1. A Consumer Perspective on Sustainability: A look at LOHAS Consumers on both sides of the AtlanticDiane Ray & Gwynne Rogers Natural Marketing Institute

2. OVERVIEW Where does sustainability fit in overall trends? Who are the consumers that care about sustainability? How are European and U.S. consumers similar and different? How is sustainability manifesting itself in new product launches? How do you use this to create & evaluate opportunities in USA & Europe? 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database2 3. NMIs Top Trends for 20081. The Dual Society2. Generation Zzzzzz3. STOP I Want Off!4. Dr. Me5. The Culture of Sustainability6. Golden Opportunities7. The New Immunity8. Giving is the New TakingTrends directly related to Sustainability! 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 3 4. Giving is the New Taking Volunteerism, activism and participation in the non-profit sector are growing rapidly as consumers discover the emotional rewards of giving, rather than taking. To meet the challenge, corporations are engaging in CSR 2.0 in order to maintain brand allegiance, retain their workforce, and manage their stakeholders, among other activities. Countertrend: Premiumization, the height of New Luxury, continues to evolve in strong contrast to a more values based, philanthropic culture. At times, premium brands are even co-opting green values. 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 4 5. The General Population Is Socially Conscious (% consumers who completely/somewhat agree..)87% care about CHILDRENS70% agree: 66% care about BUILDING AISSUES such as child abuseSENSE OF COMMUNITYand child laborI care about social WHERE THEY LIVE consciousness 82% care about SUPPORTING 83% care about PROTECTING MILITARY TROOPS WORKERS RIGHTS81% care about WOMENS ISSUES such as equal pay for equal work 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database Source: NMIs 2007 LOHAS Trends Database5 6. Activism Takes Other Forms, And Has IncreasedYear Over Year (Numbers in parentheses indicate % change since 2005) The General Population reports that they regularly do the following: 30% boycott a brand or company that haspractices they dont like (+5.1%) 21% encourage their elected officials to pass laws to protect the environment (+5.7%) 11% volunteer to clean up parks, trails and neighborhoods (+2.7%) 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database Source: NMIs 2007 LOHAS Trends Database 6 7. Financial Support of Organizations or Causes IsImportant(% consumers who donated money to an organization in the past year) Two-thirds of the GP donated money to an organizationor cause during the past year % of GP donating Civic-oriented groups (e.g.,27% Salvation Army) Did not Medical research groups (e.g.,23% donate, American Cancer Society) Donated37%Religious-based groups (e.g., 21% money,Catholic Charities) 63% Relief agencies (e.g., American 18% Red Cross) Animal rights groups15%Childrens organizations12%Wildlife charities9%Political parties 8% 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database Source: NMIs 2007 LOHAS Trends Database7 8. And Yet Premium PrevailsExplosion of Green LuxuryCountertrend(% consumers who completely/somewhat agree....) I do not want to sacrificeWhen I want to treat anything when buying myself, I buy myselfenvironmentally friendlysomething special (56%) products (38%) I would be more interested in environmentally-friendlyproducts if they were from premium or specialty brands(22%) 2008, Natural Marketing Institute Source: LOHAS Consumer Trends DatabaseSource: NMIs 2007 LOHAS Trends Database8 9. NEWS FLASH: June 4, 2008 A strict new environmental law that was fought by soap industry officials may be the best thing that's ever happened to Palmolive's dishwasher detergent. By the end of the month, Palmolive Eco liquid detergent will dominate store shelves because it beat all major producers to market with a product that complies with a July 1 restriction sharply limiting the use of phosphates in detergents. "They're taking the step to make their product more environmentally friendly," said Rick Eichstaedt, a local attorney active in efforts to improve water quality in the Spokane River. "They should be applauded for doing that." Still, the ban, which industry officials say is the strictest in the nation, will eliminate low-cost options and the most popular detergent brands. Gone from Spokane County shelves will be Cascade, Electrasol and Sun Light until those brands come up with products that comply with the law. Distributors say they haven't been given an indication when those products will return. 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 9 10. CHALLENGE Since causes, donations, activism and corporate social responsibility all play a role in consumers decision to buy or boycott where are your strengths? Vulnerabilities? Where will your company and your products fit? What space will you carve out for yourself? Since both the trend/countertrend are occurring (giving and premiumization) there is a lot of open space within which to align your products/brand. The challenge is to select the right space! 