Sustainability Demand to Impact Food Industry

From the Huffington Post to the Wall Street Journal, it’s clear that naturally trans fat-free palm oil has captured the attention of mainstream media. The American food industry would be smart to take notice, because American consumers are paying more attention to where their food ingredients come from, and sustainability is an emerging concern. How well food manufacturers leverage this information could have a major impact on their bottom line over the next few years.

 
Data collected for the EcoFocus Trend Survey found that the U.S. market for sustainable palm oil includes the majority of consumers (58%) ages 18 to 65 years. If that includes your target market’s sweet spot, keep reading.  

 
Growing Market for Sustainable Palm Oil
Sustainable or eco-friendly ingredients such as palm oil are an emerging trend in the U.S. consumer packaged goods (CPG) marketplace. For food manufacturers and ingredient suppliers, however, getting sustainable ingredients to market and adopted by the U.S. shopping public may be as challenging as sourcing and verifying the ingredients.  

 
America’s use and demand for palm oil has accelerated, driven by dietary recommendations for consumers to limit trans fats consumption for better health, and regulatory pressures on industry driving trans fat-free food formulations. As palm oil is being more widely used in U.S. products, attention has turned to the health advantages and the environmental sustainability of palm oil. 

 
Palm Oil Getting Direct Attention
Because so much is being said and written about palm oil sustainability, the American public may assume that it is inherently not as sustainable as other oils. The facts are just the opposite, particularly in Malaysia.
 

• Oil palms require significantly less land to produce the same amount of oil as other vegetable oil crops such as soy, canola (rapeseed) or sunflower. 

• Oil palms have a 25- to 30-year lifespan, making it more environmentally efficient compared to annual oilseed crops.

• In Malaysia, oil palm is exclusively planted on designated legal agriculture land. Malaysia set aside at least 50% of total land area under forest cover and pledged to protect this land.

• Malaysia has a zero-burn policy.

• Malaysia’s oil palm cultivation uses integrated pest management practices such as barn owls to control the rat population.


 
American Foodies Taking Notice
Consumers are making a stronger connection between their personal health and an eco-friendly lifestyle. Data reveal that an overriding trend among American consumers is caring about the source country. Especially now that country of origin is listed on produce labels, people are paying more attention to the source. Their awareness of certifications regarding wildlife and environmental protection are influencing their shopping decisions. Green consumers—and even those who are light green in terms of their shopping decisions—are demanding that their Clementines come from Spain, that their seafood be caught wild from U.S. waters, and more recently that their olive oil come from Tunisia.

 
It won’t be long before country of origin becomes an advantage on all ingredient labeling, particularly premium food products.


 
EcoFocus Trend Survey Results
Highlights of the 2014 survey revealed significant information on value to food formulators and marketers. These highlights include:
 
A majority (84%) of today’s general population ages 18 to 65 years (GPOP) said they sometimes (34%), usually (30%), or always (20%) take “environmental reasons” into consideration when shopping, a number that has remained strong and stable since 2010. Named Consumers Who Care (CWC) by EcoFocus, this market segment is largely a mainstream population.  
 
Many CWC are rethinking the choices they make (71%) and some are willing to change brands for more eco-friendly choices (46%). CWC (71%) strongly agree or agree “better personal health is a big benefit of an eco-friendly lifestyle;” 25% strongly agree, up six points since 2010.
 
CWC see value in foods and beverages that marry sustainability with health benefits, and some are choosing their shopping destinations accordingly. Affordability and availability are cited as hurdles.
 
Six in 10 CWC (62%) said it is extremely or very important to support companies that protect rainforests, coral reefs or other ecological areas, up from 56% in 2010.  
 
Corporate commitments to protecting wildlife (74%) and protecting natural resources (71%) are extremely or very positive purchase influencers.  

 
With respect to listing sustainable ingredients on food and beverage labels, these visible reminders of a company’s eco-friendliness are increasingly important in buying decisions.
 

• 61% GPOP said “information on the package” is a major influence on their opinion as to whether a brand is eco-friendly; 66% of CWC consumers agreed.   

• 59% GPOP said “the product ingredients” are a major influence on their opinion as to whether a brand is eco-friendly.  

