How Customer Data Helps CPGs Become Authentically Sustainable

How Customer Data Helps CPGs Become Authentically Sustainable

How Customer Data Helps CPGs Become Authentically Sustainable

About a decade ago, consumers changed their definition of healthy food. Heavily processed low-fat or sugar-free “health” foods were replaced with natural, locally grown, “closer to the ground” options.

Unfortunately, many large food companies were too focused on their customer (i.e. retailer) relationships to see the shifts in consumer preferences. The focus on partnerships between large CPGs and their customers had been forged 25 years earlier during Procter & Gamble’s VP of Sales Lou Pritchett and Walmart’s Chairman Sam Walton’s legendary meeting. That focus had served the industry well while consumer behavior was more or less stable.

But the rapid changes in consumer health and wellness preferences caught the industry by surprise. Former CEO of Campbell Soup Company Denise Morrisony described them as “seismic shifts” in the marketplace. Though not the only cause, the lack of consumer understanding contributed to a steady drop in stock prices among many large food companies—some by a third or more between 2016 and 2019.

How Customer Data Helps CPGs Become Authentically Sustainable
Figure 1. Campbell Soup Company, General Mills and Kraft Heinz stock price 6/1/2016 through 2/1/2019. Source: Yahoo Finance.

Recently, a similar shift in consumer trends has occurred with an increased focus on sustainability. Luckily, many CPGs have not been caught off guard like they were with health and wellness trends.

However, not everyone was quick to take the shift to sustainability seriously. A few years ago, an IBM exec told me not to focus on a sustainability-oriented opportunity for a CPG client because “sustainability is nothing more than a checkbox in the annual report.” My, oh, my, how things have changed! Today, sustainability has moved from a compliance activity to a board-level strategic imperative.

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As sustainability transformed into a strategic imperative, it also became a driver of shareholder value. The value proposition is clearly visible; from 2015 to 2019, 55% of the CPG industry’s growth came from products marketed as sustainable. Similar research from 2013 to 2018 showed that products marketed as sustainable grew 5.6 times faster than products that did not make sustainability claims.

The trend continued with the COVID-19 pandemic. Accenture found that over 50% of consumers say they’re making more sustainable choices during COVID-19 and will continue to do so after the pandemic has ended. EY’s Future Consumer surveys conducted throughout 2020 and 2021 show that over 30% of consumers identify themselves as Society or Planet First, with 20% placing sustainability among their most important shopping criteria.

So the verdict is in—products that have attributes associated with sustainability win the hearts and minds of consumers in the marketplace. Some CPGs, such as Unilever, were ahead of the pack in responding to this trend. But it certainly is not too late to make sustainability a pillar of your overall brand strategy.

Where do you begin if you are just getting started?

The key here is having a deep understanding of your consumers. You will want to ensure that your messaging is aligned to the characteristics and promises of your brand. This is no time to not “walk the talk.”

EY found that 20% of consumers are not forgiving of brands who can’t deliver on their promises. Some brands have incredible permission in the area of sustainability. As an example, let’s look at Patagonia. On the Patagonia website, “Activism” is one of four top menu navigation items. Patagonia is “in business to save our home planet: we aim to use the resources we have—our voice, our business and our community—to do something about our climate crisis.” That is a very bold and provocative statement—one that clearly shows Patagonia’s understanding of their consumers’ motivations and principles.

Your brand may not have that same level of credibility in the area of sustainability, but that is OK. What do your consumers stand for? What are their expectations? Here is yet another example of where first-party data becomes an invaluable asset.

If you are building out an internal business case for a DTC model, why not include consumer insights in the area of sustainability to justify the investment? You might not even need to focus on the sustainability of the product—packaging innovation is another great area to investigate. Having a DTC sales channel would allow you to experiment with different packaging options and get direct and timely feedback from consumers that could then inform a broader rollout of packaging changes.

The bottom line? Sustainability needs to be at the center of your brand’s radar, but to do it correctly, really requires a deep consumer understanding. To learn more about how a

Treasure Data Customer Data Platform (CDP) can help, visit our CDP for CPG solutions page.

For more on sustainability, watch CPG Bytes Episode 16, where we look at how Unilever is doing good for the world and its competitors.

CPG Bytes Episode 16

David McCarty
David McCarty
David McCarty has over 30 years of experience in the CPG industry. He consults with CPG and retail clients to develop and implement strategic, digital transformation initiatives. David’s areas of focus include marketing, trade promotion, ecommerce, new product innovation, and supply chain. His passion and motivation are driven by helping his clients leverage innovative technology to drive profitable growth.
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