A new magazine entitled “greenLIFESTYLE” has claimed that its raison d’être will be to provide “exciting ideas and inspiration for a sustainable lifestyle.” As such, the magazine is jumping on the bandwagon: sustainability has become a buzzword over the last few years, rapidly increasing in prominence in the public consciousness. The importance of sustainability for industry and trade is growing, too. Manufacturers in a wide variety of sectors are now using the concept sustainability to push their products. So, this begs the question: to what extent does sustainability really affect consumers’ consumption and purchasing behavior?
A research cooperation between the University of Potsdam, HHL Leipzig Graduate School of Management, Leibniz University of Hanover, Brunswick University of Technology and the GfK Verein is conducting a feasibility study as a joint project for a survey instrument developed by the four universities to measure awareness of sustainable consumption.
The aforementioned universities have developed a tool (for consumer surveys) which can determine all aspects of the sustainability of consumption behavior on the basis of a number of fundamental – and cross-sector – statements. It consists of a scale of 24 items (12 in the short version) and takes into account the three pillars of sustainability: improving the quality of environmental, social and economic life.
(For more information see: Balderjahn, Buerke, Kirchgeorg, Peyer, Seegebarth, Wiedmann (2013): Consciousness for sustainable consumption: scale development and new insights in the economic dimension of consumers’ sustainability, AMS Review: Volume 3, Issue 4 (2013), pp. 181-192.)
The scale and survey can be broken down as follows: Environmentally friendly consumption may include, for example, products manufactured in a climate-friendly way which conserves raw materials. It may also be distinguished by a preference for the use of recyclable materials, among other things. Socially conscious consumption is defined by ensuring that consumption behavior does not have an adverse effect on others. Socially conscious consumers place great importance on the ethical treatment of production workers and are keen for companies to comply with international labor standards. Economically sustainable consumption values the principle of moderation, depending only on one’s own financial resources. The Sharing Economy, which promotes alternatives to product ownership such as the sharing, exchanging and borrowing or renting of products, for example, is also a fundamental component of this concept.
Today, it is relatively simple for consumers to reconcile questions of ethics and morals with environmentally friendly and socially conscious attitudes. However the crux of the matter for scientists and economists is the extent to which these statements have an effect on the respective consumer’s behavior. It was precisely this issue which was the focus of a survey conducted by the GfK Household Panel for 10 selected products from the daily consumer goods segment. The survey used the tool developed by the universities mentioned previously.
For this survey, the abridged version consisting of 12 items was used with a partial sample of the panel. The focal points of the study were the pillars of environmental and social awareness. However, the economic pillar also plays a role. As the analysis focused on product categories which cover the basic (in some cases vital) needs of consumers, there are no effects to be determined in this context. As another study* reveals, this is not the case for consumer durables.
In creating a link with the panel, consumer’s responses relating to the items can be compared with their actual purchasing behavior over the course of many months (including in the past). The panel records the actual purchases. These are recorded on an ongoing basis by the respective head of household using a scanner. These are then transmitted to GfK. The panel data set used within the framework of this study was a representative partial sample consisting of 3,335 of the approximately 30,000 households overall. The study recorded purchase decisions in ten product groups for 2014 as a whole. Eight of the product groups were in the food and drink segment. An important factor in purchase decisions was the availability of organic or Fairtrade products: specifically bananas, eggs, fruit juice, yogurt, milk, roasted coffee, ice cream and chocolate bars. Two further product groups were attributable to the hygiene segment (household cleaning agents and toilet tissue).
The survey reveals that, in general, there is strong agreement with ethical/moral statements. This makes a realistic economic assessment of sustainability issues via surveys difficult, as their relevance is often overestimated when responses are considered in absolute terms. For this reason, households were divided into tertiles for the purpose of the survey instrument in question. In concrete terms, this means that for each of the sustainability pillars, respondents were allocated to one of three groups of similar size depending on their level of environmental or social awareness. The lower tertile group has a comparatively lower level of awareness, independent of the absolute level of the responses given. The median tertile can be described as having a moderate awareness of sustainability issues. The upper tertile expressed an above-average level of environmental or social awareness. These three groups are compared with each other on the basis of their purchasing behavior with regard to three categories: organic, environmental and Fairtrade products**.
First, the good news: The survey instrument passed the practical test. With regard to share of expenditure on organic and Fairtrade products, clear differences can be identified between the upper tertile (households which are particularly environmentally or socially conscious) and the other two groups.
