The decline in the willingness to pay extra for sustainable products among Danish customers is not only due to inflation.
Danish consumers became less willing to pay extra for sustainable groceries from 2021 to 2022, according to the Global Sustainability Study from the consultancy Simon-Kucher. The decline is partly due to inflation. But according to Simon-Kucher’s experts on consumer trends and sustainability, there is another explanation.
“We hypothesize that the decline in willingness to pay extra for environmentally friendly groceries is mainly due to two things: One is that price increases have affected consumers’ overall purchasing power. The second is that more and more consumers simply assume that they can buy sustainable products at prices comparable to those of traditional products. This is a development we see in a number of areas. A few years ago, green alternatives were seen as something that not everyone offered. Today, a very large segment of consumers expect that they can be climate conscious through their purchasing decisions as the supply of sustainable products increases,” says Senior Manager Caroline Kastbjerg from Simon-Kucher.
According to the latest edition of the Global Sustainability Study, 37 percent of Danish customers were willing to pay extra for sustainable groceries and household items, compared to 42 percent in 2021. Among the 37 percent who were willing to pay extra, people were willing to pay an average of 21 percent extra for a sustainable grocery product. The corresponding figure was 26 percent in 2021.
Sustainability is not just about the product itself
Senior Partner Nicolai Broby Eckert of Simon-Kucher says that manufacturers and retailers should continue to prioritize the transition to sustainability, even if the willingness to pay extra for sustainable alternatives is declining.
“It is true that price, availability, and user-friendliness are the most important criteria when Danes choose groceries. But there is also a significant consumer segment that ranks sustainability highly on their list of purchase criteria; 35 percent state that it is important that a grocery product is environmentally sustainable. Therefore, sustainability should increasingly be part of commercial strategy. It’s becoming essential to think green, including in terms of raw materials, production, transportation and packaging,” says Nicolai Broby Eckert.
However, the Simon-Kucher survey also shows that whether the product itself is sustainable is not the only factor. A total of 28 percent of respondents stated that it is important that a brand takes initiatives that have a positive impact on the environment and society.
“Many consumers are skeptical about whether companies translate their good intentions of being environmentally sustainable into concrete action. The greenwashing cases of recent years have left an impression on consumers,” says Caroline Kastbjerg.
Additional research by Simon-Kucher has shown that many consumers closely link sustainability with health when it comes to food and other everyday products such as cleaning products. This association has increasingly contributed to the value of products.
The Global Sustainability Study 2022 is full of similar insights into what makes an effective sustainability strategy. Reach out to our industry experts to learn more.