The surf industry may have quietly crossed a historic line on sustainability, from mere appearances to proven profit generator.
Let’s start with an acronym you mightn’t have heard. ‘LOHAS’ stands for Lifestyles of Health and Sustainability – it applies to both consumers and also the market in which they’re active. New economy market researcher Mobium Group has surveyed over 50,000 adult Australians about health and sustainability over the past fifteen years, arranging consumers into four groups: Leaders, Leaning, Learners and Laggards. It’s an approach that traces back to American researcher Paul Ray, who coined the term “cultural creatives” to describe the people who drove a new and more conscious form of consumption.
Mobium’s “leaders” are consumers who are committed to buying sustainable products, are interested in the brand story and will pay extra for genuine sustainability. Since 2007, that sector of the market has grown from 8% of Australian consumers, to 16%. Back in 2007, the LOHAS sector of the market (that is, products like organic foods, solar energy and recycled paper) was valued at $12 billion – by 2020 it is projected to nearly triple, at $35 billion.
A ground-breaking new report, commissioned by Patagonia from Mobium, looks at the growth of the LOHAS economy, and in particular how it is interacting with surf. The results might surprise you.
Before you read on, download your copy of the Patagonia x LOHAS report HERE
Story by Jock Serong
At its very simplest, this is a story about the relationship between what people want, and what they believe. Patagonia commissioned this research from Mobium, but they, and the wider surf industry, aren’t the only ones wanting to know more about sustainability-driven consumer behaviour. Mobium’s Andy Baker was recently hired by one of the big banks to provide insights into consumer behaviour in the wake of the Financial Services Royal Commission.
For Patagonia, Mobium took the algorithm they’d devised out of their study of 50,000 consumers, and used it on a specific cohort of 1,000 people who’d bought a surf or surf apparel product in the past twelve months. This ‘deep dive’, driven by Patagonia, is believed to be an industry first. “For the past couple of years, we’ve been questioning Patagonia’s point of difference in the market,” says the company’s Australia/NZ head, Dane O’Shanassy. “We’re developing a market report based on the findings to share with surf retailers. We’re saying to them ‘This might be the biggest market you’ve never heard of.’”
So what did the researchers find out? Nearly all of the respondents (around nine in ten) wanted companies to act on sustainability, and three quarters of them stated that they were willing to change brands to support action. But they wanted clearer information about products, and there’s a background trend that people don’t trust companies to tell them the truth where green claims are being advanced.
Australians spend $1.2 billion dollars on surf apparel annually. More than half of the people spending the money say they’d switch brands if they saw evidence of sustainability. That means there’s over $600 million up for grabs out there for companies with a convincing story to tell. What’s more, 60% of survey respondents say they believe sustainability will be a more important factor in buying decisions in the future.
“There’s over $600 million up for grabs out there for companies with a convincing story to tell.”
And consider this: we said in our intro that 16% of buyers in Australia are LOHAS “leaders”, the people who shape the market. But in surfing, that figure jumps to 26%. We can all speculate about why that might be: is it that we’re closer to the pointy end of environmental damage when we step into the ocean, as compared to our landlubber cousins? 76% of surfers in the survey have donated to an environmental cause. Two-thirds of surfer respondents would be willing to pay 25% more for sustainable products. Nearly half have participated in a demonstration. These are active, critical, principled consumers.
To obtain a clear cross-section of the thinking among surf brands operating in the Australian market, we put the same set of questions to each of them, around sustainability and marketing. Here’s the results:
How does the average Australian view surf brands in terms of sustainability?
Sustainability discussions in the surf industry have gone from fringe to the mainstream in relatively few years.
There’s an interesting tendency in the research to talk about “social” and “environmental” changes in the same breath, as though one leads naturally to the other. But do they? If a company is good on recycling, are they necessarily also good on child labour, or the gender pay gap? Rip Curl was revealed in 2016 to have had garments made under forced labour conditions in North Korea: without their knowledge, their Chinese producer had outsourced the work. It’s easy for a global, de-centralised manufacturing business to lose control of supply chain, whether from a social or environmental perspective.
