Consumers willing to pay up for sustainable productsConsumers willing to pay up for sustainable products
Consumers have indicated a willingness to pay extra for sustainably sourced products, but not everyone has that luxury.
May 3, 2021
When it comes to food and beverage, the word “sustainable” can mean many things. It can mean protecting and humanely treating the animals from which food is made. It can mean ensuring the impact production has on the environment is mitigated as much as possible. It can mean ensuring the people who work to farm, pick and ship food and beverage products and ingredients earn a living wage. Regardless of the exact meaning, though, one thing is clear: Sustainable is both good for the planet and those who inhabit it. As it turns out, it could also mean good news for a brand’s bottom line.
According to research published in April, sustainable could be as good for the balance sheet as it is for the planet. Finnish researchers affiliated with the Diverfarming project—described as encouraging crop diversification in southern Finland—found consumers were willing to pay extra for products sourced sustainably, especially once the benefits of crop diversification and other techniques were explained (Environ Manag. 2021;67:988-999). In fact, 79% of households surveyed were willing to pay a premium for food products produced in sustainable ways.
A sample of 600 consumers was presented with three scenarios: “The first one focused on agroecosystem services on cropland, the second on wider socio-cultural effects, and the third was a combination of both.” The researchers were able to quantify that consumers were, on average, willing to pay nearly $300 more per year for products which utilized crop diversification.
“Positive societal implications of cropping diversification were valued slightly higher than direct field-level effects of diversification,” the researchers wrote. “In particular, improved maintenance of domestic food production and processing, reduced nutrient runoffs from agriculture, maintained food culture and tradition, as well as improved carbon balance of agriculture and the number of jobs in rural areas were valued high.”
Food & Beverage Insider insights
Sustainability, while nearly impossible to define succinctly, is clearly top of mind for many consumers. Whether it’s switching to flexitarian diets to limit their impact on the planet or demanding confectionery brands source ethically and with the environment in mind, consumers are using their wallets to highlight the importance of sustainable food and beverage.
However, sustainable practices don’t come free, and consumers can’t always be expected to pay the full difference. For instance, in the Finnish study, 21% of consumers said they would not be willing to pay a premium for more sustainable products. Of that 21%, nearly half explained inability to afford that premium price played a large role. Additionally, 3 in 10 consumers agreed it should be brands and, when applicable, governments that pay the difference, rather than end consumers.
For global food and beverage supply chains to reached peak sustainability, it will take all hands on deck. Consumers are, in increasing numbers, willing to do their part to ensure the food and beverage they consume doesn’t harm the planet or its inhabitants. If brands and other entities can help bridge the gap toward doing so, everyone wins.
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