Shopping: Targeting the wrong crowd: How retailers miss out on sustainable food and beverage sales

Why it is the topic trending:

• Growing Consumer Demand for Sustainability:

  • Nearly half of US shoppers actively seek out retailers that offer sustainable product ranges, as indicated by claims like USDA Organic, non-GMO, or B-Corp. This signifies a strong and increasing consumer interest in environmentally and ethically conscious products.

• Shrinking Price Gap Between Sustainable and Regular Products:

  • The price difference between sustainable and conventional FMCG products in the US has significantly decreased from around 40% in 2018 to just under 27% in 2024. This reduction in the price premium makes sustainable options more accessible and appealing to a broader range of consumers.

• Suboptimal Retail Stocking Decisions Based on Stereotypes:

  • A new study highlights that retailers in the US are disproportionately stocking sustainable food and beverage products in areas with predominantly liberal, white, and affluent consumers. This suggests that stocking decisions are influenced by assumptions about the "stereotypical sustainable consumer" rather than a data-driven, profit-focused approach.

• Untapped Market Potential in Underserved Demographics:

  • Research suggests that minorities are actually more likely to engage in sustainability. By limiting the availability of sustainable products in lower-income and non-white communities, retailers are potentially missing out on a significant and willing consumer base, hindering the overall growth of the sustainable product market in the US compared to countries like the UK and Germany.

Overview: A recent study has revealed a potentially detrimental bias in how US retailers stock sustainable food and beverage products. Despite a strong and growing consumer demand for sustainability, coupled with a decreasing price gap compared to conventional options, retailers appear to be making stocking decisions based on stereotypical assumptions about who buys these products. The study found that sustainable products are more readily available in areas with a higher concentration of liberal, white, and affluent consumers, while their availability is lower in regions with predominantly lower-income and non-white populations. This approach contradicts research indicating that minority groups are often more engaged in sustainable practices and is likely causing retailers to miss out on significant sales opportunities, hindering the growth of the overall sustainable product category in the US.

Detailed findings:

• Significant Consumer Interest in Sustainable Products:

  • Circana data shows that nearly a quarter of FMCG products in the US carry a sustainability claim. Furthermore, almost half of shoppers report choosing retailers that offer a good selection of sustainable products.

• Decreasing Price Premium for Sustainable Options:

  • The price difference between sustainable and regular FMCG products in the US has narrowed from approximately 40% in 2018 to less than 27% in 2024. This trend makes sustainable choices more accessible to a wider range of consumers.

• Concentration of Sustainable Products in Specific Demographic Areas:

  • The study published in the Journal of Marketing found a direct correlation between the presence of a higher percentage of Democratic voters in a particular area and the increased availability of sustainability-marketed products in local stores. Conversely, regions with a higher proportion of lower-income and non-white consumers experienced a decrease in the availability of these products.

• Discrepancy with Actual Sustainability Engagement:

  • Existing research indicates that minority populations are, in fact, more likely to participate in sustainable behaviors. This contradicts the retailers' apparent strategy of limiting sustainable product availability in areas with larger minority populations.

• Data Based on Extensive Store-Level Analysis:

  • The study's findings are grounded in weekly Circana store-level scanner data from 25,000 stores across 52 states and 2,445 counties in the US. The analysis focused on four CPG categories: yogurt, coffee, frozen dinners, and laundry detergents.

• Profit Potential of Sustainable Products:

  • The research considered the price elasticity of demand and the profit potential of sustainable products in both grocery and big-box stores. In grocery stores, consumers showed a higher likelihood of purchasing sustainable products over regular ones, even with price increases (except for yogurt drinks).

• Impact of On-Pack Claims on Profitability:

  • In yogurt, "Certified B-Corp," "non-GMO," and "organic" claims were associated with the strongest profit potential. For coffee, "Fair Trade" and "Sustainably Sourced" claims had the highest profit potential in single-cup varieties, while "Sustainably Sourced" ground coffee also showed high profit potential. Multiple sustainability claims on packaging generally increased profit potential in several categories in grocery stores and mass merchandisers.

