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"Almost three-quarters of investors (74 percent) would be more likely to work with an advisor who could give them competitive investment returns from investments that also made a positive impact on society and 65 percent of investors would be more likely to stay with an advisor who could discuss responsible investing with them."
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"70% of people [in UK] want to invest ethically but the financial services industry is failing to respond." Referencing research by Abundance.
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America's 50 Million Cultural Creatives
Impact the Marketplace

July 20, 2003

They Care About the World (and They Shop, Too)

By AMY CORTESE

The New York Times

THERE'S a name floating around for consumers who worry about the environment, want products to be produced in a sustainable way and spend money to advance what they see as their personal development and potential.

It's Lohas, which may sound like a disease but is an acronym for "lifestyles of health and sustainability." The name was coined a few years ago by marketers trying to define what they regarded as a growing opportunity for products and services that appeal to a certain type of consumer.

It may be the biggest market you have never heard of, encompassing things like organic foods, energy-efficient appliances and solar panels as well as alternative medicine, yoga tapes and eco-tourism. Taken together, they accounted for a $230 billion market in 2000, according to Natural Business Communications, a company in Broomfield, Colo., that publishes The Lohas Journal and is credited with introducing the term. The company, which will release an updated estimate later this year, figures that the total market has grown by double-digit percentages annually.

In its second annual study of the Lohas market, conducted earlier this year, the Natural Marketing Institute, a research and consulting firm in Harleysville, Pa., estimated that 68 million Americans, about a third of the adult population, qualified as Lohas consumers, the kind of people who take environmental and social issues into account when they make purchases. That was up from 30 percent a year earlier.

Ninety percent of the Lohas consumers said they preferred to make purchases from companies that shared their values, and many said they were willing to pay a premium for products and services they considered sustainable, which means that they are made in a way that minimizes harm to the environment and society.

Consumers are spending more in categories like organic foods and alternative medicine. But even some sympathetic observers are skeptical about attempts to define such a sprawling market. "I've been listening to this conversation for 15 years," said Joel Makower, founder of GreenBiz.com, which tracks business and environmental issues.

"We're still waiting for this great wave of purchasing changes around values and desires to make the world a better place," Mr. Makower said. "The only thing that's changed is now we have an acronym."

There is, in fact, a yawning gap between what consumers say in surveys about what they will buy and the actual sales data. For example, in a Natural Marketing Institute study, 40 percent of the Americans surveyed said they had bought organic food and beverages, but only 2 percent of the $600 billion in food and beverage sales in the United States comes from organic products.

Steven W. French, a managing partner at the institute, attributes the gaps to the fact that while consumers base some purchasing decisions on values, factors like convenience and price also matter.

Education and availability are issues, too. For instance, renewable power may not be available from a local utility, and even if it is, consumers may not be aware of it.

Still, there is no doubt that some Lohas segments are booming. Sales of natural products, including food and personal care products, were $36

billion last year in the United States, up from $14.8 billion five years earlier, according to the investment bank Adams, Harkness & Hill. And yoga, alternative medicine and energy-efficient appliances are finding mainstream appeal.

Lohas proponents build on research indicating that a cultural shift is under way that could have significant impact on consumer purchasing behavior.

Paul H. Ray, executive vice president of American Lives Inc., an opinion polling company, has surveyed people about their values and lifestyles for more than a dozen years and has identified an emerging subculture that he calls the cultural creatives. This group, which Mr. Ray said included 50 million people in the United States and Europe ‹ and is the subject of  "The Cultural Creatives," his book ‹ is socially conscious, involved in improving communities and willing to translate values into action, he said.

Not surprisingly, the cultural creatives tend to overlap with Lohas consumers. "What you're seeing is a demand for products of equal quality that are also virtuous," said Mr. Ray, who is now co-chairman of an institute within the Global Academy, a nonprofit group, that focuses on long-range societal issues. Speaking of similarities between his research and that of the Natural Marketing Institute, he said, "You get to the same phenomenon regardless of how you get into it."

