Green signals from the middle class

A survey shows that Indian consumers are willing to pay premiums for green products if they were readily available — and that’s because they’re worried about the state of the environment

Conventional wisdom has it that the Indian middle class values price over almost any other attribute in its purchasing decisions and is relatively indifferent to environmental concerns. Ergo: the market for green brands and products is too small to consider. A recent global survey suggests that consumer goods marketers who continue to think this way are missing a big opportunity for growth.

This is the broad message from the latest edition of an eight-country, 9,009-respondent survey conducted by US research firm Penn, Schoen Berland in collaboration with design company Landor and environmental consultancy Esty Environmental Partners. Called the ImagePower Green Brands Survey, it shows that the signals from consumers in India are increasingly turning green.

 

Indian consumers are not only willing to spend more on green products and services, they don’t consider premium pricing a major deterrent in their purchasing decisions. Instead, they want green products to be more easily available and clearly labelled.

These responses are significant because the survey is not restricted to the “creamy layer” of Indian consumers, the rich minority that can be expected to be relatively progressive in its decision-making. More than half — 52 per cent — of the 1,101 respondents in India earned between Rs 1 lakh and Rs 5.3 lakh a year. Those earning more than Rs 5.3 lakh and up to Rs 30 lakh — who would qualify as India’s upper middle class and rich — make up about a third of the respondents. (Click here for graphs & tables)

The education level of the Indian respondents is relatively high, as would be expected in an online survey — nearly half of them (46 per cent) are post graduates and 39 per cent graduates. Significantly, too, 65 per cent of the respondents were in the age-group 18 to 34 years, broadly representing the consumers of tomorrow.

When it comes to concerns about the state of the economy versus the environment, the emerging economy grouping of Brazil, India and China (BIC) was more concerned about the latter, in sharp contrast to the developing economy grouping (the US, the UK, France and Germany). This is unsurprising, given the rebalancing of growth dynamics after the 2008 global financial crisis. But the point that corporations may find worth noting is the growing percentage of Indian consumers who felt this way — 74 per cent, a big jump from 53 per cent in 2009. (Click here for tables)

This finding ties in with the 61 per cent of Indian consumers who think the state of the environment is on the wrong track, the second-highest percentage within the eight-country sample (Brazil being marginally higher at 63 per cent).

What concerns Indian consumers most about environmental issues? Interestingly, it is air pollution and deforestation — in the developed world energy use and climate change are major issues. But the takeaway for companies is that a fair percentage of the respondents (72 per cent) consider it very important that a company be environmentally conscious and a majority (64 per cent) plan to spend more on green products and services — one of the highest percentages among countries in the sample. This percentage does represent a drop over previous years (see Figure 1), a uniform trend in all countries, and not unexpected given global inflation, but a higher proportion of consumers in the BIC countries are likely to be green spenders than in the developed world.

If they don’t buy more such products, it is not the price premium that deters them but the fact that they have a limited selection from which to choose and such offerings are difficult to find (Figure 2). Note that price remains the single-biggest deterrent in the developed country grouping. Clues to product pricing can be found in Figure 3, which suggests a significant proportion of consumers are willing to pay a premium of up to 10 per cent for green products.

What green products do they buy? Household products and groceries top Indian consumers’ list but more consumers say they intend to buy green auto products in the next year (Figure 4).

“Consumer preference is definitely shifting but the question is what should companies do about the shift,” said Ashwani Singla, managing director and chief executive, South Asia, Penn Schoen Berland. “There is clearly a demand for more transparency and greater information for consumers to make informed choices.”

This is corroborated by the fact that a relatively low percentage of consumers in India make use of certification marks to determine whether a product is green — just 45 per cent compared to 62 per cent in China. So what works best for product messaging? Figure 5 shows that television advertisements are considered the most impactful medium for the message, followed by newspaper advertising. (Interestingly, social media, which Indians appear to be embracing with growing enthusiasm, doesn’t rank high as an influencer of purchasing decisions.)

This finding broadly ties in with the finding that a big majority of Indian consumers (86 per cent) trust green advertising. Although this is true across the country sample, India records the highest percentage of consumers who think this way.

Like elsewhere, Indians think the government needs to play a bigger role in supporting green innovation and they want their government to mandate disclosure of ingredients and greater label clarity (elsewhere, the demand is for governments to drive recycling and taking back products at the end of their useful life are big considerations). Overall, Indian consumers want governments to drive the green agenda (only the US thinks the private sector should do this), a message, perhaps, for corporate social responsibility programmes as well.