The state of the U.S. economy has hit the green industry as hard as any other, but to some degree, for a lot of different reasons. There are many green products companies that have outstanding quality products at affordable prices to appeal to the recessionary consumer. One of my favorites True Body Products bar soap comes in a 3 pack for just $5.49; a great value to anyone. The issue for True Body and others is that they have to endure an extra step in the supply chain to make it to your retail shelf; a natural or specialty distributor. This step can add as much as 50% to the cost of a typical product, a crippling increase that ruins any marketing plan. This fact has held back many companies and impacted the industry in many ways.
I spoke recently with a businessman in China about the U.S. green industry; his comments said a lot about the industry. This businessman, an experienced retailer and industry professional internationally was taken aback by what he saw as a vastly underdeveloped green industry in the food, drug and mass channels in the U.S. His perception from what he had seen in the world wide press about the green industry that it would have been fully embraced in every channel, but not so.
At issue are the food, drug and mass channels limited acceptance of green products because of their limited perceived potential for growth at national brand levels and their use of the category as a profit generator. Green brands do not have the brand equity or the financial resources to overcome these issues and have a chance at success.
Green companies need to take back control of their own brands. Pull out that dog eared business plan and give it a once over again. You need to reassess your mission, goals and strategies you originally set down for your brand. Every opportunity for retail distribution has to be assessed for its potential and long term profitability, not simply for ACV distribution. If it doesn’t look profitable on paper, it will not magically get better on the shelf.
Success can be found for natural and organic brands without becoming the next mega-brand. Know your limitations and manage your resources for maximum profitability.
This is like a catch 22. Consumers won't necessarily pay more for organic/natural or green even though they claim they would. So when the product doesn't turn at a high price, retailers won't stock. The product price can't be lowered because of the channel issue. Round and round.
ReplyDeleteYou get it. This catch 22 has held back distribution of natural/organic products in the FDM channel. Combine this fact with the limited amount of shelf space in the natural channel and you have many brands left with no where to go.
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