Key success factors of product (trend):

• Clear and Trustworthy Sustainability Claims: Products with recognized and trusted certifications like USDA Organic, non-GMO Project Verified, Fair Trade, or Rainforest Alliance are more likely to resonate with consumers.

• Reasonable Price Premium: While consumers are willing to pay slightly more for sustainable options, the price difference needs to be justifiable and perceived as fair. The shrinking price gap is a positive trend in this regard.

• Availability Across Diverse Retail Locations: Ensuring that sustainable products are accessible in a wide range of stores, including those located in diverse demographic areas, is crucial for maximizing sales potential.

• Effective Communication of Benefits: Brands need to clearly communicate the environmental, social, and ethical benefits of their sustainable products to educate and motivate consumers.

Key Takeaway: Retailers in the US are potentially hindering the growth of the sustainable food and beverage market by making biased stocking decisions based on inaccurate stereotypes about who buys these products. By focusing on liberal, white, and affluent areas while under-serving minority and lower-income communities, retailers are likely missing out on significant sales opportunities and contradicting research that indicates higher sustainability engagement among minority groups. Adopting a more data-driven, profit-oriented approach that prioritizes making sustainable options available to a broader consumer base is essential to unlock the full potential of this growing market.

Main trend: The main trend is retailers' biased distribution of sustainable food and beverage products, leading to an under-serving of diverse consumer demographics.

Description of the trend (please name it): The trend is "The Sustainable Shelf Disparity." This describes the phenomenon where the availability of sustainable food and beverage products in US retail stores is skewed towards areas with predominantly liberal, white, and affluent populations, despite evidence suggesting broader consumer interest and engagement in sustainability.

What is consumer motivation:

• Ethical and Environmental Concerns: Consumers are increasingly motivated by a desire to support environmentally friendly and ethically produced goods.

• Health and Wellness: Claims like "organic" and "non-GMO" are often associated with healthier food and beverage choices, motivating health-conscious consumers.

• Social Responsibility: Consumers may be motivated to support companies and products that align with their values regarding social responsibility, as indicated by certifications like Fair Trade and B-Corp.

What is driving trend:

• Retailer Stereotypes and Assumptions: Retailers appear to be operating under the assumption that sustainable products are primarily of interest to a specific demographic profile (liberal, white, affluent).

• Potentially Limited Market Research: Retailers might be relying on incomplete or biased market research that reinforces these stereotypes.

• Legacy Stocking Practices: Historical stocking decisions based on outdated assumptions may not have been updated to reflect the evolving demographics of sustainable consumers.

What is motivation beyond the trend:

• Retailer Profit Maximization (Short-Term): Retailers might believe that stocking more sustainable products in the perceived "target" demographic areas will yield the highest immediate profits. However, the study suggests this might be a flawed assumption leading to missed long-term potential.

• Supplier Distribution Strategies: It's possible that some suppliers of sustainable products initially focused their distribution efforts on retailers located in wealthier or more liberal areas, influencing initial stocking patterns.

Description of consumers article is referring to:

The article refers to two main groups of consumers:

• The "Stereotypical Sustainable Consumer" (Retailers' Perception): This group is perceived by retailers as primarily liberal, white, and affluent individuals who are the main target audience for sustainable food and beverage products.

• The Actual Sustainable Consumer Base: This is a broader group that includes individuals from diverse racial, income, and political backgrounds. Research cited in the article suggests that minorities are actually more likely to engage in sustainability. The study indicates that there is untapped demand for sustainable products among lower-income and non-white consumers.

