Selling ‘green’

In the past decade, there’s been an emerging consumer segment that is focused on health and fitness, the environment, personal development, sustainable living, and social justice. Similar to consumers’ ever-increasing interest in organic or local foods, products labeled as “sustainable” are appealing to consumers. The term “sustainable” has been widely used in research, mass media, and marketing campaigns. However, different from “organic” or “local,” the definitions of sustainable vary, and there are no federal or state certifications to align the definitions across products (Campbell et al., 2015).

Defining sustainability

What does sustainable stand for? One of the most commonly used definitions for sustainable comes from Merriam-Webster (2016), where the term is defined as “…involving methods that do not completely use up or destroy natural resources.” The American Hotel and Lodging Association (2016) defines the term sustainability from a consumer-oriented perspective as “meeting the needs of the present without compromising the ability of future generations to meet their needs.”

Do consumers understand the term sustainable? More than 75 percent of both U.S. and Canadian consumers are familiar with the term; consumers who are familiar with the term are likely to characterize it as “green,” and perceive environmentally beneficial characteristics as attributes for sustainability. Moreover, there is some confusion between the terms “sustainable” and “organic” among consumers, and many consumers equate “local” and “organic” with “eco-friendly” and “sustainable.” Yue et al. (2011) found that participants in their study perceived sustainability as “eco- or environmentally friendly” or “energy-saving, energy-efficient or energy conserving.” In general, the perception and knowledge of the term sustainable is not always accurate among consumers, and some consumers do not even understand the term before purchasing the products.

Sustainability as a selling point

If consumers understand what sustainable means, are they interested in purchasing sustainably-grown plants? Do they prefer sustainably-grown plants to their conventional counterparts? Are they willing to pay premium prices for sustainably-grown plants?

Numerous research and studies have investigated consumer interest in the sustainable characteristics of products, especially food products, and how to market sustainable products to consumers. However, not many studies focus on consumer interest in sustainably-grown plants. Yue et al. (2011) found that consumers are more interested in ornamentals, vegetable transplants, and herbs grown in sustainable ways than their conventionally grown counterparts. They also found that consumers are most concerned about the plants’ pots being plantable/biodegradable and compostable among other sustainable production practices.

Other studies (Yue et al. 2015; Hawkins et al. 2012) also suggested that consumers are willing to pay more for plants labeled as sustainable compared to conventionally-grown plants. These studies also found that consumers do not value all the sustainable attributes equally. In the case of plants, they place higher value on the specific sustainable attributes such as “water-saving” or “energy-saving,” compared to the general label of “sustainable.” Figure 1 shows that compared to the conventionally grown plants in 4-inch plastic pots, consumers are willing to pay 16 cents more for the same plants in plantable pots and 14 cents more for plants in compostable pots. These price premiums are 15 cents and 12 cents for plants grown using energy-saving practices and water-saving practices, respectively. The price premiums are the lowest for plants labeled as “sustainable” and plants grown in recyclable pots.

Additionally, these studies concluded that consumers’ demographic backgrounds affect their perception of and preferences for sustainably grown plants. For example, younger female consumers with higher income and education level are more interested in sustainably-grown plants. As expected, it is also found that consumers who are more concerned about the environment or their own health are more interested in plants that were produced in sustainable methods.

Educating the consumer

Is it worthwhile for growers to tell the story as part of their marketing campaigns? How do growers impart that message into their marketing? Since consumers show an increasing interest in sustainable plants, yet some consumers are lacking an accurate understanding of what sustainable means, growers have the opportunity to educate and inform consumers about the environmental and social benefits of using sustainable products.

Growers could provide more detailed information on labels about their sustainable production practices and the specific benefits of sustainably grown plants. To get higher premiums for sustainably grown plants, detailed labels such as “water-saving” “energy-saving” should be used instead of broad and open terms such as “sustainably grown.” For growers who sell potted plants, promoting plants grown in biodegradable or compostable containers are likely to generate higher price premiums than promoting “sustainable” plants.

It is also worth noting the price premiums generated from sustainable attributes may not cover the production cost of sustainable practices. If growers can produce plants with sustainable practices and at the same time maintain reasonable costs, sustainably grown plants could potentially generate profitable niche markets and boost growers’ profits.

Chengyan Yue is associate professor, Department of Horticultural Science and Department of Applied Economics, Bachman Endowed Chair in Horticultural Marketing, University of Minnesota; Jingjing Wang is a graduate research assistant, Department of Applied Economics, University of Minnesota.