Greening the [Private] Label

November 11, 2008
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The Food Marketing Institute (FMI), Washington, D.C., defines sustainability as “business strategies and practices that promote the long-term well-being of the environment, society and the bottom line.” But are retailers really doing all they can to promote sustainability in their stores?

According to a 2007 report by Chicago-based Information Resources Inc. (IRI), a whopping 85 percent of leading consumer packaged goods retailers and manufacturers currently have sustainability programs in place, most of which focus on recycling and energy conservation. But the report goes on to note that consumer-focused initiatives related to sustainable product offerings are still in the early developmental stage at most companies.

“A lot of companies have already found the low-hanging fruit,” explains Steve Roberts, vice president at Austin, Texas-based EnviroMedia Social Marketing. “They started with the easiest changes that resulted in the largest eco-efficiencies - upgrades in facilities, supply chain improvements, etc.”

But that’s no longer enough, he continues.

“Today, retailers really have to wear two hats. It’s not just about how sustainably you operate, but how environmentally friendly your products are. … Consumers want you to help them do less harm to the environment.”

Unfortunately, Roberts says, most chains don’t yet offer a wide enough array of products with sustainability benefits, particularly on the store brand side. Oh sure, many large retailers have added a selection of organic products to their own brand lineups, but beyond that, sustainable private label pickins’ are pretty slim. And that’s a shame because IRI found that one-fifth of all U.S. consumers are “sustainability-driven” in their product and store selection. Moreover, about half consider at least one sustainability factor - organic attributes, eco-friendly ingredients or packaging, fair treatment of employees or suppliers, etc. - when selecting brands or stores to shop.

Clearly, IRI notes, “Sustainability has evolved from a niche segment concern to a major factor influencing purchasing and shopping behavior across a sizable consumer base … creating a viable and growing U.S. market for sustainable products and packaging with the potential to mirror well-developed markets in Europe and Japan.”

Need more proof of sustainability’s clout with consumers? Consider the number of large national brands that have introduced more environmentally friendly products.

“In just the last 18 months,” reports KoAnn Skrzyniarz, president and CEO of Sustainable Life Media, Burlingame, Calif., “we’ve seen an enormous shift toward recognition by big global brands that sustainability is the direction the world is heading.” She cites Clorox’s new Green Works line of environmentally friendly cleaning products as a prime example.

“That’s the first new brand that company has launched in 20 years,” Skrzyniarz says, suggesting that sustainability is rapidly becoming not just a competitive advantage but a competitive requirement.

“If you look at this as a niche that you’re going to leave to someone else to fill,” she adds, “you’ll be sorry when it becomes a basic expectation of consumers. It’s not just an offensive move; it’s a defensive one as well.”

Howard Mallen, executive   vice president at Chatsworth, Calif.-based Winterborne, agrees.

“When people use the word sustainability, they’re usually referring to environmental sustainability,” he says. “But more and more, it means both environmental and business sustainability” - because you can’t have the latter without the former, particularly on the store brand side.

Important for Private Label

According to Roberts, a chain’s private label is one of the best ways to demonstrate to consumers exactly what the retailer stands for. Whether top-of-the-line products or rock-bottom prices, he explains, a retailer’s store brand lineup should reflect its core values. But stores with a behind-the-scenes commitment to environmental sustainability that doesn’t carry over to their store brand assortments are unlikely to get the kind of credit they deserve from consumers, who can only judge them on what they see in the aisles with their name on it.

“So use your private label to make a statement about what kind of company you are, how you operate and how much you care about the environment,” Roberts says.

The good news is that more and more retailers are doing just that.

“Private label is the fastest-growing part of our business by far,” reports Dr. Marion Myers, technical director at Pacific Sands, a Racine, Wis.-based supplier of environ-mentally friendly cleaning products. “Everybody wants to have their name on these kinds of products.”

Initially, says Michael Bruno, private label market sector specialist at Los Angeles-based L.A. Paper Box, requests for more environmentally friendly packaging were coming primarily from “niche” brands founded on green principles (think Whole Foods’ 365 line, Safeway’s O Organics program, etc.) Now, however, the company is fielding requests from every corner of the retail community.

