Great insight from Georgina Curtis on why #sustainablesubstitutes are failing,,,
Last week Bolt Threads announced a ‘pause’ on production of its mycelium-based leather, Mylo – originally backed by Stella McCartney, Adidas, Lulu Lemon, Kering. This is really sad news as we loved the idea and the consortium approach but is it part of a bigger trend? In the last few months we’ve seen…
- Beyond Meat’s stock reach a record low (down 92%) and is still suffering from net margins of - 65%. This company was once valued at over $13bn, that’s about the same size as Rolls Royce!
- Oatly’s, the plant-based milk, also once valued at $13bn, struggling with losses of $59.3m and a valuation of only just over $1bn.
- And in vertical farming investment has dropped massively, down from $1bn last year to just $100m this year - bankrupting the likes of AeroFarms which was valued at $1.2bn only a couple of years ago.
These sustainable substitutes are, arguably, better for the planet and promote a more positive future – so why are they struggling? The blame has been laid at the door of inflationary pressures driving up costs and prices, but we think there’s more to it…
Many businesses and brands are moving way ahead of mainstream consumers and are enjoyed by consumers who believe in sustainability and put their money where their mouth is. The issue is that this group of consumers is small and whilst mainstream consumers care about sustainability, they are yet to change their purchase behaviours.
Valuations such as those above are based on sustainable substitutes reaching the mainstream market but many businesses have failed to achieve this and cross the chasm (for fans of Geoffrey Moore). Sustainable substitutes are typically things that most consumers aren’t asking for, especially when they are more expensive (in a cost-of-living crisis), not discernibly better and relay a confusing message as to why consumers should buy them. This is the challenge we need to address by getting the proposition right.
We’re optimistic about businesses and brands 'crossing the chasm', and if there’s one thing to learn from technology it’s that change in consumer behaviour will come when we offer consumers what they want and need! And that, on scale, will deliver positive change and business benefits.
