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Natural & Ethical Consumers 2005 - A 2004 NCI report examining the growing trend towards ethical consumerism and the interest in natural and organic foods. It covers the development of these trends into the future and how consumer packaged goods companies can exploit them.

Product Code: dmcm1824

Publication Date: 21-Feb-2005

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Overview

Introduction

Awareness of the ethical issues affecting food, drinks and personal care has been growing over the last decade, and this awareness is now having a real impact on food, drinks and personal care. To target ethical consumers, manufacturers and retailers need to ensure that they respond to their concerns by modifying their practices, updating products and effectively communicating any changes.

Scope

· Current and forecast numbers of natural and organic consumers by country.

· Value of the key natural and organic food, drinks and personal care product markets by country.

· Detailed insights into the ethical issues that consumers are most influenced by in their purchasing decisions and how they act on their convictions.

· Review of leading corporate social responsibility programs, labeling schemes and how these effectively attract ethical consumers.

Highlights

Dutch and French consumers are the most willing to pay a premium for ethical products, with 67% and 60% respectively claiming that they would do so.

The number of loyal natural food, drinks and personal care users in Europe and the US is predicted to increase from 89 million in 2004 to 173 million in 2009. In the US, the proportion of loyal users will increase from 12% in 2004 to 24% by 2009, while the equivalent figures for Europe are 14% and 25%.

Overall 67% of consumers in the US and Europe claim to have boycotted a food, drinks or personal care company's goods on ethical grounds. According the Co-op's index, UK companies lost US$2.7bn of sales through consumer boycotts in 2003.

Reasons to Purchase

· Access comprehensive data on the opportunity that the growth of natural and organic consumers are creating.

· Understand how growing ethical concerns influence consumers' purchasing behavior and how this will evolve over the next five years.

· Learn how to successfully target ethical consumers by effectively communicating to them how you are meeting their expectations.

