27 May 2024 900 words, 4 min. read

Greenwashing: retailers must play their role

By Pierre-Nicolas Schwab PhD in marketing, director of IntoTheMinds
In this article, you'll discover how Nesquik inflates its margins through greenwashing. An eco-responsible product is sold for 48% more than its standard equivalent. Consumer psychology explains why this technique works so well.

Consumers are willing to pay more for eco-responsible packaging. Some brands have understood this and are manipulating you to boost their margins. This is what we call greenwashing. Here’s the proof with a hyper-popular product: Nesquik. If you’ve had enough of being taken for a ride, do something about it. Share this article on social networks.

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While shopping a few weeks ago, I noticed an anomaly on the shelves. The eco-responsible version of an ultra-popular product (Nesquik) was more expensive than the normal version (see photo below).

Nesquik Greenwashing eco packaging - the marketing of "without"

On the left in the photo, the classic product is €5.19/kg. On the right, the refill with 86% less plastic, but 48% more expensive (8.45€/kg). Why such a pricing strategy? Is it a deliberate greenwashing strategy?

The marketing of “without”

Although I can’t say who, the brand or the distributor, decided to sell the eco-friendly refill 48% more expensive than the original product, it reminded me of what I wrote in 2022 after visiting SIAL, the world’s biggest food trade fair. We now must deal with “without” marketingwhere removing certain ingredients justifies a higher price. Manufacturers have understood that consumers’ desire to “do good” alters their price sensitivity. And this naturally applies to eco-responsible packaging.

Customers are willing to pay more for eco-responsible packaging

Customers are willing to pay more for eco-responsible packaging

In research that I analyzed on this blog showed that consumers are prepared to pay 16% more on average for a product in eco-responsible packaging. The study was based on photos of fictitious products and in a laboratory. Therefore, a difference is expected from a real-life situation, but the results are unmistakable.

So, it’s hardly surprising that manufacturers are “taking advantage” of this trend to sell more expensive products that meet consumer demand for greater environmental respect. This is the very definition of greenwashing. But is it justifiable to charge 48% more for a product packaged in a plastic bag?

I understand that changing packaging materials altogether can cost more. But in the case of Nesquik, I find it difficult to justify such an increase by an industrial effort. From a marketing point of view, it would be interesting to study how consumers react to the sight of two opposing pieces of information: on the one hand, less plastic, and on the other, more expensive.

How to influence consumers in the right direction

Clearly, this pricing strategy is deliberate and relies on customers not reading labels. At least not the information on price per kilo. The stimulus is based on the price per unit, which is the advantage of refilling (since the quantity of product is lower).

The consumer must, therefore, be influenced to behave correctly. This is known as “nudge marketing.” Often, this nudge stems from a regulatory constraint, as it serves the interests of salespeople. Ecolabels could be the start of the answer. The European Green Claims Directive aims to combat greenwashing. For example, this has inspired the French government to introduce the official environmental equivalent of Nutri score in 2024. The calculation will be based on the PEF (Product Environmental Footprint) reference system for measuring the environmental impact of foodstuffs. The methodology will also be based on LCA, which makes it possible to quantify this impact throughout the production chain.

However, this official “eco-score” is insufficient to alert consumers to price differences. This is where the retailer has a role to play.

affiche shrinkflation carrefour greenwashing retailers

Carrefour supermarkets have launched a “Name and Shame” campaign to denounce the practices of certain brands. The message is clear: “This product has seen its weight reduced and the price charged by our supplier increased. We are committed to renegotiating this price”. This way, the retailer places itself on the consumer’s side, increasing sympathy capital.

What role should retailers play?

Retailers have a real role to play in educating consumers. This role is not assumed today because retailers are financially interested in not educating consumers. But if, tomorrow, the most interesting products for the consumer were visually highlighted on the shelves, wouldn’t that change things?

You’ll agree that consumers already have all the tools they need to inform themselves and make intelligent choices. Applications such as PingPrice contribute to this education, but they require an effort before purchasing. However, as I’ve often said on this blog, human beings minimize effort, often leading them to be on “autopilot,” especially in supermarket aisles. It is, therefore, illusory to hope for a massive change in behavior in this way.

The only hope, therefore, lies in a “nudge” at the point of sale. This is possible since, in France, Leclerc supermarkets decided in September 2023 to combat shrinkflation by naming the products that practiced it in their stores. From July 2024, French supermarkets must inform consumers about brands that use shrinkflation. The government has passed a law to this effect.

Conclusion

Consumer biases are far too numerous to enable them to make conscious, informed judgments when making purchases. Brands know this and play on these biases to extract maximum value. This involves marketing techniques aimed at sending out stimuli to increase the perception of value.

More informative displays on the shelf can counter this, but this is not the priority of retailers, who are themselves dependent on the relationship with these same brands. There is, therefore, a latent conflict of interest that only a legal obligation, as in France for shrinkflation displays, could counter.



Posted in Marketing.

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