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Will Eco-friendly R&D Pale Under Economic Uncertainty?

By: Karen A. Newman
Posted: February 27, 2009, from the March 2009 issue of GCI Magazine.

While more than one in seven (16%) global beauty products launched last year were certified organic, ethical or all natural, according to Mintel’s beauty and personal care launch monitor, there are concerns that the global economic climate will stifle new product development, innovation and sustainability programs in 2009.

Andrew Winston is an environmental strategist and co-author, with Daniel C. Esty, of Green to Gold, a look at “How smart companies use environmental strategy to innovate, create value and build competitive advantage.” In a Jan. 5, 2009, post to the Harvard Business Review blog “Leading Green” (blogs.harvardbusiness.org/leadinggreen), Winston predicts that, due to the global state of the economy, 2009 may very well be “the year of light green.” The way he sees it, “Going green drives innovation and creates value in four fundamental ways: cost reduction, risk mitigation, revenue growth and brand value enhancement.” Cost reduction will rise to the top in 2009, says Winston, driven by “eco-efficiency,” broadly defined as doing more while using less. “Few companies will have the stomach for deep investments in R&D to create new green products.” On the other hand, companies launching products in this troubled quarter have the R&D work and expense already behind them.

Companies practicing eco-efficiency could be in good shape to work with some major retailers. Winston further suggests in his blog post that leading companies, including Wal-Mart, will continue to demand more from its suppliers in the way of more eco-friendly supply chains. “Wal-Mart and others clearly believe that reducing environmental impacts up and down the chain creates value for all,” says Winston. For a look at how natural and organic product manufacturers are doing in the current retail climate and how retailers such as Whole Foods have changed the retail landscape for natural and organic products, read contributor Sara Mason’s article, “Retail’s Natural (R)evolution.”

We wrap up our annual review of natural and organic products with a closer look at sustainable packaging as an overall and fairly widespread initiative, rather than something confined to use by natural-positioned brands: How the use of sustainable packaging impacts the overall marketing and business strategy; and how it may change the corporate story and the brand story that can be shared with consumers. GCI magazine senior editor Jeff Falk also details how consumers respond to this message in his feature "Sustainable Packaging—A Value Proposition."

The idea of products from nature is as old as, well, nature itself. In contrast, concerns about how we use the natural world—in products and in general—are very much an issue of our modern era and clearly ours to understand and remedy as needed. Whatever the motivation, a renewed awareness of our world and our use of its resources, and a growing interest in products from its bounty, is creating unforeseen opportunities for suppliers, manufacturers, marketers, retailers and consumers. Enjoy this special focus.