In fact, one of the leaders of the retail sustainability movement is none other then Bentonville, Ark.-based Wal-Mart, whose much-ballyhooed Sustainability 360 program includes an initiative to reduce packaging 5 percent by 2013, with the help of a scorecard designed to measure the environmental impact of all forms of packaging used by the chain’s 60,000-plus suppliers. For its own brand products, however, the chain has created an even more stringent set of guidelines, including, for example, a ban on PVC in private label packaging. Other key consumer-focused initiatives include a program to make all energy-intensive products sold in Wal-Mart stores 25 percent more efficient within three years, as well as a plan to work with suppliers to develop more green products in areas in which consumers are most receptive.

Although consumers first were a little suspicious of Wal-Mart’s motives, given the company’s mixed record on issues related to social responsibility, even the skeptics have had to admit that its sustainability push has been good for the environment. Perhaps even more important, however, it’s forced the rest of the industry - both retailers and manufacturers - to do their part as well or risk being left behind.

“When Wal-Mart moves, everyone has to move with them,” Roberts explains. Fortunately, he continues, the company has used its powers for good.

“I’ve been very impressed by what they’ve accomplished in terms of environmental sustainability” and by the positive influence they’ve had on other retailers, he says.

Oh sure, he adds, Wal-Mart also is saving millions of dollars by going green, but it’s no different from the majority of consumers who want to help the environment only if they can help themselves, too. That’s why retailers looking to boost the sustainability quotient of their private label collection should start with those products that offer the greatest “eco-efficiencies.” For example, Wal-Mart made its Great Value brand compact fluorescent light bulbs one of the centerpieces of its sustainability program based on the fact that they could help consumers save money on their electric bills - not to mention prevent millions of tons of greenhouse gases from entering the atmosphere.

Good Starting Points

But money isn’t the only way to attract consumers to sustainable products; better-for-you attributes also hold remarkable appeal. In fact, IRI’s research revealed that 39 percent of consumers consider organic certification when selecting foods or beverages, again largely because such products are good for both the environment and them.

Another recently released study, from Troy, Mich.-based J.D. Power and Associates, found that organics were the most talked-about food and beverage category in the sustainability blogosphere - and also got the most positive buzz - earning them a gold star from the study’s authors. The bottom line? If you don’t yet have an organic private label program, now’s the time to start one.

Another strategy likely to bear fruit is local sourcing, Skrzyniarz says.

“Decreasing the distance food has to travel saves gasoline, but also results in fresher, better-tasting food that often costs less as well,” she says.

That makes it a win-win for the environment and consumers. In fact, 61 percent of respondents to a recent Harris Poll commissioned by FMI said they would be very likely to purchase locally grown products, while another 33 percent said they would be somewhat likely.

But not all environmentally friendly products offer such obvious benefits to consumers. For example, the purchase of sustainable or farmed seafood instead of wild-caught helps prevent over-fishing of certain species, but it doesn’t always taste as good or contain all the same nutrients. It’s no surprise, then, that only 38 percent of respondents to FMI’s survey said they would be very likely to purchase such products. Even fewer consumers are likely to choose fair trade products, which often cost more than their conventional counterparts.

According to Daniel Diebra, director of sales at the Houston-based Maximus Coffee Group, fair trade coffee sells for as much as 20 percent more than regular coffee, although consumers are assured that the non-child laborers who harvested it were paid a fair wage. As a result, he reports, “Fair trade still represents a pretty small part of our business.”

Although Austin, Texas-based Whole Foods offers hundreds of fair trade products through its Whole Trade program, across channels, fair trade products typically represent only 0.5 percent to 5 percent of total sales in those categories with a fair trade presence (wine, sugar, cocoa, rice, coffee, tea, bananas, etc.) - and probably even less on the private label side. But look for sales to increase as other mainstream retailers mimic Wal-Mart’s recent introduction of its own brand of fair trade coffee, which is likely to heighten consumer awareness of issues associated with fair trade.