Who are them: Price-conscious individuals and households who are also motivated by ethical, environmental, and health considerations when making food and beverage choices. This group is more diverse than the stereotypical image. What kind of products they like: Products with sustainability claims like organic, non-GMO, plant-based, Fair Trade, and Rainforest Alliance certification across categories like yogurt, natural cheese, milk, fresh bread, coffee, soup, and others (as indicated by the study focusing on yogurt, coffee, frozen dinners, and laundry detergents). What is their age?: The article does not provide specific age demographics for sustainable consumers in general. However, given the increasing awareness of environmental and social issues among younger generations, it's likely that Millennials and Gen Z are significant segments of this consumer base, along with older consumers who prioritize health and sustainability. What is their gender?: The article does not specify gender as a primary factor influencing the likelihood of purchasing sustainable products. What is their income?: While retailers seem to target affluent consumers, the article highlights the potential in lower-income markets, especially given the shrinking price gap. This suggests that income is not the sole determinant of interest in sustainability. What is their lifestyle: This likely includes individuals and families who are conscious of their impact on the environment and society. They may be engaged in other sustainable practices in their daily lives. What are their category article is referring shopping preferences: They shop across various retail formats, including grocery stores and big-box stores. They are likely to notice and appreciate the availability of sustainable options in their local stores. Are they low, occasional or frequent category shoppers: Given the demand for a variety of sustainable food and beverage items mentioned in the article (yogurt, coffee, dairy, bread, etc.), they are likely to be regular shoppers in these categories. What are their general shopping preferences-how they shop products, shopping motivations: They are motivated by a combination of factors including ethics, environmental concerns, health, and increasingly, value as the price gap narrows. They pay attention to on-pack claims and are likely to support brands that align with their values. They are also becoming more discerning about the authenticity and meaning of sustainability claims.

Conclusions: The study concludes that US retailers are likely missing out on substantial sales of sustainable food and beverage products by adhering to outdated and inaccurate stereotypes about who their target consumer is. This biased stocking approach, which favors predominantly liberal, white, and affluent areas, contradicts research indicating broader interest in sustainability, particularly among minority groups. By adopting a more economically driven strategy that focuses on making sustainable products available to diverse consumer segments, retailers can unlock significant untapped market potential and foster greater growth in the sustainable product category.

Implications for brands:

• Advocate for Broader Retail Distribution: Brands should encourage retailers to adopt more inclusive stocking practices that reach diverse consumer demographics, highlighting the potential for increased sales volume.

• Communicate Value and Accessibility: Brands need to emphasize the value proposition of their sustainable products and work to ensure they are available at a range of price points to appeal to a wider income spectrum.

• Highlight Universal Appeal of Sustainability: Marketing messages should focus on the broad benefits of sustainability, appealing to a diverse audience beyond traditional stereotypes.

• Support Retailers with Data: Brands can share data and insights with retailers that demonstrate the demand for sustainable products across various demographic groups.

Implication for society:

• Limited Access to Sustainable Choices: The current biased stocking practices limit access to more sustainable options for consumers in lower-income and minority communities, potentially hindering broader adoption of sustainable consumption patterns.

• Reinforcement of Stereotypes: Retailers' actions inadvertently reinforce existing societal stereotypes about who cares about sustainability.

• Slower Progress Towards Sustainability Goals: If a significant portion of the population is underserved with sustainable options, it could slow down overall progress towards broader sustainability goals in the food and beverage industry.

Implications for consumers:

• Limited Choices Based on Location: Consumers in certain geographic areas, particularly those with higher concentrations of lower-income and non-white residents, have fewer sustainable product options available to them in local stores.

• Potential for Higher Prices in Underserved Areas: Limited availability might also lead to less competitive pricing for sustainable products in these areas.

• Frustration and Disengagement: Consumers who are interested in sustainability but find limited options in their local stores may become frustrated and less likely to actively seek out these products.

Implication for Future:

• Potential for Market Correction: As retailers become more aware of the untapped potential in diverse markets, we may see a correction in stocking practices, leading to wider availability of sustainable products.

• Growth of Targeted Marketing: Brands and retailers might adopt more targeted marketing strategies to reach specific demographic groups with messaging that resonates with their values and needs.

• Increased Focus on Private Label Sustainability: Retailers may expand their sustainable private label offerings to provide more accessible and affordable options for a broader range of consumers.