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database10 11. NMIs Top Trends for 20081. The Dual Society2. Generation Zzzzzz3. STOP I Want Off!4. Dr. Me5. The Culture of Sustainability6. Golden Opportunities7. The New Immunity8. Giving is the New TakingTrends directly related to Sustainability! 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 11 12. The Culture of Sustainability Its not a matter of whether we will run out of natural resources its a matter of when. Sustainability will become the most significant social movement of our time. It will permeate every aspect of consumers lifestyles, business infrastructures, and other societal constituencies. Countertrend: Consumers are overwhelmed with many sustainabilityinitiatives, with significant green washing fall-out expected as consumerslearn to discern its true meaning (and impact). 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 12 13. Sustainability Takes Root 60% of Americans state they are becoming increasingly concerned about protecting the environment and the ecological problems in the U.S. And 43% of Americans state they are actually doingsomething new with regard to protecting the environment Almost 50% of Americans state that the U.S. government should spend more time and money on U.S. environmental issues rather than troops in Iraq 47% of Americans believe they can personally affectglobal warming 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database Source: HBI Omnibus, October 2007 13 14. LOHAS Consumers (as defined) Serve as Market Predictors New LOHAS Products Mainstreaming Awareness Organic pet foodEnergy-efficient appliances Green dry cleaning Natural toys TrialOrganic food/beveragesAir purifiers Sustainable Furniture Carbon offsets Adoption Green banking Organic clothingLoyalty Many others Influence NATURALITESLOHASCONVENTIONALS DRIFTERS 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 14 15. CHALLENGE How to best connect with LOHAS consumers as they tend to be early adopters AND influencers?SO..Who are the LOHAS consumers really? How can we better understand theirmotivations, behavior, influence? 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database15 16. Data Source:NMIs LOHAS Consumer Trends Database Database is the only consumer research to identify LOHAS consumer attitudes, behavior, and product/ service usage patterns across sustainability, corporate social responsibility, environmentalism, social issues, and much more United States Currently 6 years of U.S. data: 2002 2007 inclusive Annual quantitative research among 2,000+ general population adults Nationally projectable to adult 18+ population; margin of error +/- 2% Europe 1st annual European study in 2007 conducted in partnership with Porter Novelli Approximately 2,000 households in each in the following countries: Belgium, France, Germany, Italy, the Netherlands, Portugal, Spain, UK Nationally projectable to adult 18+ population in each country; margin of error +/- 2% 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 16 17. Cultural Differences Affect Consumer Research Data In a cross-cultural survey, respondents can not be compared directly: Construct whether concepts have the same meaning in different countries (e.g., brand loyalty, opinion leadership) Functional - whether a given concept or behavior serves the same role or function in different countries Metric how respondents use rating scales; driven by response style: Social Desirability - tendency for respondents to give answers that aresocially desirable or acceptable Extreme Response Style - tendency for respondents to use only theextreme response categories of a scale Acquiescence - respondents tending to agree with whatever ispresented to them Linguistic - the development of equivalent language in the survey 2008, Natural Marketing Institute Source: Bloomerce Source: LOHAS Consumer Trends Database17 18. Impact on European LOHAS Survey Portuguese, Spanish, and Italian responses are generally high across the board Dutch, German, and UK responses are generally muted Consequently, cross-country comparisons need to be made with some caution, and with an understanding of the cultural biases that respondents bring with them to the survey There is not a quantitative way to adjust for cultural differences inthe 8 countries surveyed 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 18 19. Introduction to the LOHAS Segments (Lifestyles of Health and Sustainability)(% of U.S. general population adults)LOHAS 19% Not on radar Environmental stewards UNCONCERNED 17% CONVENTIONALS 19% Cautious NATURALITES 19% actors DRIFTERS 25%Health motivatedGood intentions; trend-oriented 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database19 20. The LOHAS Consumer LOHAS 19% A