CONSUMER SPENDING TRENDING TOWARDS NATURAL
Eco-friendly, sustainably sourced skincare and fashion products mean premium prices, right? No, according to Nick Stein and Nico Myburgh from Natural Holdings who spoke to Out&About about new consumer trends and how responsibly sourced and healthier options are moving into the mainstream.
NATURAL HOLDINGS LEADS THE WAY
When entrepreneurs Nick Stein, Richard Frankel and Herschel Aronstan introduced Australian eco-wear brand, Boody, to South Africa in 2015, many couldn’t quite see why the so-called greenies would get their knickers in a knot over whether or not their undies were environmentally friendly.
The fact that these new smalls were sold by a pharmacy rather than an upmarket boutique displaying brightly coloured bits of satin made the arrival of Boody an even bigger departure from the norm for locals who bought their underwear and other everyday essentials at specialist retailers or department stores.
Since then, even South African consumers, who traditionally lag their first world counterparts when it comes to adopting new trends, seem to have recognised that sexy is not necessarily sensible or even sustainable.
The entrepreneurs who were prepared to take a massive risk in introducing new age everyday essentials to a very staid market have since not only added babywear, activewear and loungewear to the Boody offering but also created a company called Natural Holdings to bring a further seven eco-friendly brands to our shelves.
Now, in their warehouse, fashion sits side by side with healthcare brands such as All Good, an organic, reef friendly sun care range, natural skincare range P’URE Papaya care, eco-friendly oral care brand Woobamboo as well as other all natural hair, nail and skincare products.
Chief executive, Nick Stein says the decision to invest in Boody came at a time when their conventional underwear manufacturing business was thriving.
“What really attracted us was that there was nothing like this product here. It had a story to tell. It’s not just another underwear range. We started to talk to the Australians about a year before we got into stores. It took a bit of time to map out how it would work. We felt that, as a completely new and distinct brand that needed to find credibility in the market, we had to identify a pharmacy group that would take it on and be our reference point,” Stein explains.
That group was Dis-Chem which had also spotted the potential opening of a new gap in the market.
The first surprise came when their assumption that less spending power combined with minimal knowledge about organic and eco-friendly products might just make the brand slower out of the starting blocks in South Africa was over turned.
As a result, they went from supplying just 17 stores around the country at start up, to more than 150 today.
Stein notes: “We really didn’t know where this was going to go. We were looking for something that was a business with a purpose. We wanted to find something that was a lot more meaningful and something with which we could resonate. Boody fitted in well and we grew Boody nicely during those first few years. Then, in 2017, we stepped back and asked now what? We realised that there must be more to this.”
That something more was discovered during a Pretoria photoshoot alongside those distributing Boody products in the US.
Stein was introduced to an oral care brand called Woobamboo. Bamboo toothbrushes? There was a definite spark. They quickly realized that the distribution network built up for Boody perfectly matched this new brand.
Woobamboo also gave them direction when it came to growing their portfolio of brands.
“We expanded from just being Boody to having a more general natural products business that was more in keeping with a lifestyle category. It was a better fit than us going into the organic foods or supplements business,” he says.
In 2018, Stein went to Expo West in California, the largest natural products expo in the world. He came away with more compatible brands that not only matched their values – cruelty free, naturally good, healthy for both consumers and the environment and sourced ethically and sustainably – but were also likely to appeal to a rapidly expanding market.
TALKING TO A DIFFERENT CONSUMER
If, in 2015, consumers were shying away from synthetics and gravitating towards natural textiles, by 2020 they were asking far deeper questions about the longer term impact on the environment as well as key consumer health issues.
We recognised pretty quickly that there was a definite following and an interest. Initially, it was just a small segment of the market that was very aware. For a long time, this was a very niched customer base.” Nick Stein
Social media combined with well-publicized viewpoints held by celebrities and influencers when it came to responsible sourcing of raw materials, sustainable manufacturing processes and products that are both healthier and kind on the environment changed that, he believes.
Now, according to Stein, sustainable and eco- friendly products are becoming far more mainstream. Dis-Chem – and Boody – had got into the market early. Six years on, even big name supermarkets like Checkers, Pick ‘n Pay and Woolworths are on the bandwagon.
Newly appointed sales director, Nico Myburgh, believes that, very soon, there will be no separation between what is eco-friendly and what is not.
