Not so Green, After All

The Indian consumer is high on the ladder when it comes to being concerned about the environment. But will he take the plunge and pay more for eco-friendly products, afaqs! finds out.

The return-what-you-took-from-Mother-Earth campaign has taken off significantly in the past decade. Green brands have sprouted all over. Sustainable business practices are watchwords for every company from food and drink to consumer durables and construction to automobiles.

Consumers across the world have become more conscious about the environment. They think highly of brands that are associated with environmental conservation. According to the Greendex 2010: Consumer Choice and the Environment - a worldwide tracking survey conducted by the National Geographic Society and polling firm GlobeScan - Indian consumers' lifestyle emerged as the most environmentally sustainable with 62.6 per cent claiming to care about the environment. Paradoxically, that very consumer is reluctant to fork out more money for a green product.

But what exactly is Green Marketing? The commonly accepted definition is that a company is considered to be a Green Marketer if it integrates business practices and products that are environment-friendly while also meeting the needs of the consumers. Efficiency, emission levels, bio-degradability and the intelligent use of natural resources are factors that decide the green-ness of a product.

In India, companies like Hero Honda (before they split), Volkswagen and Toyota in automobiles, Voltas, Panasonic and LG in consumer durables, Nokia, Sony Ericsson and Philips in personal electronics and Wipro (with its non-toxic Green PCs) are shining examples. While these are categories that have more to do with emissions or saving power, there are categories that have nothing to do with power and energy but are working towards developing a cleaner environment.

The Body Shop, in the cosmetics category, for example, uses very little packaging, which is why most of its products come without an extra cover. In apparel, sportswear brands like Nike and Reebok have made their own contribution. The Indian cricket team's jersey by Nike was made out of recycled products. Woodland is another such company that has taken the eco-friendly way. In foods, Fabindia and Navdanya are developing organic food.

While green is the way to go, the green product comes at a higher price tag than if the company had used conventional processes. The new green revolution raises two questions. With Greenwashing (when green claims are not authentic) becoming a major issue, how does a consumer decide that a brand is serious when it splashes those green claims all over the place? Secondly, is the Indian consumer actually willing to pay more for an ecologically acceptable product especially in categories such as food, clothes or footwear?

The shades of green

Green has become the preferred colour for brands - both from NGOs and corporates - across categories. Take organic food. One of the oldest organisations to introduce organic food is Navdanya, which started more as a programme of the Research Foundation for Science, Technology and Ecology (RFSTE) founded by environmentalist Vandana Shiva in 1987.

In 2004, apparel and upholstery brand Fabindia forayed into the world of organic food by launching its own range. According to Ashima Agarwal, category head - Organic Foods, Fabindia, "Our range extends from teas, coffees, drinks, soups, pickles, chutneys, sauces, sweeteners, candied fruits to flours, grains, pulses, herbs, spices, seasonings, breakfast foods and roasted snacks."

Reebok launched the 'Urban Metro' organic range in 2009. Footwear brand, Woodland too caught on to the trend. Says Harkirat Singh, managing director, "Though we are yet to turn into a 100 per cent ecological brand, we have already taken small steps in that direction. Of the total turnover, 30 per cent of our products belong to the eco range. And it has been growing by 25 per cent every year."

Singh explains that the company uses organic cotton in case of apparel and when it comes to footwear the leather is processed in an eco-friendly manner called vegetable tanning (a process of making leather by using barks of trees which permanently alters the protein structure of skin so that it cannot ever return to raw hide) rather than using chemicals to process the leather. The price for this category of footwear ranges from Rs 5,000 to Rs 10,000 while the normal range starts at Rs 1,900.

Categories like automobiles and consumer durables have witnessed a high surge towards eco-friendly products. Recently, German automaker Volkswagen launched the 'Blue-motion' technology (an innovation that uses a special 1.4 litre 3-cylinder, turbocharged direct injection diesel engine that produces just 102 gm of carbon dioxide per km). Toyota's mid-sized hybrid hatchback, Prius is rated amongst the cleanest cars to hit the road - though it has a steep Rs 27 lakh price tag attached to it. Japanese automaker Honda's car is made of 95 per cent recycled parts. According to Gyaneshwar Sen, general manager, Marketing, Honda Siel Cars, the road to the future will be built on green technology.

Air-conditioners, refrigerators and plasma or LCD TVs are going green with a vengeance. Voltas from the Tata Group launched its first 'Green' range of air-conditioner in 2007, following which the Government of India made it mandatory for home appliances to have energy star ratings. Energy Star is an international standard for energy efficient consumer products that originated in the US. Thus, devices carrying the star logo, such as computer products and peripherals, kitchen appliances and other products, use about 20-30 per cent less energy than the set standards.

Pradeep Bakshi, COO, Voltas, explains, "The ecological range of air-conditioners has been a huge success for Voltas for the last three years. Thanks to the range we are growing every year by 50 per cent, while air conditioners as category (valued at Rs 6,000 crore) is not growing more than 30 per cent." While a regular Voltas air conditioner starts at under Rs 10,000, the eco range, called Vertis, under which the company has ranges like Elegant, Platina, Pearl and many more starts at Rs 15,000.