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CHAPTER 1 EXECUTIVE SUMMARY	3
Introduction	3
The future decoded	3
A growing number of consumers actively participate in ethical activities	3
People are also increasingly willing to pay a premium for ethical goods	4
Ethical concerns drive uptake of natural and organic products	4
Ethical consumerism goes beyond simply choosing more ethical brands	4
Ethical consumers are turning to alternative food distribution channels	4
Action points	5
CHAPTER 2 THE FUTURE DECODED	11
Introduction	11
Consumers are increasingly acting on their ethical beliefs	12
The proportion of consumers acting ethically is growing	12
American, Dutch and Swedish consumers are the most ethical	12
Spain, Italy and France show the strongest growth in ethical behavior	12
Consumers are increasingly likely to pay more for ethical goods	14
Varying preparedness to pay for ethical goods reveals cultural differences	14
More consumers are turning to natural and organic products	16
Definitions of natural and organic products	16
The number of consumers of natural products is rapidly growing	16
The proportion of loyal users is increasing	18
Definition of loyal and occasional users	18
The value of natural and fresh food and drink sales is rising	19
Natural and fresh food and drink is driven by the meat sector	19
Growth in organics will remain healthy	20
Consumers are turning to natural and ethical personal care	21
There are two definitions of natural personal care	21
Both natural and ethical personal care are growing	22
Natural personal care is a very rapidly growing sector	22
Ethical personal care benefits from the growth in naturals	23
Ethical issues matter most to food and drinks	24
Most consumers find ethics most relevant to food and drinks	26
The food and drinks industry is linked to a very wide range of ethical concerns	26
Fewer consumers attach importance to ethics in personal care	26
The problem of testing cosmetics on animals has mostly been eliminated	26
There are, however, growing environmental concerns relating to cosmetics	27
Many consumers wish to - and do - act on their convictions	27
Over two-thirds of consumers have boycotted a CPG company	27
Many consumers consider that their choice of product is a political act	28
Belief in non-traditional political action amongst consumers is growing	29
Environmental concerns have the most influence on consumers	29
Ethical consumers dislike excessive packaging	30
Environmental concerns are closely linked to food safety	31
European consumers continue to reject Genetically Modified (GM) products	32
Social concerns also feature highly in consumers' priorities	32
Unfair international trade is a main concern of ethical consumers	32
Consumers are turning to alternative distribution channels	34
Case study: UK and US farmers' markets	34
Farmers' markets are mutually beneficial for producers and consumers	34
Consumers are partly driven by disillusionment with supermarkets	35
Farmers' markets are also growing in popularity in the US	35
Time-poor ethical consumers often turn to deliveries	35
Organic delivery companies are expanding their offering	36
Delivery companies offer convenient ethical shopping but are expensive	36
Natural personal care consumers have different motivations	36
What consumers want from natural personal care	36
Credibility of natural personal care	38
Conclusions	39
Ethical concerns increasingly guide consumers' choices	39
CPG players must not dismiss ethical consumerism as a fad	39
Regaining consumers' trust is key	39
CHAPTER 3 ACTION POINTS	40
Introduction	40
Make the distinctive properties of natural products clear	40
Promote natural personal care products as being healthy	40
Use natural positioning to develop a unique proposition	41
Be clear about the ethical and natural properties of products	41
Make verifiable claims about natural products	41
There is no legal definition of what constitutes a natural product	41
A lack of clarity misleads consumers and destroys trust	41
Ensure that claims can be substantiated	42
Make sure your natural ingredients are ethically sourced	42
Case study: The Body Shop Community Trade program	42
Encourage retailers to develop a market feel	43
Consumers enjoy shopping in markets	43
Case study: Coco's Fresh Food Markets	43
Capitalize on latent demand	44
Use reliable labeling schemes to build trust	44
Avoid confusing consumers with a proliferation of labels: the French example	44
Labeling schemes should not just denote a minimum standard	47
Adopt effective yet honest communications strategies	47
CSR pays no dividends if consumers don't know about it	48
Show consumers that your CSR activities are not just PR	48
CSR initiatives aligned with consumers' concerns can reap rewards	48
CSR creates goodwill amongst employees as well as consumers	49
Many employees are not aware that their company has a CSR program	49
Most senior executives believe that their CSR efforts are effective	50
People wish to work for ethically responsible companies	50
Engage in cross-industry ethical agreements	50
Case study: the Common Code for the Coffee Community	50
Coffee producers and workers are the immediate beneficiaries	51
Retailers have shown that ethical commitments pay dividends	51
The CCCC is not necessarily a permanent solution, but it is a first step	51
Help to educate consumers about food production	51
Rectify consumer misconceptions	52
An interest in production methods and health go hand in hand	52
CHAPTER 4 APPENDIX	53
Supplementary data	53
Definitions	56
Research methodology	57
Relevant links	57
How to contact experts in your industry	58
List of Tables
Table 1: Consumer survey: "Please rate the extent to which you have bought more or less ethical or socially-responsible goods and services in the past year."	15
Table 2: Percentage and total number of natural (including organic) food and drink consumers by usage status, Europe and US, 2004-2009	17
Table 3: Value of natural (including organic) food and drink markets by key product markets, Europe and US, 2004-2009	19
Table 4: Value of organic food and drink markets by key product markets, Europe and US, 2004-2009	20
Table 5: Naturals % share of overall personal care market, 1999-2009	22
Table 6: Total value of natural personal care market, 1999-2009 (US$m), US & Europe	23
Table 7: Ethical personal care market value, 2004-2009	24
Table 8: Consumer survey: "for which type of product do you think that ethical considerations are most important?" (% respondents)	25
Table 9: Structure of the European organic food retail market, 2002	34
Table 10: Motivators for the use of natural personal care products (% survey respondents citing)	37
Table 11: Barriers to use of natural personal care products by non-users (% survey respondents citing)	37
Table 12: Percentage and total number of organic food and drink consumers by usage status, Europe and US, 2004-2009	53
Table 13: Consumer survey: "With regards to food and drinks, how aware are you of the following issues and how much do they influence your purchasing behavior?"	55
Table 14: Definitions used in this report	56
List of Figures
Figure 1: Ethical consumer behavior by country, 2000-2005	13
Figure 2: Willingness to pay more for ethical products by country, 2000-2005	15
Figure 3: Defining natural personal care	21
Figure 4: Consumer survey: "For which type of product do you think that ethical considerations are most important?" (% respondents)	25
Figure 5: Consumer survey: main reason for boycotting a food, drinks or personal care manufacturer's products	28
Figure 6: Consumer survey: "With regard to food and drinks, how aware are you of the following issues and how much do they influence your purchasing behavior?"	30
Figure 7: Rates of household waste recycling by country, Europe, 2003	31
Figure 8: French food certification schemes: consumers are often confused by what they actually indicate	46
Figure 9: The EU's food labels guarantee provenance and production methods but not quality	46
Figure 10: Consumer survey: "Which of these ethical commitments would most improve your disposition towards buying a particular company's food, drink or personal products?"	49

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