Andy Baker says “Companies who’ve gone on the journey environmentally are more likely to have looked closely at social issues. And it’s the same for consumers: once they start looking at purchasing decisions through this lens, the whole spectrum (of ethical decisions) then becomes relevant.” But interestingly, those consumers are not looking for a halo: “They don’t need you to nail all of them, but they do need you to articulate which of them are central to your company.”
Vissla’s John Mossop believes surf brands “generally have decent credibility (on) sustainability…but whether their work cuts through to the consumer is debatable. But I think surfers should feel reasonably proud of the good work being done by brands. There’s a long way to go but surf brands started the sustainability journey a long time ago.”
“I think surfers should feel reasonably proud of the good work being done by brands. There’s a long way to go but surf brands started the sustainability journey a long time ago.” John Mossop, Vissla
Helen Sharp, Ethical Sourcing and Compliance Manager at Rip Curl, talks of consumers wanting more information.“We know the consumer is becoming more aware of what options are available to them, and are looking to the brands to be both transparent and responsible. Consumers want to make informed choices.”
Outerknown’s Simon Krite also sees a trend towards more careful and critical consumer behaviour. “We’re noticing Australians are becoming more conscious about their purchasing habits with regards to sustainability.” For a brand that wears its environmental credentials very publicly, he’s proud to say “Our sales have been on a steady incline and with the launch of our ladies collection we are seeing large growth.”
Do surfers, specifically, view surf brands differently to the wider public?
The Mobium LOHAS research tells us that surfers are more likely to be ‘leaders’ when making buying decisions than the wider public are. Do the brands see this in their market?
Mark Price, CEO of Firewire, thinks they do, but he adds a note of caution. “There are a couple of stumbling blocks to a deeper appreciation of the changes needed: firstly, there is insufficient understanding of the urgency to act, and secondly when it comes to surfboards specifically, despite all the romance around riding waves, for many surfers, surfboards are still considered sporting goods equipment. With that in mind, IMHO, the perception of PU/PE superiority has slowed down the transition to less toxic materials.”
So we’re environmentally conscious, but we’re gear snobs. What’s more, we’re driven by affordability: “In regards supply-chain transparency and alternative materials,” says Price, “these initiatives inevitably add cost, and the consumer’s willingness to pay more for less toxic surfboards is limited. So manufacturers end up eating margin if they want to match, or just slightly exceed existing RRP’s. The surfboard business isn’t the most profitable at the best of times, so this is an obstacle that needs to be recognised.”
John Mossop makes an interesting connection to the debate over surfers vs non-surfers leading surf brands: “Surfers generally have a green bent as our passion is exercised in a natural environment. We instinctively want to protect that environment so where you have surfers driving brands, then it’s likely those brands are working on environmentally-better outcomes.”
The credibility of surfer-as-figurehead doesn’t get much higher than Outerknown’s Kelly Slater. Simon Krite agrees that surfers have “a real affinity with brands that are sustainable.” He asserts that Outerknown’s strong surf heritage “was born from Kelly’s vision to genuinely try and change the way we make our clothes.”
Are we seeing a real change of direction, or more greenwash?
There’s nothing that makes a manufacturer bristle like being accused of greenwashing. Each of the brands we spoke to (and no doubt many we didn’t speak to) are ready and able to point to genuine efforts they’re making – beyond mere marketing claims – to examine and improve their environmental practices.
For Simon MacGregor, the Consumer Activation Manager for Quiksilver/Boardriders, there’s pride in having received a trophy from Repreve for recycling 100 million bottles into products. In 2020, 100% of Quiksilver’s boardshorts and 65% of their snow gear will be made from recycled plastic bottles. He says eco-friendly materials and manufacturing processes like Econyl and Spindye will grow in prominence.
Firewire’s Mark Price sets a high standard for claims of ‘sustainable’ production: “In the strictest interpretation, a sustainably-produced product is one that uses zero virgin raw material inputs and creates zero landfill waste by up-cycling or recycling any leftover materials. And the energy inputs are renewable as well. ‘Cradle-to-cradle’, as it’s often referred to, is an incredibly high bar, and one that few if any products achieve.”
