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Eco-labels: Environmental Marketing in the Beauty Industry
By: Margaret H. Whittaker, Elizabeth Engimann and Imogen Sambrook
Posted: August 11, 2009, from the August 2009 issue of GCI Magazine.
- Eco-labels are commonly divided into two classes: single-attribute eco-labels and multi-attribute eco-labels.
- The natural and organic beauty market is anticipated to exceed $10 billion by 2010. The majority of this growth is in the U.S. and Europe, markets where eco-label recognition is growing at a similar pace.
- Recognition by an eco-label program can help a marketer break into one of the fastest-growing sectors of the beauty industry, or increase an existing market share.
- Harmonization of eco-label standards is an ideal way to increase transparency to the consumer and promote growth in the eco-label network.
Natural, and organic have long been popular marketing buzzwords in the beauty industry, but their meanings continue to have multiple definitions. The “green” sector of the beauty industry is one of the fastest-growing markets globally, with further potential for expansion. Increasing consumer demand for green products, which are generally classified as products that are made from sustainable sources and/or are safer for the environment and human health, has led many beauty companies to jump on the green bandwagon—particularly in terms of marketing.
Consumers, however, have become aware of greenwashing practices that may be associated with the use of general claims on “natural,” “earth-friendly” and “non-toxic” products, causing confusion in the marketplace and weakening the perception of truly green products. According to a panel from the Natural Products Association (NPA) and representatives from natural beauty care companies, as few as 20% of the products in the natural personal care products sector are truly green. In response, the beauty industry is turning to eco-labels as a means to reposition itself within the market and substantiate green claims for products in this industry.
What is an Eco-label?
Eco-labels are used to identify products, raw materials, or companies that meet a particular organization or government agency’s standards in terms of organic content, sustainability or minimizing risks to humans, animals or the environment. Applying an eco-label to a product or raw material is an excellent way to inform consumers and add a point of market differentiation. However, there are now more than 300 different eco-labels to choose from, covering multiple product types, and not all are created equal. Eco-labels are commonly divided into two classes: single-attribute eco-labels and multi-attribute eco-labels. Figure 1 identifies some of the major differences between these single- and multi-attribute labels, along with examples of each type of eco-label.
Single-attribute eco-labels are often faulted because they tell only part of the story. As an example, a cosmetic may be compliant with a label that requires 70% organic content for ingredients, but this label says nothing about the product being safer for health or allergen-free, and thus can be misleading to consumers. Despite the criticisms lodged against single-attribute labels, there is a need for them since consumers understand them, making these labels attractive for retailers.