Market for products positioned and marketed on the basis of ethical standards is thriving despite recession

Packaged FactsOct 6 2009

The market for products positioned and marketed on the basis of ethical standards (eco-friendly/green, natural/organic, humane, and fair trade) is thriving despite the recession, reveals a new report by leading market research publisher Packaged Facts.

Based on data from a proprietary survey, the recently released "Ethical Food and Beverage, Personal Care and Household Products in the U.S.; Conscientious Consumerism and Corporate Responsibility in the New Economy, 2nd Edition," indicates that one-fourth of U.S. adult shoppers frequently purchase certified organic food or beverage products and one-third are usually willing to pay more for organic foods.

"With the economy foremost in consumers' minds, heightened price sensitivity in the midst of the current recession is inevitably having an effect on the market for ethical products," says Don Montuori, publisher of Packaged Facts. "However, our survey indicates that more shoppers understand the environmental, social, and economic implications of their choices. The result is a sizeable number of consumers who will purchase typically more expensive ethical products even in economically challenging times."

The U.S. market for ethical products has annually grown in the high single- to low double-digits over the past five years, according to the report. Packaged Facts forecasts the growth rate will persist despite the recession and the market will approach $62 billion in 2014, up from a projected $38 billion in 2009.

Foods and beverages dominate retail sales of ethical consumer products in the U.S., accounting for nearly 75% of retail dollars through all channels in 2009. Non-food products -- mainly personal care and household products -- represent the remaining quarter. However, through 2014, Packaged Facts projects that non-foods will grow at a considerably faster pace than food, with an 80% versus 57% growth rate. Nevertheless, non-foods will still represent a smaller portion of the overall market.

Tapping into the trend are major marketers and retailers who are offering more ethical products, upping their corporate responsibility efforts through energy-efficient "green" facilities and sustainable business practices, and increasing their cause-related marketing efforts. Meanwhile, supermarket chains are entering the fray by developing private-label lines of organic foods and natural household products.