More than Food

Interest in sustainable products isn’t limited only to foods and beverages; many consumers also are looking for safer, more eco-friendly cleaning supplies. IRI reports that nearly a quarter of all consumers actively seek out household products inherently better for the environment, while one-fifth select stores based on the availability of such products.

FMI’s survey found 44 percent of consumers were very likely to purchase environmentally friendly cleaning products, with another 44 percent somewhat likely to buy such products.

One of the keys to success in sustainable household cleaners is improved efficacy, says Janet Eden-Harris, vice president of marketing for the Web intelligence research division at J.D. Power. If a product doesn’t do the job properly or costs more than standard offerings, consumers won’t buy it - no matter how good it is for the environment or how bad the alternative.

“Convenience often trumps conscience,” she explains, suggesting manufacturers focus on improving quality, lowering prices and educating consumers about the benefits of eco-friendly cleaning products without confusing them further.

Fortunately, Myers says, “Today, there are a wide range of cleaning agents made with [modified] corn, coconut, soybean, sugar and other natural oils that perform pretty well against those that contain petroleum-based surfactants with varying degrees of toxicity.” He points to Pacific Sands’ flagship line, which includes a complete range of cleaning products built around oxygen bleach technology.

Another sustainability trend in cleaning supplies, particularly on the liquid side, is a move toward more concentrated formulations that include less water and, therefore, weigh less and cost less to transport. Again, Wal-Mart led the push, recently achieving its goal of selling only concentrated liquid laundry detergent. In three years, the chain estimates it will save 400 million gallons of water, 95 million pounds of plastic resin and 125 million pounds of cardboard, not to mention a lot of gasoline.

Packaging - an Easy Fix

Eco-friendly packaging consistently ranks as one of the most important sustainability attributes. In fact, IRI reports, 29 percent of consumers surveyed said environmentally friendly packaging influences their choice of brand, while 21 percent said it influences their store selection. Fortunately, it’s also one of the easiest changes to effect.

“One of the simplest ways to make packaging more sustainable is through source reduction, whether reducing the size of the package or reducing the amount of fiber in the paper material or the gauge of plastic,” Winterborne’s Mallen says, pointing to recent efforts by the bottled water industry to lightweight its plastic bottles.

Many retailers have gotten into the act as well, asking both national brand and private label suppliers to eliminate superfluous packaging. For example, a 2006 push by Minneapolis-based Target Corp. to rid its store brands of excess wraps resulted in the redesign of more than 500 items. Of these, 100 were reconfigured to eliminate PVC, which typically contains little recycled material, isn’t easily recyclable itself and creates more greenhouse gas emissions during manufacture than other materials (the proverbial three strikes).

The backlash against PVC and other such materials has resulted in “a lot of questions from both retailers and manufacturers about how they can get out of traditional plastic clamshells/blisters,” Mallen says.

One alternative is Winterborne’s EnviroShell, a “trapped blister” that uses up to 90 percent less plastic than full blisters by fitting recycled PET (not PVC) around only the product itself. The balance of the package is made of rigid corrugate, which, in turn, is made from a renewable material, contains 70 percent recycled content and is very highly recycled. The best part about it? It doesn’t cost a penny more than traditional clamshells, although the environmental impact is significant. In fact, Target’s recent initiative to replace all the clamshells in its stores with trapped blisters made mostly of recyclable cardboard is expected to prevent an estimated 5,000 pounds of PVC from entering landfills each year.

Switching to more eco-friendly packaging materials has yielded similar results for other retailers as well. For example, Cincinnati-based Kroger recently moved its own brand tomato sauce and other tomato products from cans to Tetra Recart recyclable paper cartons, which it calls “the most sustainable recyclable packaging available on the market today.”

Maximus also offers a more recyclable alternative to aluminum cans for coffee. Currently used only by branded leader Maxwell House but available for private label as well, the cardboard-type CEKA “can” also is made of recycled materials. But the selling point is its shape. Because it’s square rather than round, Diebra says, the package cubes up easily, making maximum use of space during shipping, which reduces transportation costs.