The growth of this segment of the market is evident in the amount of shelf space allocated to these products in mainstream retailers. It started with small areas close to the floor for the sorts of detergents and healthcare products likely to be favoured by the tree hugging fraternity. Now, these products have not only moved upwards and outwards but specialist departments for the likes of healthy foods and supplements have been created even in neighbourhood shops like Spar.
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It won’t stop there. Global market research company Euromonitor International recently published a report defining consumer behaviour entitled Top 10 Global Consumer Trends 2021. Enter the caring consumer. This report suggested that businesses focus on purpose-driven initiatives that support the triple bottom line—people, planet and profits. Globally, nearly 70% of professionals expect consumers to be more concerned about sustainability than before COVID-19, it said.
Myburgh agrees. “I think that the growing awareness around global warming has morphed into people being more conscious about what they are purchasing. We are moving away from specialist stores and a niche set of consumers to our products becoming a choice on the same shelves alongside the traditional not so eco- friendly products. “
Stein adds: “We definitely believe that, ultimately, there should not be and probably will not be an eco-category that consumers need to seek out. Ultimately, all products should eventually subscribe to the values and the standards on which we exclusively focus on right now. The role we are playing – and the decision that we took upfront – was to be the ones that brought natural, eco-friendly and sustainably and responsibly sourced products to the general market in South Africa. That’s been our mission both in how we’ve gone about launching our products and the types of brands that we have selected to bring to the market.”
However, he warns that consumers are now savvy enough to spot green washing (talking up eco-friendly elements whilst declining to disclose damaging characteristics of products). Similarly, consumers are not prepared to pay more just because a product is “green” or eco-friendly.
“The starting point is quality and performance and then the added benefit is that it is eco-friendly and kind to the planet and us. We cannot rely only on the green aspect of products if we want them to compete side by side with non-eco products,” Nick Stein.
STAYING AHEAD OF THE CURVE
The Covid pandemic has not only given people more time to think about what they are spending their money on but also pushed more sales online, making these products more accessible, according to Myburgh.
But this is just the beginning.
Myburgh says that Natural Holdings is looking to grow as well as improve access to its products. “That’s fairly easy in large metropolitan areas but we still have a big country to cover. How do we make products such as these more accessible across Africa? We need to prepare to move into the next phase.”
Stein believes it is also time to strike a balance between growing the market for the brands that Natural Holdings has already introduced and creating space for more.
He points out that Natural Holdings has grown very quickly within a short space of time. “We don’t want to launch too many new brands at the same time. We need to do justice to what we have.”
But, although Myburgh and Stein don’t feel under pressure to introduce anything new right now, the entrepreneurial spirit is still strong, and they are open to opportunities. They admit that they already have two new brands (one from Australia and another from Europe) under assessment for possible release into the local market.
Stein believes it is also time to strike a balance between growing the market for the brands that Natural Holdings has already introduced and creating space for more.
He points out that Natural Holdings has grown very quickly within a short space of time. “We don’t want to launch too many new brands at the same time. We need to do justice to what we have.”
But, although Myburgh and Stein don’t feel under pressure to introduce anything new right now, the entrepreneurial spirit is still strong, and they are open to opportunities. They admit that they already have two new brands (one from Australia and another from Europe) under assessment for possible release into the local market.
“We know that there is a lot of opportunity that we haven’t yet tapped to grow what we have. But, at the same time, the message here is that we need to stay ahead of the game and be aware of the trends that are unfolding,“ says Stein.
Closely aligned with this is making eco- friendly affordable.
Up until now, so-called green brands have been viewed as a premier offering with price tags to match.
Myburgh believes that, ultimately, the market itself will dictate the pace and the price for eco-friendly goods. “You can come with whatever weird and wonderful ideas you like but, if your customers see that the pricing is not viable, they will reject it upfront. Part of our vetting process that adds an additional dynamic for us is to find brands where we can make it work from an affordability perspective, where we can be competitive price wise.”
The difficulty is that most products are imported as the skill and manufacturing capacity for eco-friendly and sustainable products is lagging in South Africa. This means that a volatile currency and high import duties do push up prices.
If we only stick to products that are priced at a tier where the upper LSMs have access to them, in South Africa we are not going to get the traction and have the influence on consumer behavior that we would really like.” Nico Myburgh.
It also means that the time is ripe for local producers to raise their hands. Natural Holdings would like to find local suppliers but suspect it will take some time.
“We can’t do everything all at once. But we still feel like we are teenagers and have a long way to go. It’s exciting because that’s the energy that we will bring to this business for the long term,” says Stein.
