While there is a greater appreciation for sustainable products, too often consumers opt for cheaper products. People often say they will pay a premium for sustainable products. But there’s a difference between what people say in a survey and what they actually do in a store. Are Asian consumers ready to pay more for green goods? Zafirah Zein discusses this issue in the context of Asia in an article on the eco-business website. What are your views?
Will sustainability ever trump price for Asian consumers?
Half of consumers in Southeast Asia would pay more for environmentally-friendly products, according to a global survey conducted by Nielsen in 2017. That alone might suggest that sustainable products are taking off in the region. But are Asian consumers putting their money where their mouth is?
“Consumers voice positive opinion for sustainable products but don’t back it up at the check-out counter,” said Regan Leggett, executive director of thought leadership and foresight at Nielsen, a global measurement and data analytics company. “But if the price is competitive for two brands, sustainability could be the deciding factor.”
He added that while there has been positive momentum for sustainable products in Asia, it is difficult to accurately measure how well they’re selling. In many industries, the definition of what makes a product sustainable is often fuzzy. Furthermore, consumers are often unaware of a brand’s true sustainability credentials.
According to Leggett, global demand for more environmentally-friendly and ethically-made products should influence more companies to drive sustainability initiatives and make their claims more public.
However, as climate change and other environmental issues such as waste and plastic pollution become a growing concern for Asian consumers, sustainable products are now more popular in the region than ever before.
In 2017, the total volume of green purchases made on China’s leading e-commerce retailer JD.com increased by 71 per cent the same year the company more than doubled its range of sustainable products. Almost half of the sales were made by millennials aged 26 to 35, while the products that enjoyed the highest premiums were childcare and beauty products.
“People are definitely willing to purchase more sustainable and ethical products, but they also want to maintain their standard of living and convenience,” said Stephanie Dickson, founder of Green is the New Black Asia, an eco-conscious lifestle festival.
This is especially true in Singapore where consumers tend to prioritise cost and convenience. When the country’s major supermarket chains considered introducing a levy on plastic bags to ease the country’s waste problem, the idea received heated criticism from customers and the charge was abandoned.
Nonetheless, more eco-friendly stores have cropped up around the country, encouraging sustainable consumption while also offering products at low prices. UnPackt and The Social Space, which sell goods like shampoo, dishwashing liquid, cereal and other daily food items in bulk without any packaging, are able to sell their products for 5 to 10 per cent less than the market rate.
Skincare and cosmetics label Lush, which opened in Singapore in 2011, similarly gives its customers the option of going Naked, by offering lotions, shower gels and shampoo bars packaging-free. According to the director of Lush Singapore, Sohana Rouf Chowdhury, the brand has seen an increase in customers looking for sustainable products. Lush sold 2,000 shampoo bars in Singapore last month, saving 6,000 plastic bottles from being created.
Asian consumers are more inclined to buy sustainable utility items that can be easily weaved into everyday life. “People are still looking for small replacements like a disposable cup or a bamboo straw or tapao [takeaway] containers,” said Mayur Singh, co-founder of both Coopita, a retail platform that trades artisanal products from around the region, and The Green Collective, a pop-up store which offers a mix of sustainable products from different brands.
When charged with a higher price for these items, Asian consumers “are okay with making that choice,” he said.
This appears to be true of big-ticket purchases as well as lower value items. Preeti Gupta, corporate affairs director for BMW Group Asia, shares that the German automaker has seen sales of its electric and plug-in electric hybrid (PHEVs) vehicles increase steadily since the launch of its PHEV range and the BMW i3 in Singapore in September last year.
“Purchasing a vehicle is a long-term investment, and while the initial cost of owning a EV or PHEVs may be slightly more expensive than a petrol or diesel vehicle, the overall long-term costs are lower,” she said.
“The positive increase in sales is proof that our customers in Singapore are willing to pay a premium, initially, to drive an electrified vehicle.”
What do Asian consumers want?
As a whole, benefits to health and wellness, as well as brand trust, are two key factors driving consumer decisions in Asia. In a 2015 report by Nielsen, seven in 10 consumers in the region prioritised their health and well-being, with the same proportion of consumers favouring products made with natural or organic ingredients.
Dickson agreed that a lot of what influences Asian consumers to buy sustainable stems from their own well-being, although she notes that the struggle to find smaller brands often deters consumers from switching to sustainable products.
“They don’t really know where to purchase, where to put their money,” she said. “They’re sceptical about bigger brands and can’t find the smaller brands.”
Last year, close to five thousand people flocked to Green is the New Black: The Conscious Festival, where over sixty eco-conscious brands ranging from fashion, lifestyle and beauty showcased their wares. According to Dickson, people are more likely to buy sustainable products if they have access to the right brands.
Putting consumers directly in touch with the people behind these smaller brands bridges the trust gap that often exists between consumers and big companies that are not transparent enough about their practices. According to Regan, consumers would switch brands if a company was able to fulfil basic attributes such as quality and convenience while living up to sustainable values.
Price prevails over sustainability in Asia
It would be impossible to turn all consumers on to sustainable products. So companies in Asia are expanding their consumer bases by not just targeting eco-warriors but those interested in exploring new, more innovative products. Many consumers in Singapore, home of the hit movie Crazy Rich Asians, fall into the latter category, with Singh calling them some of the most peculiar consumers in Asia based on their unique spending habits.
While consumers in lower income countries such as India and Vietnam are very price-sensitive, Singaporean consumers are not price-sensitive at all if they like a product. According to Singh, “they will just give you the credit card without even looking at the price.”
However, from a sustainability standpoint, consumers in general will choose to fork out money for sustainable products that do not make big dents in their wallets. This stops Asian consumers from spending more on pricey, artisan products that are made sustainably in the region, such as traditional crafts and handmade products that Coopita aims to promote.
“There will never be a day where more than 90 per cent of the customers in the world want to buy sustainable products because they’re expensive. And that’s the truth,” said Singh.
Nonetheless, the perception that sustainability is wholly unaffordable is slowly being broken, believes Dickson.
Sustainable products typically last longer and have positive social impacts that make consumers feel good about buying them. She said, “People think they are expensive because they look at what they’re used to buying. But once they see the long-term benefits, they come to understand. It’s all about a shift in mindset.”