Product, Service & Design Innovation
Forget Innovation — Responsible Products Drive 70% of New Product Growth

Maryanne Conlin
Published 9 years ago. About a 3 minute read.

A recent Boston Consulting Group (BCG) research report showed responsible products accounted for two-thirds of grocery product growth in 2013. That’s a pretty incredible number considering how grocery brands have been struggling.

The number that has been getting the press in recent years has been the growth in private label to 18 percent of grocery sales — but with 96 percent penetration, growth should slow. And while we have been worrying about the impact of private label on the bottom line, high-margin “responsible products” have grown to a surprising 15 percent of grocery sales! This is not news for top-tier natural brands, but may be a hidden opportunity for conventional brands.

Large CPG companies have the advantage of extensive distribution and highly experienced sales and marketing teams, which should make success in this category easier to obtain. But as consumers get more savvy about certifications and are exposed to more information on how products are grown, conventional brands can trip up and consign their brand to nasty Internet memes rather quickly.

The fact that CPG companies apparently are not quite doing green products right is evident from the figures. Specialty manufacturers of natural products have enjoyed a blistering 12.5 percent growth on average, while big CPG brands that have launched green products have seen growth of less than 2 percent.

While the BCG report doesn’t cover product positioning in depth, my guess would be that brand equity is on the side of the specialty brands. We know that most consumers purchase natural products alongside conventional, with a substantial amount of the population only buying organic or socially responsible in selected categories (meat, dairy, etc).

For a conventional brand with strong equity, the best move might be in creating a separate brand where the natural brand benefits from marketing, sales and distribution power but is not burdened with a legacy brand image. Clearly this is a winning strategy as evidenced by the success of Green Works by Clorox. Conversely, a major brand can buy a natural company, as Clorox again, did with Burt’s Bees.

In the first case, with Green Works, deep green consumers shied away from a brand clearly developed for the mass market. With Burt’s Bees, Clorox again saw a drop in deep green consumers, despite no change in the product, again shying away from mass-market display. The lesson learned is don’t target the deep green consumer if your company manufactures conventional products. You won’t benefit from your distribution strength and will risk public outcry (besides, it makes you look really stupid in the eyes of the deep green consumer.)

With the high growth rates for natural products, it’s likely we’ll see large and small brands jumping on the bandwagon, with varying degrees of success. ‘Tread quickly, but tread lightly’ is the tagline for success in this growth category.

This post first appeared in MediaPost on August 6, 2014.

The Clorox Company