New research reveals while half of the nation’s consumers are willing to pay a premium for environmental products, brands are pricing their products just above their purchase limits.
A majority (69 per cent) of Australians aspire to purchase more sustainable products, however, 41 per cent believes current pricing levels are too high, according to a survey by consultancy firm Simon-Kucher.
“Consumers recognise environmentally led products and services come with a cost,” Amelie Spaniol, senior manager at Simon-Kucher Australia explains.
“Brands that bridge the affordability gap and meet their price perceptions will realise a material commercial advantage in the market.”
Sustainability as a key purchase driver
Sustainable practices have become a standard preference in consumer purchasing behaviours. In Australia, 61 per cent prioritise sustainability as a top three value driver in purchase decisions, making it their baseline evaluation criteria. This rises further in industries that hold a tangible link to sustainability such as energy and home improvement. Consumers are willing to pay most for sustainability in the automotive, consumer goods and construction sectors.
Generational comparisons
Across all generations in Australia, the willingness to pay premiums for sustainable products has increased from 31 per cent in 2022. However, this overall percentage varies among different generations. Boomers have the lowest average at 16 per cent to 25 per cent compared to Gen Zs, where the average attainable premium is 41 per cent to 46 per cent. Gen Zs also prove to be the most sustainably aware, with 75 per cent considering sustainability when purchasing.
Greenwashing awareness
Although consumers are showing more support for businesses with sustainable practices, they have become more actively involved in discerning sustainability. Instead of entrusting a brand’s claims, around 80 per cent of consumers are initiating their own research on products and their environmental impact. More than half (54 per cent) of customers perceive that brands are guilty of greenwashing, often due to the void of evidence aligned to the sustainability claims. When brands are transparent and claims are proven to be authentic, it leads to a loyal customer base and a distinct competitive advantage.
