As consumers demand greener and organic alternatives – and are prepared to pay a premium – niche sectors are springing up in nearly every industry
North America has never been known for its green and organic credentials. Widely criticised for making up less than five per cent of the world’s population but consuming close to 25 per cent of the world’s natural resources – and re-electing a president who stubbornly refuses to sign up to the Kyoto agreement – the American Dream has tended to believe that when it comes to houses, cars and consumption generally, bigger is better. A recent survey showed that 40 per cent of US consumers believe environmentally friendly products to be less effective than their non-green counterparts, while the US Environmental Protection agency released figures showing that the average US home pollutes even more than the average American car.
However, there are signs that change is afoot in many markets. According to the Natural Marketing Institute and the Organic Trade Association, retail sales of organic products in North America were worth $1bn (&£570m) in 1990 and are expected to reach $20bn (&£11.3bn) this year, with most of the growth occurring in the past five years. The market for organic products in the US is estimated to be 90 million people, nearly a third of the population. From food to clothes and cars, Americans are starting to demand greener and organic alternatives.
Although less than eight per cent of the total US food industry, the organic food sector is the fastest-growing segment of food sales, having seen growth of 20 per cent over the past decade, compared with one per cent in the food sector in general. Top consumers of organic foods are 45- to 54-year-olds, which is the largest consumer group in North America. The organic food sector has been introducing an average of 1,500 products a year to satisfy this craving and consumers are willing to pay more for organics. No wonder big companies are keen to get in on the act. Whole Foods Market, a successful retailer in this sector that has been in business for 25 years, has just opened the biggest food store in Manhattan. It also bought Fresh & Wild in the UK this year, proving that organic is no longer just about niche.
Petrol is subject to less tax in North America than in Europe and costs half as much as in the UK, but rising fuel costs, especially in the wake of hurricane Katrina, are forcing some Americans to think twice about their gas-guzzling SUVs (sport utility vehicles) and trucks. In turn, the big car companies have had to think about alternatives, even though many are less than convinced about the technology.
Driving the cause further afield
The Toyota Prius hybrid car, which supplements ordinary fuel with an electric-powered engine, has become a runaway success in the green car market. While GM lost a staggering $1bn (&£570m) on its EV-1 electric car, the Toyota Prius has appealed to a niche market that is big enough to force other manufacturers to follow suit. General Motors and Daimler Chrysler have agreed to work together on hybrids.
Marketing of the Prius began in 2003, with American political pundit Arianna Huffington propelling the car into the spotlight. In television ads, the Huffington-led Detroit Project equated driving an SUV to financially supporting terrorism. Lending support to the cause were personalities Ted Turner, Leonardo DiCaprio, Alicia Silverstone, Cameron Diaz and others. Automotive research company JD Power and Associates projects US hybrid sales will reach 500,000 by 2008.
The Environmental Media Association – which aims to get TV and film producers to incorporate environmental messages into their projects, and uses celebrities as role models of responsible environmental behaviour – also worked with Toyota on the Prius launch. It was trying to get the word out that driving a hybrid was “a cool thing to do. It’s becoming the trendy thing to do (in Hollywood)”.
Even the fashion industry is having to review its way of working, with self-cleaning nanofibres being considered to avoid the harsh chemicals used in dry cleaning. Cotton has been under fire for using the most pesticides and creating the most pollution out of any crop in the world. Fashion journal Women’s Wear Daily admits: “No longer just for tree-huggers, organically grown cotton is growing into a viable part of the active apparel industry.”
Fashion cottons on to the trend
According to the Organic Trade Association (OTA)’s 2004 Manufacturer Survey, the organic fibre products category grew by 22.7 per cent in 2003 to reach $85m (&£48m) in sales. However, organic cotton still represents only 0.5 per cent of the world cotton supply. The association predicts that the introduction of organic fashion and fitness wear on top of demand from consumers should increase this exponentially. “The growing sector of environmentally conscious consumers wants to be able to purchase everything organic, from the food they eat to the clothing they wear,” says OTA executive director Katherine DiMatteo. “The organic apparel being made today looks and feels as appealing as the apparel made from conventionally produced fabric.”
Nike co-sponsored the Wear Organic! show with the OTA earlier this year. It featured the latest apparel and textile designs in organic fibre on the catwalk and in trade show exhibits. In 2002, Nike launched a certified organic collection and has continued to integrate organic cotton in its collections, focusing on womenswear. Nike is estimated to be the largest retail user of organic cotton in the world – 2.5 per cent of the cotton it used globally in 2004 was organic.
On track for wider horizons
While food, clothes and cars seem obvious opportunities to go green, niche sectors are springing up in almost every industry. Travel is seeing the growth of ecotourism, whereby travellers are careful not to make a negative environmental impact on places they visit. In 2004, the World Tourism Organisation revealed that ecotourism and nature tourism are growing three times faster than mass tourism. Among US travellers, over 75 per cent feel their visits should not damage the environment and 38 per cent are willing to pay a premium.
A company called Affordable Internet Services Online offers solar-powered internet connection for just $9.99 (&£5.66) a month and consumer technology designers are hard at work making more energy-efficient products – the iPod has been called the ultimate green accessory by some, as it eliminates the need for all the plastic and packaging involved in CDs.
While still a niche in most markets, greener and organic products are growing strong in almost every industry driven by consumer demand rather than manufacturer innovation.