Will the Great Recession Kill the Market for Green Products? Not Likely.

A recent New York Times article has created a stir in green circles because of its dreary implications for the commercial viability of green products during the current tough economic climate. As the reasoning goes, consumers have less money or are less willing to spend it, and so are they are going to shy away from purchasing a more-expensive green product when the non-green alternative will serve the same function at a lower price point. The Times article cites, as examples of this phenomenon, the case of Clorox’s Green Works line, which had $100 of sales in its 2008 debut and is now posting annual sales of just $60 million, and that of S.C. Johnson’s Natures Source lines of products, with different products in the line posting declines ranging from 35-78%.  Some commentators have gone so far as to say that the article heralds the “death” of green products.

 

Looking at what the article actually says, the news is not so dire. For example, the article also says that advertising spend to support these green offerings has declined, sometimes down to zero, and so the decline in sales may be at least in part attributable to a failure to invest in marketing. Also, the article’s examples are only in the field of household cleaning products, specifically of cases where a ‘big blue-chip companies have tried to layer a green offering on top of their conventional offering.’  On the other hand, ‘niche players’ like Method and Seventh Generation show better performance in the household cleanser field, and other areas of green products also remain strong. Furthermore, the key disadvantage to green products, higher price, is not written in stone. It is possible, and will be increasingly possible going forward, to offer green products at competitive prices.

 

At a minimum, research indicates that consumer interest in green products remains strong.  The EcoPulse study shows that 64% percent of Americans are searching for greener products, ironically, even as belief in global warming is decreasing. The ImagePower Green Brands Survey found that 54% of respondents stated that they would be willing to pay some premium for green products.

 

Is a bad economy a more challenging environment for green products? Of course, at least so long as the products remain more expensive. But it is far from fatal.

 

Mark Image

 

 

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