Natural Marketing Institute
12
Consumer Perspective Trends
% general population who completely/somewhat agree with the statements
2009
2014
I prefer to purchase products that are
manufactured in a sustainable manner.
51%
59%
STRONGER
PREFERENCE
Knowing that a company is mindful of its impact
on the environment and society makes me
more likely to try their products.
52%
58%
MORE LIKELY
TRIAL
Seeing that a product is environmentally
friendly makes me think that it is higher quality.
26%
32%
HIGHER
PERCEPTIONS
I am willing to pay 20% more for products which
are made in an environmentally friendly and
sustainable way.
15%
29%
MORE VALUE
©2015, Natural Marketing Institute
13
Health & Wellness
Sustainability (LOHAS)
Two of NMI’s Consumer Segmentation Models
©2015, Natural Marketing Institute
14
Some Segments Spend More Than Others
Shopping Trips Per Household
LOHAS
NATURALITES
DRIFTERS
121
105 CONVENTIONALS
UNCONCERNED
103
127
127
Basket Ring $ Per Household
LOHAS
NATURALITES
DRIFTERS
CONVENTIONALS
UNCONCERNED
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15
$6,183
$5,695
$5,590
$4,941
$4,674
Consumer Awareness of Chemical Ingredients
is Increasing Among the General Population
©2015, Natural Marketing Institute
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Important Differences in Consumer Awareness of ‘Parabens’
Is Obvious in NMI’s Sustainability Segmentation Model
Consumer Awareness of the Term ‘Parabens’
LOHAS
NATURALITES
DRIFTERS
CONVENTIONALS
UNCONCERNED
44%
29%
27%
28%
19%
13%
13%
10%
6%
2010
©2015, Natural Marketing Institute
2011
2012
17
2013
2014
Natural Household Cleaning Products Trends
% general population indicating…
“Natural cleaning products are
healthier for me”
62%
59%
% general population indicating they have
purchased the following natural household
cleaning products in the past 12 months
Laundry detergent with no fragrances,
dyes, etc.
Natural household cleaning products
19%
55%
Natural liquid hand dish detergents
13%
2013
19%
2014
2014
Natural laundry detergent
Natural drier sheets or fabric softener
Natural automatic dishwasher
detergents
©2015, Natural Marketing Institute
27%
17%
Natural home fragrance
2012
33%
25%
18
15%
11%
12%
9%
8%
5%
2010
Natural Marketing Institute (NMI)
272 Ruth Road
Harleysville, PA 19438
www.NMIsolutions.com
Scot Case, VP Strategic Consulting
phone: 215-237-8187
[email protected]
All materials herein are © 2015 by Natural Marketing Institute. All rights reserved. Reproduction,
publication (internal and/or external), transmission, or other use of any of the within materials,
including but not limited to graphics, data, and/or text, for any commercial or non-commercial
purposes, is strictly prohibited without the prior express written permission of Natural Marketing
Institute.
©2014, Natural Marketing Institute
19
Consider the Source:
Sustainable Food Production
20
│
Carl Jorgensen, Director, Global Consumer Strategy - Wellness
June 2015
Consider the Source:
Sustainable Food Production
“What is
unsustainable will
not be sustained.”
ECONOMIST
Milton Friedman
University of Chicago
FARMER
Wendell Berry
American novelist,
poet, environmental
activist, cultural critic
21
│
“A sustainable
agriculture does not
deplete soils
or people.”
Consider the Source:
Sustainable Food Production
Food
Safety &
Quality
• Integrates natural biological cycles
• Renews soil fertility
Water
• Uses on-farm resources
• Reduces use of nonrenewable
resources and off-farm inputs
Fertilizers
Sustainable
Production
• Provides an adequate and
dependable income
Pesticides
• Promotes opportunity in family
farming and farm communities
• Minimizes adverse impacts
on health, safety, wildlife,
water quality and the environment
22
│
Source: USDA SARE (Sustainable Agriculture Research and Education)
Soils
Biodiversity
Greenhouse
Gases
Integration of Natural Biological Cycles
Example: Crop rotation supports the natural cycles of soil
nitrogen replenishment
UNSUSTAINABLE
SUNFLOWERS
WHEAT
(broadleaf) 2014
(grass) 2015
CORN
SOYBEANS
(grass) 2017
(broadleaf) 2016
SUSTAINABLE
(ROHRICH FARMS CROP ROTATION)
23
│
Soil Health
“Healthy soil = healthy
food = healthy people.”
ORGANIC PIONEER
J.I. Rodale, 1947
UNSUSTAINABLE
24
│
SUSTAINABLE
Use of On-farm Resources
Reduces the use of nonrenewable resources and purchased
production inputs
UNSUSTAINABLE
25
│
SUSTAINABLE
Optimizing Management and Use of
On-farm Resources
Reduces the use of nonrenewable resources and purchased
production inputs
UNSUSTAINABLE
26
│
SUSTAINABLE
Providing an Adequate and Dependable
Farm Income
UNSUSTAINABLE
27
│
SUSTAINABLE
Promotes Opportunity in Family Farming and Farm
Communities
UNSUSTAINABLE
28
│
SUSTAINABLE
Minimizes adverse impacts on health, safety,
wildlife, water quality and the environment
UNSUSTAINABLE
29
│
SUSTAINABLE
Thank You!
30
│
Marketability Through
Sustainability
CSR_Sustainability Summit_Aug 2013
31
Albertsons Safeway Today
 14 Operating Areas
– Over 2,200 Retail Stores
– 27 Distribution Centers
– 19 Manufacturing and Food Processing Centers
32
Own Brands Sustainability Foundation
33
Own Brands Options
Hundreds of products
that do not contain:
Line of better-for-you
foods:
USDA Certified Organic
products that do not
contain:
• Artificial colors
• Low fat
• GMO
• Artificial preservatives
• High in fiber or protein
• Toxic pesticides
• Added trans fat
• Low sodium
• Synthetic fertilizers
• Hydrogenated oils
• Added hormones
• Antibiotics or added
growth hormones
• Artificial ingredients or
preservatives
Earth-friendlier home
care products that have
been third-party
reviewed
• Paper products – at
least 50% recycled
• Cleaning and laundry
– non-toxic and
biodegradable
• CFL
34
Own Brands Options
Labels
Packaging
35
Brand Benefits
 Point of Differentiation
– Consumers
– Investors
– NGOs
 Grow the Brand
 Mitigate Risk
36
Thank you!
Questions?
37