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The Green Report: The Question Begs the Answer

By: Jeff Falk
Posted: August 7, 2007, from the August 2007 issue of GCI Magazine.

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The core natural/organic manufacturers, offered mostly in the exclusive natural/organic channel, have taken the lead in developing products free of synthetically derived and/or processed ingredients, and have been enjoying double-digit growth rates since the early 90s. Volumes haven’t traditionally been high enough to justify putting pressure on packaging and ingredient suppliers to provide these types of products. Now that volumes are higher and larger, mainstream players are finally getting the message—albeit at a geologic pace.

Neither the mainstream companies or the natural/organic companies are doing enough with regard to the three main tenets of sustainability—design for environment, pollution prevention and resource recovery. All of this is changing as we speak.

Markus Schiek and Martha Basanta: As consumers’ lifestyles evolve and change, so must the world around them. Beauty is no exception. As we become increasingly aware of global warming, and the need to be responsible and take action with regard to the environment, this will also have an effect on how we all live our lives. This became evident a few years ago as consumers sought natural and organic food, and the food industry answered with a plethora of natural and “good for you” products. For us, it only makes sense that the next phase of this thinking will affect what we put on our bodies, as much as it has been about what we put in them. More and more in recent years, there has there been a saturation of natural and organic beauty products on the market. Consumers want to do something good for themselves, and, if they see the results, it’s worth it. It is our job, as an industry, to be forthright and honest about what is really natural and organic in a product. Consumers are savvy, and they want to know the truth about what goes into a product. Once we are able to do this, we will be effective as an industry.

Amarjit Sahota: The beauty industry is looking at green issues far more seriously than ever before. Apart from companies looking at developing natural and organic personal care products, companies are looking at reducing packaging and using environmentally friendly materials.

What has had the greater impact thus far, regulation initiatives such as REACH and California’s Prop 65, initiatives by retailers or consumer demand?

Rob Zurek: Retailers seem to have had the biggest effect. We all know the effect Wal-Mart is having on sustainable packaging trends, but it’s also stores like Whole Foods and similar outlets that are creating the retail/marketing-based push toward sustainability, even before the consumer is asking for it.

Anthony Gentile: Personally, it seems to me that consumer demand has had the greatest impact thus far. And currently, there are some pretty big initiatives by retailers that seem to be driving the market. However, I don’t think we would even see those initiatives by retailers if there wasn’t such a huge (and growing) consumer demand for sustainable products.

Darrin C. Duber-Smith: Regulations have had very little impact, as they come late to the party. The rapidly growing number of natural/organic companies don’t use the banned ingredients as it is. What these regulations do is remind larger manufacturers and suppliers that, not only are consumers interested in what they are putting on their bodies, but the government is watching, too. Making more sustainable products will increasingly be seen as a reducer of risk for organizations as consumers, regulators, nonprofit interest groups, the media and smaller upstarts drive toward the market healthier, more environmentally responsible products.

Markus Schiek and Martha Basanta: Consumer demands have had a far greater impact, thus far, than regulation initiatives. In the end, consumers will really see the effects, as restrictions and guidelines are established on all goods. The regulation initiatives have a great impact on the perfumistic creativity, however, the consumer might not always be aware of the difference as he often does not read or may not understand the ingredient list on products.

How has innovation in both sourcing and marketing been impacted? Is the greening a new opportunity or a hurdle to overcome?

Robb Zurek: For us, it’s a new opportunity. Yes, we’ve had to work a bit harder to source quality packaging opportunities, and we have had to quickly become experts in another area, but that knowledge also puts us in a position to work with companies we might never have had the opportunity to work with were it not for the greening push.

Sundeep Gill: The global market of specialty natural ingredients is expanding. With the advent of better communications in third world countries, our suppliers now have access to raw ingredients that truly have a unique eco-responsibility message. We have always embraced new and innovative ways to improve the eco-responsibility of our formulas; every day, we are finding better solutions to the use of synthetic ingredients.

Anthony Gentile: Sourcing has become easier in that there are more suppliers focusing on sustainable and renewable products. It is easier for us to find suppliers that are committed to environmental causes today than it was in the past. Since we have been producing environmentally conscious packaging for 20 years, we feel like the industry has finally caught on to something we’ve known for a long time. And that is the idea that you can make excellent products, keep consumers happy, and make a living while being conscious and friendly to our environment. On a more acute scale, the greening of the beauty industry has certainly widened our appeal to some segments of the beauty industry.

Darrin C. Duber-Smith: Green is very obviously an opportunity for any forward-thinking company. The days of putting [forth] whatever works best and is least expensive, regardless of side effects, are ending quickly. More chemists are working with natural ingredients, more suppliers are sourcing them, more sustainable packing is available, and templates for making manufacturing processes and distribution more sustainable are becoming available through consulting firms. This is the future, and executives have a fiduciary responsibility to pay attention and react to this paradigm shift in a way that benefits shareholders. The new paradigm is that what is good for people and the environment is also good for shareholders. That’s what sustainability is all about.

Markus Schiek and Martha Basanta: The green movement is both an opportunity and a hurdle. It has tremendous potential and opportunity for all. With globalization on everyone’s mind, this could encourage companies to utilize local growers in remote areas, encourage free trade, increase quality of life in these areas, all while giving back to the communities and creating a natural/organic end product. The hurdle in this movement really comes from consumers’ tolerance of what these products will be, how they work and how they smell. A 100% organic face cream may be exciting to create and get onto the market, but will people use it if it doesn’t smell like they are used to? Most studies say that they will if the product delivers results, but, in reality, the level of what odors are acceptable will take time. At the end of the day consumer demand will drive this segment, and, if they want it, companies will find a solution.

How has your company dealt with the trend toward sustainability and green options? What have been the challenges in meeting evolving consumer aspirations for natural and sustainable products?