trend predictor 40 million consumers (US)Personal health + planetary healthValues drivenPrice insensitiveHigh influence on othersHighest green buyersInformation junkiesEco-lifestyleCSR seekers (and boycotters) 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database20 21. NATURALITES NATURALITES 19% 40 millionDriven by personal health and consumers (US)wellnessHigh purchase of eco-consumablesHealthy lifestyleWant to do more for theenvironmentCredible CSR affects loyaltyAttractive target for many 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database21 22. DRIFTERS DRIFTERS 25%45 millionAttitudinally predisposed to consumers (US)green, but behaviors not deeply-rootedDriven more by trendsLimited sense of eco-immediacyPrice sensitiveMore likely to be eco-concerned,but only if it affects themLower green buyers, but like tobe seen in Whole Foods 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 22 23. CONVENTIONALS CONVENTIONALS19%Rooted in practicality 40 million consumers(US)Municipal behaviors, includingrecycling and energyconservationDriven more by cost savings,rather than environmentEco-benefits are secondary 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database23 24. European LOHAS Segment Sizes Compared to US(% of population)Belgium Portugal18% 17% Highest LOHAS 24% High LOHAS 21% 22% 19% France18% 25%UKHighest NATURLS 27% Low LOHAS 15% Low LOHAS 15%24% 19% Spain18% 19%High LOHAS 20%Europe U.S. UNCONCERNEDS CONVENTIONALS DRIFTERS NATURALITES LOHAS 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 24 25. Correlation Variations in LOHAS Segment MembershipAcross Countries Willingness to pay 20% more for products which are made in an U.K. environmentally-friendly and sustainable wayImportance of personal care being earth-friendlyI will choose those products and services that are environmentally France friendlyImportance of foods/beverages organically grownI try to teach family and friends about the benefits of purchasing Germanyenvironmentally-friendly productsImportance of personal care products being earth-friendlyI will choose those products and services that are environmentallyItalyfriendlyI try to teach family and friends about the benefits of purchasingenvironmentally-friendly productsI would like to learn about how I can become more involved in Spainprotecting the environmentI try to teach family and friends about the benefits of purchasingenvironmentally-friendly products 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database25 26. Largest Cross-Continental Differences are Evident inNATURALITES and CONVENTIONALSAttitude AxisU.S. Total PassionateEurope TotalConcern LOHASNATURALITESDRIFTERSCONVENTIONALSUNCONCERNEDS CommittedAction AxisInaction Advocacy Opposed or 2008, Natural Marketing InstituteUncaring Source: LOHAS Consumer Trends Database 26 27. Major Differences Between the U.S. and EuropeU.S.Buy green productsEurope(average across numerousTwice ascategories)likelyMotivated to buy products with certificate/seal indicating product is36% moreenvironmentally-friendlylikely Influence friends/family 35% morelikely 25% moreWilling to pay 20% more for eco- likely friendly products Recycle paper products 25% morelikelyAside from making money, it is most25% more important for companies to be sensitivelikelyto their environmental impact 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 27 28. Similarities Between US and Europe U.S. EuropeEnvironmental-friendliness of companies - increases58%58%purchase likelihoodInterest in learning more about how to protect the51%55% environmentInterest in government funding for energy efficient52%54% products 34%Purchase compact fluorescent light bulbs34% Belief that, after profitability, it is most important for13%companies to support the communities in which they15%work 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database28 29. Within Europe, Individual Country Populations are alsoDynamicUnited Kingdom Particularly reluctant to pay a premium for environmentally-friendly products Less likely to use natural/organic personal care and natural feminine hygieneproductsSpain Find it more important for companies to support the communities in whichthey work Unlikely to use natural garden products, CFLs, and renewable power Italy The most willing to spend 20% more for green products The most likely to own a hybrid and CFLs France Second only to Belgium in usage of natural lawn & garden products Second to Portugal in the number of consumers whove changed theirbehavior to minimize their impact on global warming The least likely to use vegetarian foods, and foods with a specific healthclaim The least likely to belong to a fitness center/gym 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database29 30. Italians Least Price Sensitive for LOHAS; UK andGermany Most(Q. 3gg, 53a -% General Population by country agreeing completely/somewhat with)I am willing to pay 20% more for products which are made in an