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Shoppers May Dig Deeper For Green

Although premiums will continue to accompany sustainable products, green items could be among the affordable luxuries U.S. consumers allow themselves during the economic downturn, according to Lynn Dornblaser, director of the Custom Solutions Group for Mintel International. Every time there is a recession, we see a stronger focus on value-priced items and basic products, with one exception:

CHICAGO — Although premiums will continue to accompany sustainable products, green items could be among the affordable luxuries U.S. consumers allow themselves during the economic downturn, according to Lynn Dornblaser, director of the Custom Solutions Group for Mintel International.

“Every time there is a recession, we see a stronger focus on value-priced items and basic products, with one exception: There is usually a substantial increase in small indulgences,” noted Dornblaser. “If a consumer finds that they can't take the vacation they wanted, they'll give themselves a small treat, and the whole concept of green may figure into that this time around.”

Her comments were part of last week's webinar “Sustainability: Trends in the Marketplace,” hosted by The Food Institute and Mintel.

Dornblaser projects that the price of sustainable products — or those that have been ethically formulated and manufactured or packaged in an environmentally responsible way — will come down in the long term, thanks in part to what she refers to as the Wal-Mart effect. Meanwhile, “bundled” products, or those that have been both ethically formulated and packaged in an ecologically friendly vessel, will continue to demand a premium, she said.

“If you've got a [fair trade] chocolate bar made with 71% cocoa from Ecuador, you've got a better starting point when it comes to having a premium package and a premium price as well,” Dornblaser said. “Bundling benefits will allow manufacturers to sell green at a price premium, because it's not just about formulations, but the entire ethos of the product.”

The number of CPG goods that leverage bundled benefits may become more pronounced as fair trade products and ingredients expand to categories beyond coffee, chocolate and tea. Introductions of new fair trade food and beverages nearly doubled in 2007, to just under 700, vs. the previous year, said Dornblaser.

“Fair trade products have experienced significant growth year-on-year, and we don't anticipate that changing,” she said.

Major marketers, such as Unilever, are overcoming challenges associated with sourcing fair trade products on a large scale by adding to existing products single ingredients that have been sourced this way.

Ben & Jerry's Coffee Heath Bar Crunch that is marketed in the U.S. is made with Fair Trade Certified coffee extract, while its Vanilla ice cream sold in the U.K. is made with vanilla beans sourced from India and sugar cane from Paraguay. Both ingredients are eligible to bear the Fairtrade Foundation's Fairtrade mark.

Organic versions of traditional favorites are also gaining momentum.

“The very biggest companies are introducing organic versions of food,” noted Dornblaser.

Kellogg's Organic Rice Krispies, Kraft Organic Macaroni & Cheese and Nabisco's Ritz crackers made with organic flour are among the items that can be found on retailer's shelves.

Last year's organic introductions were comparable in number to new products bearing all-natural claims. This indicates that organic products are gaining a stronger foothold in the marketplace.

“In past years we've seen that all-natural introductions are substantially higher than that of organic products,” said Dornblaser. She explained that manufacturers often opt for all-natural product designations because the claim isn't regulated by law; suppliers are able to price these items comparably to more mainstream items; and “Consumers often see organic and natural as the same thing,” she said.

Marketers are also appealing to consumers in nonfood categories with natural and botanical ingredients. Dornblaser highlighted examples including Biguine Bio's lotion, which contains orange leaf oil and alfalfa extract; Prism Chemical's Eco-Max household cleaner with 100% botanical active ingredients; and a pomegranate cleansing bar marketed by Simply Be Well Organics.