Luxury brands risk losing out if they ignore sustainability challenge

Luxury brands risk losing out if they ignore sustainability challenge

• Research reveals that 78% of consumers across the UK, France and Italy would pay a premium for luxury packaging produced in a sustainable way
• However, 26% of consumers admit that they do not know how to find out if a brand is sustainable
• 21% of consumers have decided not to purchase a product because it had too much packaging

30 October 2018: Luxury brands that do not meet consumer expectations when it comes to sustainability risk losing out on potential revenue, according to a new White Paper, Sustainability in Luxury Packaging.

Brands missing out on potential revenue

The research commissioned by Asia Pulp Paper (APP) explores consumer perceptions of luxury packaging in the UK, France and Italy, and reveals that 78% would pay a premium for luxury packaging that is produced in a sustainable way.

However, it seems businesses may risk losing out on potential revenue if they don’t promote their sustainable credentials sufficiently, with a quarter (26%) of consumers admitting that before purchasing a luxury product, they do not check whether it is a sustainable brand as they would not know how to find out.

This shows that while many luxury brands are making sure that responsible sourcing is in place throughout their supply chain; they aren’t always communicating this effectively to their consumers.

Customers’ expectations of luxury brands

The research, carried out by Smithers Pira to coincide with the launch of its Sustainability in Packaging Europe conference, shows that a majority of consumers (71%) expect luxury brands to be sustainable and use sustainable packaging. However, there could be consequences for businesses who aren’t able to deliver on this, with a quarter (24%) of consumers deciding not to purchase a product because a brand did not have sufficient environmental credentials.

Despite this, the most important factor influencing whether a consumer purchases luxury goods is quality (93%), followed by products that reflect personality (80%). Meanwhile, sustainable packaging comes third in the pecking order, with 72% of customers revealing that this influences their decision when purchasing a luxury product.

Personalisation vs sustainability

The study also shows that consumers are more willing to pay a premium for luxury goods that are produced in a sustainable way (67%), than for packaging that is personalised (63%), representing a huge opportunity for luxury brands to find new solutions to satisfy consumers.

However, personalisation remains key for brands as millennials drive demand for brands that reflect self-expression and self-identity. 75% of consumers in the UK want their luxury product to reflect their personality.

Social media putting brands under increasing scrutiny

The increasing need for brands to engage with their customers via social media, has put their packaging under further scrutiny. The research highlights that 14% of consumers have posted something negative about a brand on social media because they weren’t happy with its packaging.

Likewise, one in five (21%) admit to comparing packaging between luxury products to make a purchasing decision and the same amount (21%) have decided not to purchase a product because it had too much packaging. However, brands can use this to their advantage: 13% of respondents stated that they have purchased a luxury product because of an online review that mentioned the packaging.

In addition, the research reveals that over half of respondents consider paper (62%) and cardboard (63%) packaging materials to be environmentally friendly. By contrast, plastic and metal are seen as the least sustainable materials.

European comparison

The research also showed that when it comes to caring about the quality standards of luxury products, Italians lead the way with eight in ten (80%) consumers placing a high price on the quality of the product. Italian consumers are also the most likely to check the labels of a product to see if it is sustainable (37%), compared to 26% in the UK and 22% in France.

Dr Liz Wilks, Asia Pulp & Paper, said: “Our research shows that packaging and sustainability are becoming increasingly important factors for consumers before purchasing a luxury product.

Sustainability of the core product is key, but also the landscape it is sourced from. Both the core product and packaging are becoming intrinsically linked in the mind of consumers, who are now also conscious of brand commitments to sustainable livelihoods and habitat conservation as well as responsible sourcing. As such, both the luxury brands and the packaging industry need to include these elements in their external communications.

APP already has a forest certification scheme and a zero deforestation commitment since 2013, but we are also investing $10million over a 5-year period to develop 500 villages in Indonesia. In order to maximize these types of efforts moving forward, all actors in the landscape need to join forces, and address growing consumer appetite for this knowledge.”

Adam Page, Director of Research and Reports, Smithers Pira, said: “Sustainability is not just a hot topic within the packaging industry, it is a hot topic right now for consumers as well. Our consumer research survey shows the role that sustainability and environmental awareness plays in purchasing behaviour. Consumers are judging their favourite brands by their packaging, not just the product itself. Consumers expect brands to demonstrate their social and environmental responsibilities”