environmentally friendly and sustainable way 41%29%22%14%16%UKSpainFrance Germany Italy Organic foods are worth paying an extra 20% for33%26%17% 15%20% UK Spain FranceGermany Italy 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 30 31. LOHAS Consumers Most Motivated by Certification (Q. 3ll-% NMI segments indicating they agree strongly/moderately with the statement A seal orcertification mark indicating a product is environmentally-friendly increases the likelihood I will buy it)GP45% 11%LOHAS (A)58%BCDE26%BCDE10% NATURALITES (B) 53%CDECDE DRIFTERS (C)38%E 7%ECONVENTIONALS(D)47%CE 8%EUNCONCERNEDS(E) 28% 3% Moderately agree Strongly agree 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 31 32. Fair-trade Certified ProductsThe Inca Inchi NightCream displays the MaxHavelaar logo thatguarantees that FairTrade ingredients havebeen used. The product is also Cosmebio and Ecocert certified, which guarantees that the product is formulated with at least 95% natural ingredients, mainlyobtained from organicTraidcraft has extended its range agriculture, that theto include Fair Trade Tissues. All production methods paper is 100% recycled and retails respect health and theat a competitive price. environment, and that the product was not tested on animals. 2008, Natural Marketing Institute32 Source Mintels Global New Product Database Source: LOHAS Consumer Trends Database 33. European Consumers Evangelize LOHAS-orientedpurchasing(Q. 32a-% NMI segments agreeing completely/somewhat with I try to teach family and friendsabout the benefits of purchasing environmentally-friendly products) Total 34% 46%LOHAS71% 79% NATURALITES 34% 48% European27%CONVENTIONALS areDRIFTERS33%much more likely to educate others aboutCONVENTIONALS22% environmentally-friendly49% purchasing than US 16% CONVENTIONALSUNCONCERNED17% EuropeUS 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database33 34. Consumers in European Countries Report ChangingBehavior (Q. 3kk-% total country consumers indicating level of agreement with I have personally changed my behavior to minimize my effect on global warming) Agreecompletely/somewhat 68% Disagree 58%completely/somewhat51%52% 43%French 42%consumers are 31%most likely toreport behaviorchange inresponse toglobal warming 11% 9% 17%17%18% 22% 27% USTotalUK SpainFranceGermany Italy Europe 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 34 35. CHALLENGE Consumers are interested in the topic of sustainability they believe it affects them, their families, the future Consumers are willing to take action Some Consumers are willing to pay more for products that help/dont hurt the environment Certifications/Authenticity is important dont #@% me! What can you, your products, your brands, be doingto create real actions, supported/endorsed by realagencies, to make a real difference? 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database35 36. Consumers Expect Companies to Show Socially Responsible Behavior (Q. 8)(Q. 3ee)NMI segments indicating it is veryNMI segments indicating it knowing that aimportant for companies to be sociallycompany is mindful of its impact on theresponsible)environment an society makes them morelikely to buy its product 52%58%76% BCDE86%BCDE59% CDE63%CDE40% E49%E 48% CE59%CE32%33% Total EU LOHAS NATURALITESDRIFTERS CONVENTIONALS UNCONCERNEDS Higher in Italy, France 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 36 37. Local, Small is Favored by Certain Consumers 37% US General Population 39% EU General PopulationIt is more important to buy37% LOHAS (A)local than buy organic39%C NATURALITES (B) 60% U.K. (F)53% France (G) 35%42%When a product says that it is organic, I am more likely51%to believe a small company 48% than a large corporation45% 48% 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database37 38. CSR Starts with Taking Care of Employees (Q. 10 - % consumers in each country indicating that besides makingmoney for shareholders, which of the following is most important for acompany to focus on...) Takingcare of63%its employees 59% 61%57% Being sensitive to its46%environmental 44% impact Supporting the 33% communities it works in26%22% 22%19%20% 19% 17%15%15% 10%8%GP UKSpain France Germany Italy 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database38 39. New Products are Changing Rapidly.EUUSANew Products w/recycle or recyclable claims (12 mos)892 555New Products w/recycle or recyclable claims (6 mos) 652 393New Products w/local or locally sourced claims (12 mos) 14889New Products using Carbon Footprint specific claims12 2 2008, Natural Marketing Institute39 Source Mintels Global New Product Database Source: LOHAS Consumer Trends Database 40. Recycled Materials/Recyclable Pringles Light Original Fat Free Potato Crisps are now available with anewly designed label that highlights that the product is light and fat free.The product contains 50% fewer calories than regular potato chips andis made with olestra. This product retails in a 6 1/2-oz. pack. The packis made with 50% recycled materials of which 15% is post-consumer material.Method Lil' Bowl Blu Toilet Bowl Cleaner is available in anEucalyptus Mint scent. This non-toxic toilet bowl cleaner isnaturally derived and biodegradable for happy pipes and ahappy planet. The cleaner uses the natural power of lactic acidto dissolve grime, rust, calcium deposits and ring-around-the-rim. It is easy to use and people friendly. This product has notbeen tested on animals and is available in a 24-fl. oz. bottle.The bottle is made with 25% recycled plastic. 