Sustainability: A New Kind of Mainstream

By Ian Bell, Global Head of Home Care and Tissue and Hygiene Research, Euromonitor International | June 6, 2012

Despite the economy, the developed world has embraced the importance of ‘green’ products, and developing nations are following suit.

Sustainability has become the watchword for fast-moving consumer goods (FMCG) and wider society. While climate change naysayers still make the headlines, it would appear there is broad agreement on the significant environmental challenges that global society now faces. The emergence of Life Cycle Analysis (LCA) as well as the Triple Bottom Line (3BL) view of sustainability has helped crystallize sustainability’s place in mainstream products as well as corporate practice.

LCA in FMCG, which espouses the principles of efficiency of materials, production and use, has also had the happy coincidence of communicating a sometimes complex set of issues in a very user-friendly manner through its emphasis on efficiency. For the consumer, “efficiency” directly translates into cost savings and this has been especially significant in an era of material and fuel price inflation.

Economic Sustainability, Viability Pervades

Across FMCG, the efficiency mantra has become king, whether this involves low temperature washing in laundry care or the use of latest generation superabsorbent polymer (SAP) in hygiene products. Looking back at the last 30 years or so of environmental or “green” development, in consumer products, clearly there has been a significant sea change. Especially in the post Lehman Brothers shock era, cash-strapped consumers have often abandoned “deep green” products due to a combination of higher price and general lack of efficacy compared to other mainstream products.

In unstable economic times, pricing becomes a key purchasing driver for a large proportion of consumers in developed markets, which has seen the share of overtly green products shrink. Interestingly, this trend has come at the same time as a flattening of private label growth in key markets, illustrating that although important, pricing must be balanced against efficacy and an array of energy-, money- and time-saving features that consumers also deem important. The convergence of the recession, pricing, LCA and efficacy has been responsible for the marginalization of  “deep green” even further.

Vocal ‘Deep Greeners’

In the developed world, nappies/diapers are very much a barometer for how sustainability is faring and developing in the modern consumer economy. In no other category do consumers appear to care so much about the materials used, efficacy and even disposal of these items. Newborn babies certainly help focus the mind on a whole range of issues, including the environment and collective future prospects.

In nappies/diapers, “deep green” consumers tend to be somewhat evangelical and also Internet savvy, as they generate a media or social presence, which belies their significance in terms of pure sales. According to Euromonitor sources, about 3% of consumers in the developed world use non-disposable alternatives, a figure that has not changed much during the last 20 years. Fundamentally, the debate revolves around the principle that, in their own homes, consumers can rival the efficiency of large corporations, a point that LCA does not support. Reality, according to LCA, is somewhat counterintuitive and even controversial as it suggests the most significant progress made toward sustainability has come from major manufacturers’ efforts to reduce the volume (weight) of their products through the development of more efficient absorbing materials.

Overdeveloped Focus

While continued improvement in performance offered by leading brands Pampers, Huggies and Libero is certainly a step in the right direction, in terms of greater sustainability, this progress is only a small part of the story. Globally, the hygiene industry grew by 6% in retail volume terms in 2011, with the vast majority (90%) of this growth emanating from emerging and developing markets. Indeed, 2012 will see sales shift in favor of the developing world, meaning that issues of sustainability espoused by wealthier middle-class consumers in the West are increasingly becoming less significant in global terms.

For major multinationals, which derive much of their growth from these developing markets, this prospect raises the question of how consistently environmental sustainability is pursued across all territories. Certainly environmental considerations are less pronounced in the developing world; however, to suggest these are non-existent would be an exaggeration, even though the priorities may be different due to affordability/income, access and culture.

Case Study: Indian Sanitary Protection

In India, sanitary protection sales are negligible in relation to the country’s vast population of women aged between 14-64 years. Average per capita spending remains low at just 60 cents in 2011 and is more comparable with sub-Saharan Africa; Cameroon, for example, has a per capita spend of 20 cents. India continues to compare poorly with consumption patterns in the wider Asia-Pacific region. Women aged between 14-64 years in China, for example, spend $17.40 annually on sanitary protection products.

Low income levels are clearly the key factor in India where female consumers on average earn just $750 per annum, far less than the $1000 typically required for consumers to more easily purchase sanitary protection. Low usage is far more pronounced in rural areas where incomes are sometimes a quarter of those in urban areas, a gap that appears to be widening as Indian agricultural development has lagged behind the industrial and service sectors. The Indian government has continued to invest in rural areas through its Council for Advancement of People’s Action and Rural Technology (CAPART) program. Progress has been slow, however, meaning rural-dwelling women still have far fewer opportunities to access or afford these products.

Urban-Rural Split

In 2011, the Indian sanitary protection market grew by 13% in value terms, ahead of the Asia-Pacific regional average of 10%. More rapid growth in India has been held back by the fact that growth is still predominantly an urban phenomenon where consumers are on higher than average incomes and have access to modern grocery stores (health and beauty specialist stores took 60% of value sales, while supermarkets/hypermarkets held a 25% share in 2011). With almost 70% of the Indian population living in rural areas, the vast majority of the population currently has little or no access to sanitary protection. This is an income and availability issue that has been compounded by cultural norms that often see women ostracized during menstruation.

Education has been considered a key route for the betterment of rural women’s lives but social norms continue to act as an obstacle. There remains a widespread belief that menstruation is unclean in rural society, which, as government studies have shown, results in up to a quarter of girls dropping out of school for good once their periods begin in their early teenage years.

Moreover, low incomes mean women are left to use unsanitary cloths, which lead to high rates of infection and consequently more time missed from school. With this in mind, the Indian Health and Family Welfare Ministry has developed its Accredited Social Health Activist (ASHA) scheme—which has been running in 150 districts since 2010 and is due for expansion in 2012—with the ultimate aim of providing 200 million women with 100 sanitary napkins each. These are to be offered free for those below the poverty line and at a highly subsidized Rs1 rate to other village women.

Green Light Ahead

While ASHA is the most high profile of a number of similar plans already in operation in India, the government is still facing a huge task of educating consumers about the importance of improved sanitary hygiene. Without significant investment in advertising and health, including road shows designed to promote truths as well as debunk myths about modern sanitary protection this initiative could find that it has been cast on stony ground.

In urban areas, the 1% increase in excise duty placed on hygiene products announced for fiscal 2012-2013 (raised to 6%) appears to contradict the prevailing trend toward increasing access. For the most part, the increase will only affect urban consumers, however, this was one of the criticisms leveled at ASHA initially—that it ignored vast numbers of impoverished urban women. With increasing wages and a higher income tax threshold, this excise duty increase is unlikely to dampen increased medium-term demand, which is likely to grow in the retail market.

For a country such as India, the widespread availability of lower-priced sanitary protection is crucial for greater equality between the sexes, a social aspect that most successful economies have in common.

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