Recently, Panasonic launched the Econavi range of air conditioners and a new range of LCD screens which is once again based on energy conservation. Econavi home appliances use sensor and control technologies to minimise energy consumption, based on a family's lifestyle. For example, a door-opening sensor and lighting sensor allows the refrigerator to learn the time periods when the family typically doesn't use - when they're sleeping or away from home. The refrigerator goes into sleep mode accordingly.

Greenwashed?

There has been much heated discussion and debate about whether most companies are using the 'Go Green' slogan as nothing more than a marketing strategy just to make their brand appear premium. Others argue that in a country like India, green brands, especially food, are elite.

Sonal Viswanathan, chairperson, Sociology Department, Jawaharlal Nehru University (JNU) explains that India is divided into three or four socio-economic classifications. There is a huge number that is poor. Hence, the priority for this population is somehow having food - it does not care about organic or otherwise. The country also has the lower middle class, middle class and upper middle class and the premium category. "Therefore, calling your brand 'Green' makes it an elite product as the company charges a premium for the product which can only be afforded by the high-end category of consumers," she points out.

In the last few years, the Indian consumer has witnessed how brands have claimed to work for a better environment and launched several new initiatives. But what the consumer is still not aware is how many have actually done something valuable. Shiva explains that there is a mad rush from brands to call themselves 'Green' as it helps in creating a positive image in the customer's mind. "It is more of a status symbol now," she adds.

However, for some brands, the expansion towards eco-friendly products has been natural and part of a larger plan. Agarwal adds, "Fabindia's foray into the organic food business evolved as a natural extension of our efforts to provide sustainable development to artisans and craftsmen across rural India. This partnership was further extended to farmers who support traditional agricultural practices and farm their land organically."

For Japanese consumer durable company, Panasonic, green is an important commitment. Says Manish Sharma, director, marketing Panasonic India, "We will be creating a large portfolio of eco-friendly products in the consumer durables category for the Indian consumers."

Greener - on which side?

It has been observed that the 'smart' Indian consumer is ready to pay extra money in case of certain categories like automobiles, consumer durables and real estate. But according to environmentalist Mohammed E Dilawar, though price plays a huge role in the decision-making, the Indian consumer is clever too. Citing the example of Maruti Suzuki's TV commercial - which talks about mileage - he adds, "It is also true that though the Indian consumer is conscious about how much is spent, he or she is ready to stretch the budget if there is a direct benefit. In a four-wheeler, that factor could be the saving on fuel expenses." Among the youth, electric bikes (approximately priced at Rs 30,000) such as Yo-Bykes, E-Sprint from Hero Electric and bikes from BSA are in demand.

Ironically, the same 'Smart' Indian consumer who is looking at living a better life is ready to pay a premium in case of some categories but not for others. Even in automobiles, there could be reluctance. "Take the example of Reva, the electric car, which is completely by the environment, for the environment and of the environment. But not many consumers are ready pay Rs 4.5 lakh for it," says Ramanujam Sridhar, CEO, Brand-comm. He goes on to add that it is the new generation that will be ready to pay a premium for green brands, especially organic products.

Neha Narula, a Dehradun-based student agrees. "At a mass level, the Indian consumer is still not ready to pay a premium but when the purchasing power moves from the middle-aged income group to the youth there will be a willingness to pay a premium for organic products," she says. Interestingly, Sumita Dasgupta, programme director, Environment Education, Centre for Science and Environment, points out the reluctance in buying organic products is not something the Indian consumer should be blamed for.

"Companies that are into organic food or products businesses have fixed a high price point for their products, which is quite paradoxical since the cost of production of the so-called organic food is not so high. The price stops that section of consumers who are aware about the category and want to buy organic products," adds Dasgupta. Arti Sachdeva, a Noida housewife has this to say, "For the elite, it is more of a status symbol. As far as the Indian middle class is concerned, we will only invest in such products when there is a benefit attached to it, like consumer durables which allow us to save on electricity bills." Kiran Khalap, founder, Chlorophyll, believes that exposure to global practices decides whether the consumer wants to pay a premium. But this consumer is elite. Most others are wary of sellers' claims.

Such doubts and apprehensions can be set to rest if the brand is sincere. "A sincere brand," points out Anirban Chaudhuri, senior vice-resident, strategic planning, Dentsu Communications, "would not use 'green' just to market its products and services but go beyond the stipulated industry and country guidelines to practice 'eco-friendly' ways of doing business at every step of its functioning. Soon, a discerning consumer will say that it is not about buying a green machine that saves money but checking out how the manufacturer is trying to bring down the carbon footprints in its processes down."

Calling the Indian customer a 'multi-headed' being, Sajid Shamim, marketing head, Reebok, states that it is only a micro segment of the population, who have had global exposure and is ready to pay a premium for organic food, clothes or footwear.

What will make a consumer loosen the purse strings to own or use a green brand? It's a two-way street. Companies need to stay away from 'Greenwashing'. One small incident can make the consumer run the other way. India is yet to reach developed country levels. In the US, for instance, according to a WPP study called the ImagePower Green Brands Survey, 60 per cent of the consumers prefers buying green products.

That kind of commitment among Indian consumers will take some time coming. The Indian consumer would prefer to buy products that save her money first. Any 'green' benefit that comes will be treated like a goody bag.