A week ago, the New York Times breathlessly declared in a cover story that during the recession, "As Consumers Cut Spending, 'Green' Products Lose Allure." It's a nice headline and makes it sound like the green product and business movement is in trouble. But the story, while interesting, doesn't really change the reality for business.
First, consumers never liked to pay more for green and, second, consumer pressure is not the biggest force driving the greening of business.
Here's the story. The Times piece focuses on the rise and (sort of) fall of Clorox Green Works cleaning products. Launched with much fanfare in 2008, Green Works quickly became the biggest player in the niche green cleaning space, hitting $100 million in sales before falling to $60 million in the recession (which is still a very respectable number in this market space). The Times crows that "As recession gripped the country, the consumer's love affair with green products, from recycled toilet paper to organic foods to hybrid cars, faded like a bad infatuation." So green products are on their way out, right?
Not quite.
First, as the next sentence points out, "sales at farmers' markets and Prius sales are humming along now" (fyi, Prius sales jumped 70% in February as oil prices rose). So two of the three categories the Times uses to make its point are actually growing, not fading.
Second, at the end of the article, a fascinating chart shows the "green share" of household products holding steady at about 2 percent over the last few years. The conventional brands like Clorox have flattened out -- even as Clorox sales dipped, the total number of entrants has continued to grow. The niche brands, such as Method and Seventh Generation, have continued to nibble away at market share and actually grew during the recession.
To the extent that the premium-priced green products named by the Times have taken a hit, consumers' disdain isn't news: Recession or not, mass consumers never loved paying extra for green.
Asking people to pay more for green is usually doomed. Green has always been most effective as the "3rd button" (as my co-author and I called it in our book Green to Gold) to press in marketing pitches, after price and quality. The Prius is the premium-priced exception that does not disprove the rule. It's is a special case, since the purchase confers a range of emotional and value-laden benefits that household products just don't have (critics call the pride of ownership smugness -- and, yes, I own one).
Therefore, in the trenches of consumer product development, the real story is the pursuit of more sustainable products that, as P&G execs say, create "no tradeoffs" for customers. Why ask people to pay more?
As more companies present green products at no additional cost, Wal-Mart and others will be happy to give them more shelf space, because what's really happening with consumers is subtler than a supposedly fading infatuation with green. As the Times story indicates, there is no rise in the percentage of "true green" consumers who will pay more for sustainable products. But there is a serious rise in the number of so-called "conflicted" or "conscious" consumers, which has been building for years. These buyers, who are quickly becoming the majority of consumers, not a niche segment, want it all. They demand more sustainable products at the same or lower price. The last sentence of the Times article actually captures this phenomenon:
"Sarah Pooler, 55, said she did not normally buy green products but would pick them up if they were on sale... 'Bottom line, if it's green and it's a good deal, I'll buy it', said Ms. Pooler.
And so the race is still on to provide green products at the same price and quality.
But exactly because Ms. Pooler and millions of other buyers are still waiting for that price equality, I would argue that what is and has been driving the greening of business is not consumer pressure but a mix macro-level forces and operational sustainability success stories, the countless examples of reduced packaging, lowered toxicity, and condensed versions of products(in detergents for example) that save shelf space and tons of energy in shipping and storage.
At the macro level, the greening of products and companies is accelerating because the sustainability drivers are only getting stronger. Rising resource prices, ever-increasing transparency demands about what's in every product, and continuing pressure up the supply chain from business customers are just a few of the big forces.
Does anyone in the consumer product space seriously think Wal-Mart (and other retailers) will stop demanding sustainability-driven operational and product changes just because of the recession? On the contrary, the need to lower costs in the face of rising commodity prices is making eco-efficiency even more economic.
So even if consumers develop fickle infatuations with certain products, the business world is clearly developing a deep, abiding love of -- or at least growing respect for -- the power of sustainability.
This post first appeared at Harvard Business Online.