He adds that Maximus also is pushing coffee “bricks” that can be marketed as “refills,” allowing consumers to reuse perfectly good cans multiple times - and saving them money in the process. Retailers that offer the bricks - or any product manufactured by Maximus - also are invited to display the EPA Green Power logo on the package, indicating the item was produced in an EPA-certified green plant.

Given the current lack of a single industrywide standard for sustainability, Diebra says, such certifications are especially important to consumers looking for reassurance that the product they’ve purchased really is better for the environment.

“Unfortunately,” he says, “there’s a lot of room for distortion, especially in coffee, so retailers need to make sure their partners are certified by a well-respected agency.”

The End Game

What about those packages that, despite retailers’ best efforts, end up in landfills anyway? Packaging suppliers have responded with unique biodegradable options.

“We made a recyclable bakery-type box for one green-minded retailer that featured a biodegradable PLA film rather than the typical clear acetate ‘window,’” L.A. Paper Box’s Bruno recalls. “That way, it could be assured that even if the package wasn’t recycled and ended up in a landfill, both the box and the film would break down.”

Bruno adds that recyclable packages, as well as those made from recycled materials, are always at the top of the company’s list of recommendations to customers interested in sustainability.

“But you can only recycle cardboard so many times before the fibers start to break down,” he says, making it necessary to periodically insert virgin board as well. But even that can be done in a more eco-friendly way by only using board made from wood pulp harvested from sustainable forests certified by the Forest Stewardship Council (FSC).

Yes, Bruno admits, FSC-certified virgin board does come with a slightly higher price tag, “but retailers have to weigh that against the marketing benefits associated with using a sustainable resource. If they tell consumers what they’re trying to accomplish, it may buy them additional sales.”
But, he cautions, be careful not to overstate your sustainability achievements.

“‘Greenwashing’ does more than just damage your company’s reputation,” he explains. “It also carries punitive damages as well,” under the Federal Trade Commission Act, the Lanham Act, and certain state consumer protection statutes.
“Authenticity is everything in this space,” Skryzniarz adds. “So if you’re going to ‘green up’ your brand, do your homework, and don’t overpromise or under-deliver.”

Transparency also is important, she says. In this segment more than any other, “If you mess up, you’re very likely to get caught. So it’s best to be forthright about what you are and are not doing.”

The Co-Branding Alternative

Retailers looking to boost their environmental sustainability quotient without creating an eco-friendly private label brand from the ground up now have another alternative. Planet Green, a Discovery Communications network with programming aimed at “bright green” consumers, is making its “brand” available to retailers and manufacturers with products that reflect similar values.

Ideal for co-branded private label products in such categories as household cleaners, paper products, health and beauty aids and home building supplies, the Planet Green brand “clearly communicates a legitimate green offering,” says Debra Joester, vice president at New York-based Joester Loria Group. More important, however, it allows those products to “hit the ground running,” without a large marketing budget to educate consumers about the brand’s attributes.

According to Joester, any product offered under the Planet Green label must meet certain sustainability criteria that puts them at the “better end” of their respective categories in terms of materials, manufacturing processes and social responsibility.

Sidebar: The Co-Branding Alternative

Retailers looking to boost their environmental sustainability quotient without creating an eco-friendly private label brand from the ground up now have another alternative. Planet Green, a Discovery Communications network with programming aimed at “bright green” consumers, is making its “brand” available to retailers and manufacturers with products that reflect similar values.

Ideal for co-branded private label products in such categories as household cleaners, paper products, health and beauty aids and home building supplies, the Planet Green brand “clearly communicates a legitimate green offering,” says Debra Joester, vice president at New York-based Joester Loria Group. More important, however, it allows those products to “hit the ground running,” without a large marketing budget to educate consumers about the brand’s attributes.

According to Joester, any product offered under the Planet Green label must meet certain sustainability criteria that puts them at the “better end” of their respective categories in terms of materials, manufacturing processes and social responsibility.

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