RoperASW, a research and consulting firm, figures that 16 percent of adult Americans are "green" consumers and that an additional 33 percent of the population can be persuaded to base their spending on their environmental values. The firm has also tracked consumers' rising interest in health and alternative medicine and in buying brands that are aligned with their values.

These studies suggest that companies may benefit from considering values as well as conventional demographics, like age and income, when trying to understand customers. "This is a mind-set change for how companies and consumers look at products and services," said Mr. French of the marketing institute.

RATHER than looking at discrete product categories like cars, he said, it is more important when dealing with the Lohas market to look at the common factors linking diverse product groups ‹ for example, at cars, energy and household products that are perceived as better for the environment and society.

The Lohas Market Trends Conference, held in June in Broomfield, Colo., drew nearly 450 people. Organized by Natural Business Communications, it offered business sessions punctuated with yoga classes and massages, and meals were planned by Mollie Katzen, the author of best-selling vegetarian cookbooks, including "The Enchanted Broccoli Forest."

Though most of the companies represented at the conference were small or clearly identified with the healthy lifestyle market, like Patagonia and Tom's of Maine, there was also interest from corporations that are not squarely in that market.

Sheri Shapiro, the assistant marketing manager for the Escape sport utility vehicle at Ford Motor, was there to learn about the Lohas consumer. When her team was researching the potential customer base for a hybrid version of the Ford Escape planned for next year, it kept running across the term "Lohas."

"We didn't know exactly what it was," Ms. Shapiro said. So when she heard about the conference, she decided to attend. As it turned out, she said, "the values and attitudes of the Lohas customers matched our own research."

Or consider Staples, the office products retailer. It didn't send anyone to the conference, but it has added more products with recycled materials and has promoted recycling programs at its stores for printer cartridges and consumer electronics products.

"We are really taking a look at sustainable business practices and what our social and environmental commitments are and how we convey that to customers," said Mark Buckley, vice president for environmental affairs at Staples, based in Framingham, Mass.

As more large corporations introduce environmentally friendly products or acquire organic brands, they often find themselves in unfamiliar territory. "Companies realize they have a different kind of customer, that conventional selling strategies are a complete bomb with," said Mr. Ray, at American Lives. Large companies, he added, "are used to thinking in mass-market ways."

People in the Lohas crowd tend to be well informed, discerning and skeptical of advertising claims, the institute says. Ms. Shapiro said she would think differently about marketing to this group.

"There might be different strategies and tactics to market to them," she said, like advertising in health and lifestyle publications and aligning the marketing message with Lohas values. "Whether it's vitamins or hybrid vehicles, it's the common values that really tie together all of these products."

That is where Lohas comes in. Tying them together makes sense, because "it's helpful to define an industry," said Lynn Powers, president of Gaiam, which sells products like organic cotton sheets, yoga tapes and solar panels through its catalogs and Web sites.

Still, the conference on Lohas illustrated how unwieldy a concept it can be.. In the main exhibit hall, makers of healthy candy bars, meditation videos, energy turbines and therapies labeled as cancer cures promoted their wares side by side.

Frank Lampe, the editorial and conference director at Conscious Media, which owns Natural Business Communications, acknowledged that Lohas might be too sweeping a term. His company is refining its definition of the Lohas market and may drop some categories. "We've tried to get too many things into the space," he said. 

Copyright 2003 The New York Times Company   

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Disclaimer: This website does not make investment recommendations. Nothing in this site should be interpreted as a recommendation or solicitation to buy/sell any securities or investments. Investing for the Soul is a source of general information and resources for ethical investing and socially responsible investing (SRI). Investors should consider their actions thoroughly and consult their financial advisers and other professionals, prior to taking any investment action. This website does not necessarily agree with the opinions expressed in articles on its pages or offered on the web pages to which it might be linked. Such opinions are the responsibility of the writers themselves. Furthermore, this site does not offer or provide any warranties, representations, guarantees, implied or otherwise, as to the accuracy, legality, copyright compliance, timeliness or usefulness of the information, materials or services on this, or other sites, to which it is linked. Also, Mr. Ron Robins is not an investment advisor, nor is he licensed with any professional investment related body, and thus is not able to, nor does he make, any investment recommendations.

 

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