Consumer Trend (name, detailed description): The Democratization of Sustainability: This trend describes the increasing interest and demand for sustainable products across all consumer demographics, moving beyond the traditional stereotype of the "elite" or "environmentally obsessed" consumer. Factors like the shrinking price gap are making sustainable choices more accessible and appealing to a wider audience.

Consumer Sub Trend (name, detailed description): Value-Driven Green Consumption: This sub-trend highlights the growing segment of consumers who are seeking sustainable products that also offer good value for their money. As the price premium decreases, more consumers are willing to choose sustainable options when they are competitively priced.

Big Social Trend (name, detailed description): Increased Social and Environmental Awareness: Globally, there is a rising awareness of the importance of environmental protection, ethical sourcing, and social responsibility. This growing consciousness is driving consumer demand for products that align with these values.

Worldwide Social Trend (name, detailed description): The Global Sustainability Imperative: The need for more sustainable consumption and production patterns is a global imperative driven by climate change, resource depletion, and social inequality. This global awareness influences consumer behavior across many countries.

Social Drive (name, detailed description): Ethical Consumption: A significant social drive is the desire of consumers to make purchasing decisions that reflect their ethical values and contribute to a better world, encompassing environmental stewardship, fair labor practices, and social justice.

Learnings for brands to use in 2025:

• Broaden Target Audience: Recognize that the market for sustainable products is much larger and more diverse than traditional stereotypes suggest. Tailor marketing and product availability to reach a wider range of consumers.

• Emphasize Accessibility and Value: Highlight the increasing affordability and value of sustainable options. Focus on clear and simple messaging that resonates with everyday consumers.

• Partner with Retailers for Inclusive Distribution: Work collaboratively with retailers to ensure sustainable products are available in stores located in diverse communities and not just affluent or predominantly white areas.

• Authenticity and Transparency are Key: Continue to build trust with consumers by being transparent about sustainability practices and obtaining credible certifications.

Strategy Recommendations for brands to follow in 2025:

• Diversify Product Lines and Price Points: Offer a range of sustainable products at different price points to cater to various income levels and consumer needs.

• Invest in Consumer Education: Educate consumers about the benefits and accessibility of sustainable options through clear and engaging marketing campaigns.

• Collaborate with Retailers on Data-Driven Stocking: Encourage retailers to use comprehensive sales data and demographic information to inform stocking decisions, moving beyond biased assumptions.

• Highlight the "Why": Clearly communicate the brand's commitment to sustainability and the positive impact of choosing their products.

Final sentence (key concept) describing main trend from article (which is a summary of all trends specified), and what brands & companies should do in 2025 to benefit from trend and how to do it. To capitalize on the growing mainstream demand for sustainable food and beverages in 2025, brands and retailers must actively dismantle outdated stereotypes and adopt inclusive distribution strategies that ensure these products are accessible to all consumers, ultimately unlocking significant market growth.

Final Note:

• Core Trend: Retailer Bias in Sustainable Product Distribution: Retailers are disproportionately stocking sustainable products in areas with predominantly liberal, white, and affluent consumers, neglecting potentially larger markets in diverse communities.

• Core Strategy: Inclusive and Data-Driven Distribution: Brands and retailers need to shift towards a more inclusive distribution strategy for sustainable products, informed by comprehensive sales data and demographic understanding rather than relying on stereotypes.

• Core Industry Trend: Mainstreaming of Sustainability: Consumer interest in sustainability is no longer niche but is becoming increasingly mainstream, driven by growing awareness and a shrinking price gap.

• Core Consumer Motivation: Ethical and Value-Conscious Consumption: Consumers are motivated by a combination of ethical, environmental, health, and value considerations when choosing food and beverage products, and this motivation extends across diverse demographics.

Final Conclusion: The opportunity for sustainable food and beverage brands and retailers in 2025 lies in recognizing and addressing the current disparity in product availability. By moving beyond biased assumptions and embracing a data-driven, inclusive approach to distribution, the industry can tap into a vast and eager consumer base, fostering both economic growth and progress towards a more sustainable future.

