With increased transparency and knowledge about business impacts, consumers are prioritizing the sustainability of the brands they purchase. Almost twice as many Gen Y and Z consumers (versus people 40+) say they will pay more for products that align with their values. As the purchasing power of younger consumers grows, CPGs need practices that positively impact the environment to remain relevant.
Companies must adopt new business models that diverge from linear value models of “take, make, waste” and implement circular solutions.
Seventy-one percent of consumers across all age groups say brands should do more to make it easier for them to buy and consume sustainably.
Getting started on circular
Implementing circular strategies to tackle wasteful practices along the value chain can enhance profitability. CPG companies should begin by evaluating end-to-end waste within their value chains. To generate the greatest impact, they should prioritize the three stages where the industry remains the most wasteful: product development, processing and manufacturing, and end of use.
Going forward, businesses must focus on three areas:
Redesigning their products, so they require less material and are recyclable
Improving production efficiency to reduce inputs and waste
Adopting new business models that enable the recovery and reuse of materials
These three circular strategies are expected to generate an additional $35 billion of value from reduced costs in the CPG industry by 2030. And over and above that figure is the potential growth by Gen Y and Z consumers coming to the peak of their spending power and purchasing sustainability-focused brands.
To understand more about the growth benefits of switching to a circular economy, download the first edition of The Consumer, below.