Sustainability is a strategic opportunity for consumer goods companies

Sustainability has become one of the most important drivers for consumers in the 21st century. Research by Simon-Kucher shows that 78% of consumers consider sustainability one of the top five values in at least one product category, and 75% have adjusted their habits to be more sustainable. Additionally, two-thirds of consumers take sustainability into account when making purchasing decisions.

Many companies fail to capitalise

Despite this strong consumer movement, many companies fail to leverage this shift, leaving significant growth opportunities untapped. Simon-Kucher has identified seven common reasons why companies miss this chance, leading to a perception gap between corporate offerings and consumer demand. These failures include assuming sustainability alone is sufficient, ineffective communication, relying on niche strategies, and treating sustainability primarily as a compliance issue.

Overcoming key consumer barriers

To accelerate the success of sustainable products, companies must address major consumer barriers such as lack of knowledge, affordability, and accessibility. While only 15% of European and American consumers are not interested in buying or paying for sustainable products, 85% are to varying degrees. Sustainable consumers are not a homogeneous group; they have diverse motivations, needs, and preferences. Simon-Kucher has categorized them into different segments, from "Image Driven Champions" to "Skeptic Cost Conscious" and "Planet Savers," each with a different willingness to pay and sustainability commitment.

Sustainability as a competitive advantage

The strategic opportunity presented by sustainability is unique. Companies that respond effectively can achieve rapid adoption, increased loyalty and engagement, a greater share of consumer spending, and higher lifetime value. Moreover, a strong sustainability focus can lead to long-term competitive advantages. A "second-mover" strategy is risky due to the strong loyalty and advocacy of early adopters.

A commercial approach to sustainability

Simon-Kucher emphasizes that businesses must approach sustainability both strategically and commercially. This involves understanding where growth opportunities lie, how sustainability can drive commercial success, and what resources and capabilities are needed to achieve this. The consultancy provides expertise across eleven sustainability themes, including product assortment, pricing, consumer engagement, retailer activation, organizational capabilities, market communication, and commercial performance analysis.

Assessing readiness for sustainability success

To navigate this transition successfully, companies must sell affordable sustainable products profitably at the industry's "pivot point." Businesses can assess their readiness using a self-assessment scorecard covering key areas such as growth opportunity identification, strategic priorities, commercial model disruption, value proposition definition, product portfolio, pricing strategy, consumer engagement, retailer collaboration, organizational structure, market communication, and key performance indicators.

The demand revolution in sustainability

Simon-Kucher has published "The Demand Revolution," a book detailing how consumers are redefining sustainability and transforming the future of business. Case studies illustrate how companies can integrate sustainability into their value propositions and drive growth. Examples include a packaging and food preservation solutions manufacturer and a European food producer that have successfully developed commercial strategies for sustainable growth.

Companies that embrace sustainability will win

Businesses that recognize sustainability as a strategic opportunity and successfully commercialise it will gain a significant competitive edge and drive sustainable growth.