Green vs. greenbacks.

The bad economy impacts willingness to spend more for some eco-friendly products.

America's migration toward green products such as compact florescent bulbs and hybrid cars has become yet another casualty of the economic apocalypse that's now being called The Great Recession. After several years of uninterrupted steady growth, both categories have shrunk over the last year.

But marketing eco-friendly products isn't all bleak. Some product categories are holding their own, and others are actually growing strongly.

Compact florescent sales dim.

Compact fluorescents' share of the U.S. light bulb market has dropped from 23% in 2007 to 21% in 2008 according to Department of Energy data quoted in The Wall Street Journal. The Journal succinctly encapsulated the reason for the decline with a quote from a shopper buying bulbs: "I buy the cheap ones," Dallas resident Betty Ferrell said as she reached for a pack of incandescents at a local Wal-Mart store. "They may not be cheap in the long run, but they're cheap for what I have in my purse now."

At around ten times the price of incandescents, compact fluorescents couldn't sustain their momentum during the present downturn.

Compact fluorescents' declining share isn't surprising. Depending on whose data you believe, somewhere between 10% and 16% of consumers are hardcore eco-friendly shoppers who buy green even when green products cost more. A much larger segment – variously estimated at 23% to 25% of consumers – buy green products to save money in the long run. And investment spending on light bulbs for long-term savings on electricity has become an unaffordable luxury for many people these days.

Hybrid car sales hit a roadblock.

The same economic dynamics that have reduced compact fluorescents' market share have also sharply cut hybrid car sales.

In a 2008 J.D. Powers study quoted in another Journal article, 23% of consumers were "definitely interested" in a hybrid car. By 2009, after the price of gasoline dropped dramatically, only 15% expressed "definite interest." Then, when respondents were told that hybrid-electric technology would add $5,000 to a car's price, those still "definitely interested" fell to just 4.2%.

As the price of oil went from $140 a barrel at the time of the 2008 survey to $50 a barrel during the 2009 study, sales of the Toyota Prius (the gas-electric hybrid sales leader) dropped 46%.

Organic food growth slows.

Organic foods grew 116% from 2004 through 2007, but growth slowed to an annual rate of just 5.6% in 2008. That 5.6% increase means that organics' share of market was up only slightly in 2008, a year which saw a 5.1% increase in overall grocery sales. Compared to major food companies, organics lost ground. Del Monte's consumer food business was up 11.7% in 2008.

Of course, not all organic food purchases are motivated by environmental concerns. Just as many consumers buy eco-friendly products to save money, others buy organic foods because of perceived health benefits. That group represents roughly 25% of all shoppers. (Naturally there's some overlap between consumers who buy environmentally-friendly products to save money and those who buy them for health benefits.)

Surprisingly, the consumers who are cutting back on environmentally-friendly foods are the mostly upscale hardcore green households. In 2008 they cut unit purchases by 6.6%, but price increases in the organic food category has kept their spending about where it was in 2007. The category growth is coming from middle-income Hispanic families, who increased their unit volume 3.9% and their dollar volume 15.5% in 2008.

Eco-friendly cleaning products are cleaning up.

One category of environmentally-compatible products hasn't been hit hard by the recession. Green household cleaning products are doing extremely well. Green cleaning product sales grew 108% in 2008.

To some extent, eco-friendly cleansers, detergents and dishwashing soaps benefit from being relatively recent entrants in the mass consumer market, so they're still gaining adherents among the more committed environmentalist shoppers. SC Johnson's recently launched Nature's Source products and Clorox's Green Works brands generated growth in the category previously dominated by niche brands like Seventh Generation. (Although they're somewhat eclipsed by the major consumer package goods entrants, Seventh Generation's results are pretty impressive, too. They grew 50% in 2008.)

Post-consumer paper has consumers excited.

The next big surge in environmental products will probably come in the paper products category. Just as in the case of household cleaning products, the category surge will come as major, familiar brands bring these products out of the hardcore environmentalist niche and into the mainstream market.

Advertising Age reports that Scott is offering toilet paper, paper towels and napkins with 40% to 80% recycled content. Wal-Mart's store brand toilet paper, White Cloud, will be 100% recycled. And Kimberly-Clark is about to launch Huggies Pure & Natural, a disposable diaper with more natural ingredients and an as-yet-unspecified amount of post-consumer recycled content.

The energy-efficient light at the end of the tunnel.

Despite what it must seem like to many marketers and ad agencies these days, the recession won't last forever. When it's over, environmentally compatible products will see a significant growth surge. The indicators?

· Mintel, a Chicago market research firm, projects 19% growth for environmental products through 2013.

· Aric Melzel of Scott said "If you go back 10, 20, 30 years, other green movements ultimately have the air taken out of them by recessions... this time the green mind-set is much more solidified."

· Tom Vierhile of Datamonitor agrees. "It looks like the green trend is going to survive the recession." He believes that interest in green products has reached beyond the 10% to 16% who are hardcore environmentalists and has gone mainstream.

· The entry of well-known and respected consumer package goods companies like SC Johnson and Scott into the environmental-products arena will diminish the perception that eco-friendly products have lower quality than conventional products.

· The big CPG companies coming into the market will also have the economies of scale to drive down the price of green products, and 54% of consumers say they'd buy more environmental products if they were cheaper.

There's a lot of room to grow. Organic foods, for example, have just 3.2% of the total food market. The upside potential is tremendous.

A lot of companies agree with our optimistic outlook for green products in the near-term future. According to Advertising Age, launches of new green products are on pace to reach 1,570. That's triple 2008's level. And 2008 launches were double 2007's.

The present consumer base is relatively small, but the opportunity is big. Green products have a firm cadre of hardcore supporters and a growing contingent of mainstream adherents.