What’s driving the sustainability agenda of brands?

Brands like KitKat, Adidas, Godrej have recently launched eco-friendly alternatives for their products. Does sustainability negate profits?

Recently, KitKat installed benches made from recycled plastic packaging material and Adidas rolled out a sustainable apparel range. Godrej Consumer Products Limited introduced its sustainable body wash - magic. Last year, Colgate launched its recyclable toothpaste tubes and Dabur removed the outer packaging of its ‘Red toothpaste’ as part of the company's eco-friendly initiative.

The list of brands that have ramped up their sustainability game in the recent few years is long. This is a response to consumers’ increasing awareness of environmental issues. Mintel’s sustainability report 2022 reveals that 77% of Indians believe in doing things that benefit the environment.

Yet, India generates 3.5 million tonnes of plastic waste annually. What more do brands need to do to address this issue? Amongst the issues that consumers face, while opting for sustainable products, a major one is the price factor.

As per the regional trends director (APAC) of Mintel, Matthew Crabbe, ‘sustainable’ equates to ‘more expensive’ for most consumers. “If brands can demonstrate that sustainable products are not just sustainable but also cost-effective, that can go a long way in increasing adoption. Additionally, there is also the issue of availability. Sustainable products need to be more mainstream and widely available to help more Indian people adopt them.”

Skin and body care products contain high water content as a result, litres of water is shipped before production making the finished product heavier to be transported. Godrej’s magic range attempts to solve these problems by cutting down on the plastic packaging and energy consumed in the manufacturing process.

During the launch of the product, Sudhir Sitapati, MD & CEO of GCPL said, “Godrej magic and other pioneering environmental innovations coming out of India with a green discount and not a green premium are the future.”

Brands built on the core idea of sustainability

While there are traditional brands that are increasingly betting big on sustainability initiatives, there are many others that are entirely built on the core insight of sustainability and being eco-friendly. Honasa Consumer Product’s Mamaearth has planted nearly 20 lakh mangroves and trees and every time a product is bought from the brand, it plants more trees. Neeman’s shoes are made of recycled plastic bottles and BECO, an eco-friendly homecare brand attempts to make consumers switch to sustainable alternatives to daily use products.

Speaking about how the brand can make the masses adopt its products, co-founder of Beco, Aditya Ruia says that it may not be possible right away, but by launching superior sustainable products, ensuring enough demand and using that to drive the price down, it is possible to make living sustainably easy.

“It is pleasantly surprising to see that people in small cities and towns care deeply about sustainability just as much as people in metropolises. They just lack the availability and affordability that makes it possible for them to make sustainable choices. As part of our efforts, Beco is expanding its distribution and lowering its prices. It’s not the lack of demand or education, but the lack of supply that refrains people from switching to sustainable products,” adds Ruia.

Mintel’s Crabbe says that switching to more local sourcing is one step that can help brands. Local sourcing helps reduce transport costs, as well as boosts local businesses in the community.

According to him, “Adapting manufacturing processes to reduce energy and water use can not only reduce business costs and be more sustainable, but brands can pass on those reduced costs to consumers, as well as provide ‘bragging rights’ about sustainable steps taken.”

The Body Shop’s ‘Return Recycle Repeat’ campaign aims to make returning and recycling plastic bottles a way of life in India. Through this in-store recycling programme, the brand hopes to recycle one million plastic bottles by 2024. It is also phasing out all oil-based plastic and replacing it with more PCR in its packaging. The brand’s longer-term goal is to create a circular packaging strategy, which entails using 100% of the product packaging.

Antara Kundu, general manager, brand relation, marketing & customer acquisition, The Body Shop believes that sustainability is not a trend or bandwagon. “For a brand to be truly sustainable, it has to be core to the way it does business. When this happens, sustainability is not something that adds to the price of the product, rather it adds value to the consumer.”

“Sustainability initiatives must be reflected in the complete product portfolio, not just specific ‘sustainable’ product ranges. A brand’s cheapest and most expensive products cannot have varying sustainability credentials,” Kundu shares.

Is business profits sustainability’s enemy?

While sustainability is a noble initiative, the problem with it is that it does not take the business interest into account. Especially for the food and beverage category, where plastic is the only way brands can make money by making the shelf life of the products long.

Brand consultant and co-founder of Again Drinks, Vaitheeswaran K explains that if the shelf life of a product is not long then retailers will not sell it and even if they sell it the returns may not be high in turn impacting business profitability. However, due to the pressure of being an environment-friendly brand, most of them are trying to strike a balance.

He adds, “For this most of them end up releasing sustainable packs and other initiatives for the environment. But this packaging is not for all of their products, it is only for limited variants and for small numbers which shows the brand’s shareholders and the consumers at large how sustainable the brand is.”

It is not easy for brands to adopt sustainable packaging because any environment-friendly pack will have a very low shelf life. “While this situation will not change, we will keep seeing brands coming up with sustainable packaging and initiatives,” Vaitheeswaran says.