2008, Natural Marketing Institute 40 Source Mintels Global New Product Database Source: LOHAS Consumer Trends Database 41. Natural Dermo-Care CreamCompany Elas Elas (Crme Naturelle Dermo-Soin) Natural Dermo-Care Cream is designed to repair, moisturise and fortify hands, feet and nails. This regenerative treatment is formulated with champagne (moisturising, antioxidant, anti-microbial, anti- ageing), certified organic shea butter, grape seed oil, luffa cylindrica, borage oil, glycerine, organic natural vine leaf extract, white nettle extract, and vitamin E. The company does not test its product on animals, it is said to be committed to sustainable development and all packaging and components are recyclable or have been made from recycled materials and use vegetable- based ink. Formulations are free from parabens, silicones, petrochemicals derivative, PEG, phenoxyethanol, SLS or colourants. Elas is a member of the "1% for the Planet" association and as in so doing will give 1% of its turnover to finance environmental or ecological projects.The product was on display at In-Cosmetics, Amsterdam, April 15-17 2008. 2008, Natural Marketing Institute 41 Source Mintels Global New Product Database Source: LOHAS Consumer Trends Database 42. Mini Hoki FishcakesCompany Sainsbury's Sainsbury's Kid's Mini Hoki Fishcakes are made of MSC New Zealand Hoki mixed fillets with Rsti potato and bchamel sauce, coated in light and crispy Signature breadcrumb. This product is claimed to be nutritionally balanced and designed especially for children 4-8 years old, making it a convenient and tasty way to eat healthily. This freezable product contains no artificial colours, flavourings, preservatives or sweeteners. It is claimed to come from a fishery which meets the Marine Stewardship Council's environmental standard for a well managed and sustainable fishery. The Signature breadcrumb is made using Country Ground Flour, milled in Linconshire from locally sourced wheat. The product retails in a 200g pack. 2008, Natural Marketing Institute 42 Source Mintels Global New Product Database Source: LOHAS Consumer Trends Database 43. Handy Gurugu Hand Cream Company LushLush Handy Gurugu Hand Cream is described asa fabulous, easily absorbed hand cream madewith rose water, six natural oils and butters, andluxuriously soothing essential oils. Whensourcing the rich shea butters, the creativebuying team traveled for 15 hours on a ricketybus along potholed roads to find villages where itis handmade by the local women. HandyGurugu makes a big difference to the skin and ahuge difference to the villagers who make theshea butter. The fresh, handmade hand cream isavailable in a 3.5-oz. tub. 2008, Natural Marketing Institute 43 Source Mintels Global New Product Database Source: LOHAS Consumer Trends Database 44. 100% Pure Fruit SmoothieCompany Ambiente Fruit Factory 100% Pure Fruit Smoothie is targeted specifically at the teenage and young adult market. The product is not from concentrate, and the packaging is carbon footprint friendly. This preservatives-free product is available in the following variants: Mango, Orange & Passion Fruit; Pineapple, Banana & Coconut; Strawberry & Banana. This product was on display at the Food & Drink Expo 2008, in Birmingham. 2008, Natural Marketing Institute44 Source Mintels Global New Product Database Source: LOHAS Consumer Trends Database 45. Chenin Blanc Chardonnay WineCompany Arniston BayArniston Bay Chenin Blanc Chardonnay Wine comprises a 1.5L decanting pouch of South African white wine. It is said to have an 80% lower carbon footprint and 90% less waste and landfill than glass. This product is available in a convenient on-the-go pack, which equates to two 750ml bottles. 2008, Natural Marketing Institute 45 Source Mintels Global New Product Database Source: LOHAS Consumer Trends Database 46. Marketing LOHAS in Europe: A To Do List Do recognize the differences across countries Do recognize the potential value of each segment Do include the role of outside endorsements Do utilize LOHAS consumers as your grass-roots evangelizers Do appreciate the value that CSR can have on consumer behavior Do align consumer values with corporate actions Do NOT assume price insensitivity for greenMost importantly, DO evaluate the opportunity to grow your brand globally 2008, Natural Marketing Institute Source: LOHAS Consumer Trends Database 46