Products with sustainable packaging sell more - report

Over the past five years, products packaged with ESG claims accounted for 56% of total growth, a joint study by McKinsey and Nielsen IQ showed. 

Consumer packaged goods (CPG) have been accounting for trillions of dollars in brands’ annual sales. These goods range from foods and beverages to cosmetics and cleaning products, making it all the more important to consider CPG when gearing up for a more sustainable economy.

Because of this, businesses have been infusing their product labels with claims about environmental and social responsibility. As a result, more products come out of the market with “eco-friendly”, “fair trade”, and other claims related to being environmentally sustainable.

Consumers are attracted to this move, with 78% of US consumers saying that a sustainable lifestyle is indeed important to them, according to a recent study by NielsenIQ.

This claim has been translating to sales, as products labeled with ESG-related claims pose a cumulative growth of 28% over the past five years. Products void of these claims only averaged 20% in the same period, a study by McKinsey and Nielsen IQ showed.

Despite the study results, which covered approximately 44,000 brands, not all sectors experienced this growth. An increase in sales of products with ESG-related labels was more evident among food and personal care, and less visible in beverage categories. Specifically, 11 out of 15 food categories and three out of four personal categories saw this increase, but was only evident in two out of nine categories in the beverage industry.

Considering the bigger picture, the trend was clear. Products with packages containing ESG-related claims grew faster in sales compared to those without claims. In particular, households with children, higher-income households, and urban and suburban residents are the demographics who are more leaning towards buying products with ESG claims.

At this point, it is not only important for companies to invest in ESG-related efforts for the advancement of their commitments. It is also vital to inform their target consumers about these actions through product packaging. With more people shifting their consumer behavior and putting a premium on a sustainable lifestyle, this move can easily lead to an increase in sales. This shows that financial growth and ESG are not mutually exclusive, and the key is in an effective and consumer-centric strategy.