The results show that households with high a level of environmental awareness are often more likely to be socially conscious too, and vice versa. Their spending behavior in these two regards is similar. Approximately 10% of their budget for the ten product groups included in the survey was spent on organic products. In the case of the six Fairtrade product groups, these figures were above 3% in each case. Far lower shares were observed for the households in the lower tertiles. However, it is interesting to note a slight variance in the middle groups for the two categories. While the figures for ‘moderately’ environmentally conscious households showed little increase on less conscious households, the difference was more marked in the case of social awareness. The households in this category represent a definitive outlier in terms of their spending patterns, assuming the middle ground between the upper and lower tertiles.
However, now comes the not-so-good news, which provides some food for thought: Households with a higher awareness of sustainability issues only devote a relatively small proportion of their expenditure to organic or Fairtrade products. Clearly, other factors do come into play here: more or less reliable or extensive availability of products and the price difference between organic, Fairtrade and regular products. Environmentally and socially conscious individuals are also less willing to spend money. Attention must also be paid to the trade-off with regard to regionality and the distance to the country of origin, which naturally also involves transportation as well as factoring in long-lasting ties with, or preference for, particular brands or tastes (even within the individual families). This sheds new light on the respective expenditure shares. Furthermore, the clear differences between the different product groups show that organic and Fairtrade are just two of the key factors behind a purchase decision. This also applies to the most sustainability-conscious respondents.
As organic bananas – which are often also of Fairtrade origin – can now be found in nearly every supermarket, they are also the most purchased organic product. However, organic and Fairtrade ice cream is the proverbial needle in a haystack – far more difficult to find in the frozen foods aisle. The shares of household expenditure on organic ice cream are also correspondingly low. In addition to bananas, environmentally conscious consumers are more likely to purchase eggs, milk and yogurt from the organic shelves. Each of these products boasts a double-digit share of the respective product budget. However, in the case of Fairtrade products, only bananas are purchased in noteworthy quantities. Socially conscious households invest an average of 18% of their banana budget on Fairtrade bananas.
In addition to limited availability, price is also a barrier to sales. Organic and Fairtrade products are often far more expensive than their conventional counterparts. For the product groups included in this survey, the survey showed that organic eggs and organic chocolate cost almost twice as much. As far as fruit juices are concerned, organic variants are subject to markup of around 150%. Fairtrade ice cream costs three times as much as normal ice cream, for chocolate the increase was approximately 135% and roast coffee cost almost 10% more. The additional cost for organic and Fairtrade bananas was around 30%. This shows that environmentally and socially conscious consumers must accept a (sometimes substantial) price markup for sustainable products.
However, this is not the case for all organic products. Household cleaning agents and toilet tissue can even be found for cheaper. In fact, there does not appear to be a significant correlation between environmental or social awareness and increased purchase frequency of environmentally friendly products instead of the conventional alternatives in these product groups.
Yet it is clear that sustainable consumption is not primarily driven by lower prices. As the following example shows, the reverse in fact applies: “From €0.25 per head for a light lentil soup or €1.20 for a potato and chickpea soup; ravioli with a tofu and spinach filling for just €0.55 and around €1.80 per head for a dish of tagliatelle with eggplant and goat cheese” – these recipes and prices are just a snippet of what can be found in “Arm aber Bio! Das Kochbuch”, a cookbook which provides organic recipe ideas for tight budgets. This book is Rosa Wolff’s second tackling this subject, in which she shows that price is not the only factor in purchase decisions, revealing also how a pinch of ingenuity and a dash of creativity can help extend the limits and possibilities of your grocery budget. Commenting on the publications, one particular critic was in a provocative mood: “No more excuses!” Organic produce suppliers would do well to follow this advice and inform consumers more effectively as to how nutritious, sustainable meals can be prepared on a budget.
* In 2014, a representative online survey also financed by GfK Verein (sample size: approximately 2,000 people) was carried out using the same instrument. It revealed a correlation between an awareness of economic issues and consumer behavior in the context of high-value consumer goods (household appliances, smartphones and clothing, for example). For more information, please see the August 2015 GfK Verein members’ newsletter – Sustainable consumption: Validation of a new measurement approach using representative online surveys.
** In some cases, these attributes were retrospectively added to the product by coders at the university.
Data source: GfK Haushaltspanel Deutschland
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Contact person for queries about Compact: Claudia Gaspar (e-mail to firstname.lastname@example.org).