Core Trend Detailed: The core issue highlighted in the article is not the lack of consumer interest in sustainability, nor solely the price of sustainable goods, but rather a systemic bias in how retailers decide where to stock these products. This bias is rooted in a stereotypical image of the sustainable consumer that does not accurately reflect the broader population interested in these products. As a result, a significant portion of the potential market for sustainable food and beverages is being underserved simply due to the limited availability of these options in their local stores. This isn't just a missed sales opportunity; it also has implications for equitable access to more environmentally and ethically conscious products.

Key Characteristics of the Core trend:

• Unequal Product Availability: Sustainable food and beverage products are not equally distributed across different geographic locations in the US.

• Correlation with Demographic Factors: The availability of sustainable products shows a positive correlation with areas having a higher proportion of liberal voters, white residents, and affluent households.

• Inverse Correlation with Other Demographics: Conversely, areas with a higher proportion of lower-income and non-white residents tend to have fewer sustainable product options available.

• Mismatch with Consumer Engagement: Retailers' stocking patterns contradict research indicating that minority groups are often more engaged in sustainable practices.

Market and Cultural Signals Supporting the Trend:

• Study Findings: The research paper published in the Journal of Marketing provides direct evidence of this disparity based on extensive store-level data.

• Industry Data: Circana data confirms a strong overall consumer interest in sustainable products and a shrinking price gap, suggesting a broader potential market.

• Anecdotal Evidence: Consumers in diverse communities may report difficulty finding a sufficient variety of sustainable options in their local grocery stores.

How the Trend Is Changing Consumer Behavior:

• Limited Purchase Options: Consumers in underserved areas have fewer opportunities to purchase sustainable products, potentially leading them to default to conventional options even if they have an interest in sustainability.

• Reinforcement of Market Segmentation: Retailers' biased stocking may inadvertently reinforce the perception that sustainable products are only for a specific demographic, potentially discouraging interest from other groups.

• Potential for Online Purchasing: Consumers in underserved areas who are highly motivated to buy sustainable products may need to rely more heavily on online retailers, which may not be accessible or convenient for everyone.

Implications Across the Ecosystem:

• For Brands and CPGs: Brands may see lower overall sales of their sustainable products if they are not widely available across different markets. They might need to advocate for more equitable distribution.

• For Retailers: Retailers are likely missing out on potential revenue by not catering to the demand for sustainable products in diverse communities. This approach also carries potential reputational risks as it could be perceived as discriminatory.

• For Consumers: Consumers in underserved areas have limited choices and may not have the same opportunity to align their purchasing decisions with their values regarding sustainability.

Strategic Forecast:

• As awareness of this stocking disparity grows, there will likely be increasing pressure on retailers to adopt more equitable and data-driven strategies.

• Brands that can demonstrate strong demand for sustainable products across various demographics will be better positioned to influence retailers' stocking decisions.

• We may see the emergence of more localized or community-focused retail initiatives aimed at providing sustainable options in underserved areas.

Areas of innovation (based on discovered trend):

• Data Analytics for Equitable Stocking: Developing sophisticated data analytics tools that allow retailers to accurately predict demand for sustainable products across diverse demographics and optimize stocking accordingly.

• Community-Based Retail Initiatives: Supporting the development of local grocery stores or cooperatives in underserved communities that prioritize making sustainable options available.

• Online Marketplaces with Targeted Outreach: Online retailers could focus on targeted marketing campaigns to raise awareness of their sustainable product offerings among consumers in underserved areas.

• Partnerships for Last-Mile Delivery: Collaborating with local delivery services to improve access to sustainable products for consumers who may have limited transportation options.

Final Thought: The "Sustainable Shelf Disparity" represents a significant missed opportunity for both retailers and the broader movement towards sustainability. By overcoming their inherent biases and embracing a more inclusive and data-informed approach to stocking decisions, retailers can unlock a substantial untapped market while simultaneously empowering more consumers to make environmentally and socially responsible choices.

Source: https://www.dairyreporter.com/Article/2025/06/06/how-to-grow-sustainable-food-and-beverage-sales/