• Country of Origin labeling on foods and beverages is extremely or very important for 63% of CWC grocery shoppers. Half (53%) of GPOP (up eight points since 2010) and 60% of CWC (up 15 points since 2010) strongly agreed or agreed they pay attention to where the ingredients in their foods and beverages are grown.

• Labels communicating support for local or small farmers are extremely or very important to about two in three CWC grocery shoppers, up from about one in two shoppers in 2010.  

• For GMO-free ingredients, the relatively new label indicating Non-GMO Project Verified ingredients has seen big gains among CWC grocery shoppers since its introduction: 56% said this label is extremely or very important in 2014, up six points in just one year’s time.  
 

• About half of CWC (56%) said it is extremely or very important “to buy products that are produced in environmentally responsible countries.” However, most lack the information needed. For example, about one in three CWC “don’t know” if Brazil, Malaysia and Indonesia are environmentally responsible countries.

• Among the palm oil producing countries of Brazil, Malaysia and Indonesia, Brazil is rated “not at all eco-friendly” by the fewest number of CWC: 12%, versus 16% and 17% for Malaysia and Indonesia respectively.

• Awareness of the RSPO certification for palm oil is quite low (6% of CWC) but it has powerful influence among CWC who are aware of this certification label.

• Likewise, awareness of the Rainforest Action Network is low with 14% of CWC aware of this certification label; awareness of Non-GMO Project Verified is moderate with 24% of CWC aware of this certification label.

 
Who Cares About Sustainable Palm Oil?
The EcoFocus Trend Study identified four segments of GPOP based on current awareness together with receptivity to learning about sustainable palm oil.  
 
1) The sustainable palm oil-receptive target (58% of GPOP) includes two of these segments: Aware Receptive (35%) and Unaware Receptive (23%).  
 
2) The remaining two segments are Aware Unreceptive (17%) and Unaware Unreceptive (25%).
 
Millennial and younger consumers (64% ages 18 to 21 years and 59% ages 22-37 years) are considerably more likely than older consumers (48% of Gen-X ages 38 to 49 years and 47% of Baby Boomers ages 50 to 65 years) to be aware of sustainable palm oil. However, younger and older consumers share an interest in learning more about sustainable palm oil: About six in 10 are receptive to information about sustainable palm oil.  

 
Otherwise demographically, those most interested in learning more about sustainable palm oil include: consumers of Hispanic, African American, or Asian descent (65% versus 54% of Caucasians); women (60% versus 56% of men); and middle and upper income consumers.

 
Generally, consumers who are receptive to buying sustainable palm oil hold somewhat stronger health and sustainability attitudes compared to CWC. For example, they are more likely to shop at retail stores that require the products and brands sold in their stores to be eco-friendly.

 
Food Industry Consequences of Using Sustainable Palm Oil
Sustainable palm oil, such as that sourced from Malaysia, represents a significant opportunity for the American food industry. Sustainability is an emerging dimension of personal wellness among a majority of U.S. consumers, creating an opportunity for the food industry to communicate the healthfulness and sustainability of the ingredients used in the products they produce and market for market advantage.  
 
The U.S. market for sustainable palm oil includes 58% of consumers ages 18 to 65 years. Premium products, natural products, products offering health advantages and other value-added products are likely to be the best fit for sustainable ingredients that carry a higher price tag.
 
Leverage the connection between health and sustainability for red palm oil to polish the halo for palm products overall.  
 
Consumers want brands and retailers to make eco-friendly choices easier to identify and purchase. Don’t leave the information on a website. Information on the package is critical.
 
More consumers are paying attention to where the ingredients in foods or beverages are grown, and said it is important to buy products from environmentally responsible countries, but lack the information needed. Fill the information gap with simple and consistent messages.
 
Corporate eco-commitments matter, creating opportunities to communicate the sustainability of the ingredients used in products.  
 
Take a stand, and let customers and consumers know about it. Recognize that consumers have become the voice driving change more than the audience. Their demand for natural, sustainable, and healthful products will continue to change food industry practices and governing regulations.

---

Linda Gilbert, the founder and CEO for EcoFocus Worldwide, has more than 30 years experience as a market development and strategy consultant linking consumer attitudes and nutrition awareness with product benefits. For more information http://ecofocusworldwide.com/