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 actually 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 US$230 billion market in 2000, according to Natural Business Communications, a company in Broomfield, Colorado, 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, Pennsylvania, estimated that 68 million Americans, about a third of the adult population, qualified as LOHAS consumers. They are the kind of people who take environmental and social issues into account when they make purchases. That estimate 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," 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 they will buy in surveys 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 US$600 billion in food and beverage sales in the US 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. Natural products, including food and personal care products, accounted for US$36 billion of the market last year in the US, up from US$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.