The Sustainability Agenda Drives Innovation

By Guy Harrison, Chairman, Touch

These are challenging times for producers in the FMCG arena. Although Covid has had a detrimental effect on some industries, it has also been very positive for others. Over the past year, I’ve seen client’s brands grow in very unexpected ways. Consumers are now aware of the environmental crisis and are making more astute purchasing decisions. For example, the sales of bars of soap have increased by 40%, with consumers buying these rather than single-use plastic shower gels. Packaging free zones are also being explored. It’s a very dynamic environment.

There is definitely a split between consumers who want to be proactive and those who cannot afford to be and rely on brands and retailers to be fit for purpose. Whichever way you look at it, sustainability is not going away. While Covid is an illness that will be treated, the sustainability and the health of the planet is a chronic disease and needs radical action.

The legislation is playing a major role in this area. In France, for example, all single-use plastic will be banned by 2040. But the elephant in the room is of course carbon footprint. Consumers do not truly understand it. They appreciate carbon is bad, but see a plastic bag as being worse for the environment than a paper bag without understanding the carbon implications.

Shelf life also plays a big role. If you currently look at the global picture, annual food waste is the 4th highest contributor to carbon emissions. There is a big communication exercise to be undertaken in order to change consumer habits. This needs to supported by producers and governments who also have a responsibility to drive change from a disposable approach to a circular one.

However, most brands have historically been geared up for a disposable economy – high-speed production at optimum costs to achieve optimum profit. When it comes to the circular economy, many brands are not fit for their purpose. As such, they are in danger of losing their clients and customers in the future, especially as they start to face competition from more flexible challenger brands who highlight their sustainability credentials. But sometimes it’s necessary to go backward to go forwards. Milk delivered on an electric milk float – bottles returned, cleaned and reused – has gone in and out of the public consciousness.

So how can sustainability drive innovation?

As with all innovation projects, it is important to evaluate the brand, product protection requirements, materials used, production assets and distribution methods, volumes and costs to set a benchmark. Gone are the days when being environmentally proactive meant a cost-saving.

As well as this benchmark, it is important to ascertain current and future market legislation and retailer needs.  Any innovation needs to be futureproofed and designed for the worst-case scenario. Considering the consumer is vital in this – how far are they prepared to go when it comes to sustainability? What will they accept when it comes to cost? Where can a brand add value?  How will they feel about the product experience and will they accept a new ritual?

Taking an ethnographic approach is key to identifying potential added value areas. Many consumers don’t realise they have developed coping strategies that effective design can help with. This also helps to explore how far the consumer is prepared to go to be sustainable – both key strands when it comes to developing a sustainable innovation strategy.

In the short term, brands may not wish to invest in changing their production lines. Any strategy development reviews must therefore look at how to optimise current assets, while also ensuring processes are sustainable. Technology and materials are evolving quickly. By trawling and identifying new sustainable material suppliers and start-ups, it’s possible to identify new solutions that still deliver consumer added value but are capable of running on existing lines.

Highland Spring is a really great example of how effective design in the short term can really deliver business benefits. The brand has been reducing the amount of PET and increasing recycled content, reaping the benefits of the change with an achievable level of innovation.

Reuse, refill, recycle

One key method of sustainable innovation is modifying current lines to deliver an improved sustainable solution and consumer added value. But this often requires additional investment – reviewing existing capabilities and processes and combining this with the consumer insights already gathered.

The packaging is an asset that can really be used more effectively. It can deliver real brand change. For example, the launch of Haagen Daz’s new ice cream format, which moved the brand into an ecommerce proposition but meets product protection and consumer needs. It really shows what can be achieved when it comes to looking at innovation from a sustainability perspective.

In general, delivering innovation on a sustainable platform that meets a brand’s needs. But one thing that needs to be taken into account is the longer-term plan. Brand owners should be looking at how they can become carbon neutral by 2040. This means exploring all elements from goods in and energy use, to new materials and recycling.

While brands will need to be able to adapt, whatever their current situation is, bravery will be the key to sustainable innovation, now and in the future.