Sales of 'green' products fall as consumers cut spending
When Clorox introduced Green Works, its environment-friendly cleaning line, in 2008, it secured an endorsement from the Sierra Club, a nationwide introduction at Walmart, and it vowed that the products would "move natural cleaning into the mainstream."
Sales that year topped $100 million, and several other major consumer products companies came out with their own "green" cleaning supplies.
But America's eco-consciousness, it turns out, is fickle. As recession gripped the country, the consumer's love affair with green products, from recycled toilet paper to organic foods to hybrid cars, faded. While farmers' markets and Prius sales are humming along now, household product makers like Clorox just can't seem to persuade mainstream customers to buy green again.
Sales of Green Works have fallen to $60 million, and those of other similar products from major brands like Arm & Hammer, Windex, Palmolive, Hefty and Scrubbing Bubbles are sputtering.
''Every consumer says, 'I want to help the environment, I'm looking for eco-friendly products,'" said David Donnan, a partner in the consumer products practice at the consulting firm A.T. Kearney. "But if it's one or two pennies higher in price, they're not going to buy it. There is a discrepancy between what people say and what they do."
Indeed, outside a Whole Foods Market in the Chicago suburb of Evanston, June Shellene, 60, said she did not buy green products as often as she did a few years ago.
''People are so freaked out by what is happening in the world," she said, before loading her groceries into a Toyota Prius. Of green products, she said, "That's something you buy and think about when things are going swimmingly."
Of course, sales in most consumer-products categories dropped off during the recession. But according to an analysis by Sanford C. Bernstein & Co., certain green products have fared worse.
''You see disproportionately negative impact from products like Green Works, out of the big blue-chip companies that have tried to layer a green offering on top of their conventional offering, and a relatively better performance from the niche players who remain independent," said Stephen Powers, an analyst at Bernstein.
Using data from AC Nielsen, Bernstein looked at sales for nearly 4,300 products in 22 categories, like cleaning spray, liquid soap, bathroom cleaners and detergents. It studied monthly sales from March 2006 to March 2011, the most recent data available. (Nielsen's data includes mass-market, grocery stores and drugstores, but excludes Walmart.)
Bernstein found that sales of green products generally are down from their peak — especially those offered by the big consumer-products companies. But the market share of the independent green brands, like Method and Seventh Generation, is starting to increase in almost every category, while the share of traditional brands' green products is generally shrinking.
''In terms of the big players like Clorox, there's no doubt that they've de-emphasized the brands relative to their early aspirations, and that's reflective of what they are seeing from the consumer," Powers said.
Green household products took off in the 1980s, with brands like Seventh Generation and Simple Green, which have gained a loyal following. As retailers like Whole Foods expanded in the 1990s, interest in the environment increased and competitors joined the fray. Around 2000, for instance, Method and Mrs. Meyer's tried to make green cleaning more chic, with witty product labels and scents like pink grapefruit.
Predicting the market would continue to increase, mainstream manufacturers like S.C. Johnson, Clorox and Church & Dwight introduced eco-friendly versions of their products in about 2008.
But after an initial lift, sales largely dropped off, and the introduction of new products slowed during the recession.
The number of household cleaners with green claims introduced in 2008 was 144, up from 29 in 2007. By 2009 that had dropped to 105, according to Mintel, a market research firm. Green dishwashing liquid followed a similar pattern, with 14 new introductions in 2007, 85 in 2008, then 58 in 2009.
Some of the major manufacturers pulled back on advertising, too.
Clorox spent more than $25 million advertising Green Works in both 2008 and 2009, but just $1.4 million in 2010, according to Kantar Media, which tracks advertising spending.
Similarly, S.C. Johnson introduced Nature's Source in 2009. That year, it spent $15.4 million advertising the products, more eco-friendly versions of its brands like Windex and Scrubbing Bubbles.
In 2010, spending to advertise the line fell to zero, according to Kantar.
Sales have gone south, too. In the 12 months through March, sales of Nature's Source Scrubbing Bubbles all-purpose cleaner have dropped 71 percent, to $589,614, according to SymphonyIRI Group, which tracks sales at mass-market United States stores, excluding Walmart. Nature's Source Windex dropped 35 percent, to $1.8 million. Nature's Source Scrubbing Bubbles tub and tile cleaner dropped 61 percent, and Nature's Source toilet bowl cleaner dropped 78 percent.
And that was as prices on all of those items were reduced.
Officials at S.C. Johnson did not return repeated calls seeking comment. At Church & Dwight, its Arm & Hammer Essentials multisurface cleaner, glass cleaner and laundry detergent are no longer being produced for the U.S. market, less than three years after they were introduced.
''Arm & Hammer Essentials cleaners may have been ahead of their time," said the chief marketing officer, Bruce Fleming, in an email.
Its concentrated cleaners, for instance, were sold alongside an empty spray bottle, and consumers were told to add their own water to make the cleaning sprays. "But consumers didn't understand the empty bottle and like many innovative ideas, changing behavior can be difficult and expensive," he said. As for the Essentials laundry detergent, "our consumers voted instead for our traditional" products.
''We haven't given up on launching innovative, earth-friendly products, we've just taken a step back to think about how and when consumers will be ready," he said.
Heidi Dorosin, vice president for marketing for the cleaning division of Clorox, said Green Works' sales had been battered by the recession and inconsistent pricing.
''When the recession hit, we learned a lesson that a premium product is a premium product," she said. "And during an economic reset of that nature, consumers' interest in paying higher prices for green cleaning was not as high as we thought."
The company has lowered its prices and made them more consistent, she said.
Sales held up at smaller, and more expensive, brands like Method and Seventh Generation, Powers suggested, because those customers tended to be more affluent and more wedded to environmental causes. Both companies say they had double-digit growth in 2010 after a flat year in 2009.
When the recession hit, "the more mainstream, environmentally friendly consumer was more apt to flee the green category," Powers said.
Back in Evanston, shoppers reflected the changing dynamics of the green marketplace. A handful said they continued to buy green products religiously while many others said the cost was prohibitive. Sarah Pooler, 55, said she did not normally buy green products but would pick them up if they were on sale.
''Bottom line, if it's green and it's a good deal, I'll buy it," said Pooler, 55, outside a Jewel-Osco store.
Tom Lenz, 55, had a different approach.
''I may have tried purchasing something, but I have a feeling my wife said, 'Don't ever buy that again because it's too expensive,'" he said.