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July/August 2014 Issue
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LOHAS Opportunities Await



NMI’s Lifestyles Of Health And Sustainability study reveals a $290 billion opportunity.



By Joanna Cosgrove



Published June 3, 2010
Related Searches: Dietary Supplements Energy Natural Organic
With each passing day, more consumers are embracing the precepts of a greener lifestyle. The Natural Marketing Institute, Harleysville, PA, recently released a report encapsulating the market it calls LOHAS, an acronym for “Lifestyles Of Health And Sustainability.” The report described “an integrated, rapidly growing market for goods and services that appeal to consumers who have a meaningful sense of environmental and social responsibility and incorporate those values into their purchase decisions.”
 
“Today, a majority of consumers are incorporating environmental considerations into their day-to-day lives — not just attitudinally, but by voting behaviorally with their dollars by spending $290 billion on goods and services that are environmentally-friendly, socially responsible and/or healthy,” commented Gwynne Rogers, NMI's LOHAS business director.
 
The study data were collected in 2008 in collaboration with Georgetown University and assimilated into a report released last month, identifying six general U.S. consumer spending market sectors. In order of greatest to least they were: Personal Health ($117 billion), Green Building ($100 billion), Eco-tourism, ($42 billion), Alternative Transportation ($20 billion), Natural Lifestyles ($10 billion), and Alternative Energy ($1 billion).
 
Green Building included expenditures on items like Energy Star appliances and certified homes. Eco-Tourism consisted of travel dollars spent on nature excursions. Alternative Transportation was comprised of dollars spent on hybrid, electric and diesel vehicles plus car sharing. Natural Lifestyles consisted of home furnishings and apparel.
 
Dissecting Personal Health Opportunities
 
The most lucrative LOHAS sector, Personal Health, spanned spending on natural/organic food, personal care and supplements. According to Ms. Rogers, the market continues to be the most appealing of the sectors for a variety of reasons.
 
“There are a lot of big and established industries in the Personal Health sector, including organic foods and dietary supplements. In part, the things that are in there have been around longer than hybrid cars or green building,” she said. “And because they are consumer packaged goods and it’s a lot easier to dip your toe into LOHAS by buying an organic apple than by dropping $25,000 on a hybrid car.”
 
The natural and organic food segment was the largest component within Personal Health, having contributed about a third of the sector’s $117 billion total. In the case of organic foods, they’ve been around for a long time and there’s an established definition. It’s something consumers can relate to on a daily basis and is widely available.
 
Conversely, the smallest category within the Personal Health sector was natural and organic personal care products, which represented less than 10% of the total $117 billion figure. Though the category continues to grow, its shortcomings represent additional, yet challenging, advancement opportunities.
 
“There’s a lot going on here,” began Ms. Rogers. “The natural and organic personal care segment is growing quickly but consumers don’t fully understand what natural personal care is.
 
“There are several competing standards for what is classified as natural and organic personal care so even if consumers are able to figure out what a phthalate is or why they should avoid sodium laurel sulfate, in contrast to the food segment’s highly recognizable USDA Organic seal, the personal care world is just a little bit more complicated to navigate. Beyond that, it’s something that would appeal primarily to women rather than men because they’re more into the category in the first place,” she explained.
 
When asked to compare the state of the Personal Health sector as represented in the current report to a similar consumer spending report NMI released in 2004, Ms. Rogers said shifting data sources precluded NMI’s ability to present an accurate picture of the sector’s evolution.
 
In terms of where she expected the sector’s spending to fare looking forward, she said, “The news over the last couple of weeks related to organophosphates and phthalates and things like that is likely to spur some additional consumer spending.”
 
Despite all signs pointing to continued future growth in the LOHAS Personal Health sector there is still much work to be done by retailers and marketers by way of properly educating consumers. Ms. Rogers illustrated the potentially damaging effect of consumer confusion via a recently published article in the New York Times about the Government Accountability Organization (GAO) supplement review. “You can go back and forth about whether those were good analyses but at the end of the day the consumer will read the New York Times article and not get involved in all of the details. That could have a less than desirable effect on the supplement industry,” she said.
 
On the whole though, the outlook for sectors affiliated with LOHAS is very promising and “reflect a high-growth marketplace with rapidly increasing mainstream interest and consumer engagement,” according to Steve French, NMI’s managing partner.


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