Household & Personal Products

Household & Personal Products

The Household & Personal Products industry comprises companies that manufacture a wide range of goods for personal and commercial consumption, including cosmetics, household and industrial cleaning supplies, soaps and detergents, sanitary paper products, household batteries, razors, and kitchen utensils. Household and personal products companies operate globally and typically sell their products to mass merchants, grocery stores, membership club stores, drug stores, high-frequency stores, distributors, and e-commerce retailers. Some companies sell products through independent representatives rather than third-party retail establishments.

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Source: SASB

Retailers and manufacturers are facing pressure from consumers to prioritize sustainability. With 80% of consumer emissions originating from supply chains, companies need to collaborate with suppliers to secure green materials and minimize environmental impact. The industry is grappling with how to make online purchases more sustainable, improve cost and delivery efficiency, and reduce GHG emissions and packaging waste. A circular economy approach is being adopted to develop sustainable production and consumption. Initiatives are focused on scope 3 emissions to build transparent and resilient sustainable supply chains, protect biodiversity, and reduce plastic waste. Technology is being utilized to enhance accessibility, scalability, and transparency. Sustainable packaging represents a significant opportunity for the industry, with many players seeking to reduce waste from single-use packaging and minimizing secondary and tertiary packaging in the supply chain.

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Industry Characteristics

• Retailers and manufacturers now have to align their business activities with sustainability ambitions. The greatest challenge facing the industry is to promote sustainability while remaining competitive. Industry players have to ensure transparency along their entire supply chain and make sustainability a visible and measurable hallmark of their highly complex supplier and distribution networks. Source: PwC
• 80%: Share of consumer emissions that reside in supply chains. To meet the pathway to net zero, CPG companies need to work with their suppliers to secure green raw materials and supply. CPG are the reason of more than 90 percent of the impact on air, land, water, biodiversity, and geological resources. Source: McKinsey
• Digital sales are growing across newer verticals, including beauty, apparel and grocery. Source: Morgan Stanley
• The pandemic brought a surge in ecommerce across Europe—and also increased consumers’ awareness of sustainability issues. Retailers and brands are under pressure to make online purchasing more sustainable—and both can benefit from doing so. The main concerns are how digital purchases are packaged, delivered, and how returns are sent back to the retailer. Each of these aspects encompasses overall cost, time, materials, and greenhouse gas emissions. Source: Insider Intelligence

Sustainability Impact

• Circular economy: The circular economy describes a comprehensive approach aimed at allowing companies to turn a profit while conserving our planet's resources. The focus is on developing, producing and consuming products more responsibly and sustainably. The aim is favour renewable raw materials and energy and to reduce and avoid production waste and by-products. Source: PwC
• Key activities will focus on scope 3 emissions, transparent and sustainable supply chains, reducing plastic waste and the circular economy, and biodiversity preservation. Technology will enable the adoption of more sustainable activities by making sustainability more accessible, scaleable and transparent for companies and consumers alike. Source: E&Y
• Initiatives to reduce waste are seen across the retail industry. For example cosmetics retailer Ulta Beauty has partnered with Loop to launch refillable packaging, making it the first-ever circular beauty platform. This partnership is intended to reduce the waste from single-use packaging for cosmetics products. Source: Deloitte

Sustainability Investments to watch

• Globally, the most environmentally conscious consumers are worth $382 billion to the FMCG sector and are becoming more valuable by the tune of $78 billion in the last year, meaning sustainable innovation and direct-to-consumer (DTC) communication about your ‘green credentials’ are beneficial for both business and the planet. Source: KANTAR
• 65% of global consumers try to buy products that are packaged more sustainably, but only 29% regularly avoid plastic packaging – it also shows that product packaging is one of the most important factors that green consumers consider when they try to buy sustainably. In fact, this 36% of consumers is worth $806bn of untapped FMCG market opportunity. These consumers want to purchase environmentally friendly products and services, but encounter a variety of barriers that prevent them from acting on this desire. Brands that understand how to remove these barriers to sustainable retail behavior can close the value action gap, unlocking valuable revenue streams in the process. Source: GFK
• The number of Eco-actives is also rising quicker in developed economies. In developing nations, it may take until 2035 for Eco-actives to account for 50% of the population. Still, Eco-actives represent an immediate opportunity: right now, they are worth $446bn in FMCG spend, and that value is projected to reach $1.104tn by 2029. Source: GFK
• While there is more attention today on Black beauty consumers and brands, deep challenges remain when it comes to equity. Removing those barriers represents a $9.2 billion revenue opportunity while having the potential to create greater opportunities for everyone in the industry. Source: McKinsey