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Megatrends: Quantifying Sustainable Living

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Sustainable living continues to hold significant relevance for both consumers and corporations, as ethical considerations and moral values grow in importance. This is particularly true in light of the tightening regulations surrounding sustainability reporting and the validation of sustainable claims across the EU, UK and US.

Today's consumers are not only better informed, but also proactive in their pursuit of environmental sustainability. They demand credible and transparent corporate efforts in climate action which, in turn, empowers them to lead sustainable lives. This commitment to sustainability spans across all aspects of their lives, from the products they buy, to the clothes they wear, to their transportation choices.

75% of global corporations recognise the influence of climate change on consumer behaviour, with 72% feeling consumers’ pressure to respond to these climate concerns

Source: Euromonitor Voice of the Industry Survey 2023 (n=692)

Therefore, it's crucial for businesses to keep a finger on the pulse of this rapidly evolving trend. Doing so can lead to informed strategic decisions, create a unique business proposition, build resilience, boost consumer engagement, and enhance overall brand reputation.

Leveraging cross-trends for strategic growth and innovation

Euromonitor’s Megatrends Quantification Model measures consumers’ propensity to spend and future growth direction for the respective megatrends across 40 key markets. It aids businesses in making informed strategic decisions and encouraging product innovation by identifying high-potential trends and markets for new launches.

Sustainable Living is one of the 10 megatrends influencing consumption globally selected by Euromonitor’s experts. Consumers need simpler and trustworthy sustainability communication on products and services that enables them to align their actions with their values. Hence, transparent communication about environmental impacts is vital for attracting and retaining eco-conscious consumers while adhering to increasing legislation.

The impact of sustainability is widely felt across fmcg industries, making it crucial to identify and leverage its potential in tandem with other fast-growing megatrends, like Convenience, Digital Living and Shopper Reinvented, that lead the global consumer propensity to spend CAGR in the next five years.Chart showing consumers' propensity to spend

For instance, as time-scarce consumers shift towards digital shopping and seek convenience, corporates have been pushed to rethink e-commerce packaging and logistics to minimise emissions. Also, sustainability can provide a competitive edge in the rapidly changing digital shopping landscape. Businesses that streamline the sustainable shopping journey while informing and educating consumers can differentiate themselves and benefit from enhanced engagement and loyalty. A prime example of this is Walmart's Clean Beauty section, which features more than 900 affordable beauty and personal care products, free from over 1,200 unwanted components.

Finally, the rising emphasis on healthcare and prevention, driving the Wellness trend, is also bolstering Sustainable Living. Consumers are opting for more natural, chemical-free options in various categories, such as skin and hair care, air care, and dietary supplements.

Mapping Sustainable Living growth opportunities

Euromonitor’s Megatrends Quantification Model can also help to identify where the biggest opportunities are regarding Sustainable Living and how to capitalise on them.EMI quantitative Model ScreengrabFor businesses looking to pilot and introduce new sustainable products, developed markets, particularly North America and Europe, should be their primary focus. These regions not only represent the highest per capita spending on green living in 2022, but they are also expected to see the most significant expansion in the next five years. The UK, the US, Canada and Denmark consistently rank high in these aspects, making them attractive markets.

Emerging markets, particularly in Latin America, are also promising. Argentina and Brazil, despite being populous and environmentally conscious, lack a wide range of sustainable products. This scarcity offers businesses a chance to expand their sustainability product lines.

To effectively tap into these opportunities, understanding the key drivers of sustainable spending is critical. In nine out of the top 10 nations with the highest predicted growth in per capita spending on sustainable living, products with sustainability claims form the largest part of sustainable living expenditure. This is especially true in Europe, where these products account for over an 85% value share. With the EU Green Claims directive coming into force within two years from now, companies must ensure their sustainability claims are accurate and properly supported by reliable evidence.

In Denmark, organic products offer considerable opportunities due to widespread consumer trust (55% of respondents, according to Euromonitor Voice of the Consumer: Sustainability Survey, fielded January to February 2023) and government incentives for sustainable farming. A promising tax proposal, aiming to reduce agricultural carbon emissions by 15%, is currently under discussion. If implemented, this could significantly accelerate the country's progress towards its ambitious emission reduction goals.

In Asia Pacific's major economies, China and India, consumer spending on sustainability is largely driven by meatless diets. Both markets present lucrative opportunities for diet-related claims. In China, plant-based diets are particularly appealing, with a significant portion of the market dedicated to tofu derivatives and plant-based dairy products. Meanwhile, in India, vegetarian claims are popular in the food and beverage sector, and are gaining momentum in the weight management and wellbeing categories, which have seen a substantial increase in digital share of shelf from Q4 2022 to Q4 2023, as per Euromonitor International’s Sustainability Quarterly Claims and Price Tracker.Chart showing sustainable living proxy shares

Transportation, especially in populated nations like China and the US, is a significant factor in sustainable spending. These countries are the global leaders in shared mobility, with environmentally-friendly options accounting for 43% and 22%, respectively, of the propensity to spend on sustainable living. China's car and bike sharing markets are thriving due to the high cost and inconvenience of car ownership, along with public health concerns stemming from COVID-19.

Ultimately, while there's a growing trend towards sustainable living, businesses must remember there is a growing global demand for affordable sustainability, with price-sensitive consumers seeking reasonably priced, justifiable products.

Learn more about Sustainability in our report, Megatrends: Sustainable Living – Impact on Consumer Goods and Service Categories, and visit our Sustainability page to find out more about our solutions.

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