Greener appeal helps clean up

By Jonathan Birchall
Published: March 24 2009 02:00

US households are continuing to pay more for "green", environmentally friendly household products, defying a broad trend of shoppers "trading down" to lower priced goods and retailers' own-label brands.
Seventh Generation, a small Vermont-based household products company, said it was expecting sales growth of about 25 per cent this year, while Method, a California-based rival, said it was also seeing continued strong growth.
"What you are seeing is that the only growth in the category is coming from the green segment," said Adam Lowry, who co-founded Method in 2000.
Clorox, the first large consumer company to start a "green" cleaning product, said that its Green Works brand had been a significant contributor to its homecare sales growth since its launch in January last year.
"We have not seen a meaningful slowdown in consumption growth of our green cleaning products despite the challenging economy," said Deb Witmer, a Clorox spokeswoman.
Green Works sells for 10 per cent more than lowest-cost conventional cleaners. Seventh Generation's equivalent bottle is about 15 per cent more expensive, while Method's Pink Grapefruit cleaner is about 25 per cent more expensive.
SC Johnson also entered the market last year with "natural" versions of its Windex cleaners. Hain Celestial, known for its organic and natural food brands, is also planning to launch a new line of green cleaners later this year.
The previously dramatic growth rates in the category as a whole have slowed, with IRI, the consumer products data company, reporting 30.8 per cent growth in the green cleaning category over the past 12 weeks, against the rates of 80 per cent reported last year.
US organic food sales are also still rising, but growth rates have slowed sharply, with Nielsen reporting annualised sales growth of just 5.6 per cent in December, down from about 25 per cent a year earlier.
The continued growth in green products is being supported by expansion into mainstream grocers and discounters, rather than in the traditional natural and organic retailers, as consumers shift shopping to lower-cost stores. Whole Foods Market, the grocer that has driven the expansion of several green product categories, reported its first ever decline in comparable sales in its most recent quarter.
Mr Lowry says Method is supported by "consumer advocates that subscribe not just to the fact that the products work great and smell great, but that they do a little bit of good along the way".
Jeffrey Hollender, chief executive of Seventh Generation, says recent economic turmoil may have reinforced the appeal of his company's commitment to environmental and social standards.
Copyright The Financial Times Limited 2009