“…a sustainably-produced product is one that uses zero virgin raw material inputs and creates zero landfill waste by up-cycling or recycling any leftover materials. And the energy inputs are renewable as well. ‘Cradle-to-cradle’, as it’s often referred to, is an incredibly high bar, and one that few if any products achieve.” Mark Price, Firewire
For that reason, Firewire’s boards are touted as ‘green-ER’, not ‘green’, and ‘less toxic’ as opposed to ‘sustainable’. Firewire have reduced waste-per-board-built by 95% over the past two years, “but that doesn’t mean our boards are sustainably produced. Any step towards reducing CO2 emissions, landfill waste, virgin raw material use etc, is a step in the right direction, but the wording does matter.”
Be suspicious “if a business announces overnight change,” cautions Vissla’s John Mossop. “But equally, we can’t be sceptical of every initiative. Change is evolutionary and incremental.” Mossop sees value in brands teaming with others who are developing more sustainable solutions: “they have the science and the brand has the consumer.”
Andy Baker can remember “years ago” when Naish were delivering SUP boards in a ‘keeper’ boardbag instead of plastic packaging. “We’ve been looking at this market for fifteen years,” he says, “and you’d have to be brave to bet against this change. But in every market, there are players who are just bolting on sustainability, as opposed to building it in. Do you want to be a Prius or a Tesla?” It’s an apt analogy: Toyota added the Prius to a range that includes monsters like the Landcruiser 200, but Tesla engineered an electric car as the centre of their enterprise, and their giant market capitalisation reflects the success of that strategy.
“…in every market, there are players who are just bolting on sustainability, as opposed to building it in. Do you want to be a Prius or a Tesla?” Andy Baker, Mobium
Rip Curl’s Helen Sharp makes a similar distinction: “We take our social and environmental responsibilities seriously, and don’t believe they’re a marketing tool. For the past few years we have had an increased focus within the business to become more socially and environmentally responsible across our global Rip Curl Group, and we do this because it is the right thing – not for any marketing reasons.
But there are undeniable pressures – financial and marketing ones – to dabble in a greenwash. As Simon Krite tells us, “A lot of the bigger brands are caught in a pricing cycle that unfortunately doesn’t allow for genuine sustainable practices. We’re seeing a movement towards this from many brands. It’s a difficult road to travel.”
Which brands are driving it?
Andy Baker stands outside the industry bubble, so it’s worth starting with his view on this question. “The major brands still appear to be playing at the margin, whereas emerging brands like Vissla and Outerknown seem to be placing sustainability more clearly within their core value proposition. This can lead to a process of the majors buying up the new brands, as for Amazon buying out the organic supermarket chain Whole Foods Market. Patagonia have been building these practices into their core for decades and are clear leaders.”
You’ll say ‘he wouldsay that – Patagonia paid for his research.’ But it’s a universally-held view. Firewire’s Mark Price says “Patagonia is obviously the gold standard”, a view echoed by Vissla’s John Mossop: “Patagonia has built its brand on environmental stewardship.” Both Price and Mossop also see successes elsewhere, including Volcom’s Veecologic program, Firewire andVissla.
Simon Krite looks outside the industry for influences, at global movements like Bluesign, GOTTS and fair labour groups that promote transparency in supply chain. “We also lobby and work with governments to promote their understanding.” Internally, Outerknown “follows every piece of every garment through its life-cycle and audits the trail so we can comfortably add our name and confidently demonstrate transparency and sustainability.”
There are, of course, a cohort of brands who are driving in the opposite direction – the ones who openly market on a petroleum and sugar platform. We won’t name them: you can imagine the examples. They cater to a consumer out there who can’t stand to be lectured to, and will actively buy against the tide. But as Andy Baker says, those brands are no longer the mainstream. In fact, “they’ve picked their niche, but they’re betting against the mainstream trend.”
What more can be done?
Plenty, according to Andy Baker. “If you start from the position that sustainability is the biggest innovation opportunity available right now, then everything can change, from front office through to manufacturing, to distribution.” He asks: “What are the opportunities your business is being exposed to, and what matters to your consumers? The common ground between those two things is the sweet spot.”
It’s clear from the answers that this question very quickly turns into another: ‘Who is responsible for pushing change?’
It would be great if corporations just did the right thing, says Mark Price. “But that’s not how the system is set up right now. I think we need demand pull, which will come about as consumers come to fully understand the existential threat that climate change represents.” This way, according to Price, the market will pressure companies to clean up their act or risk losing market share. “Thatwill focus the minds of any businesses that don’t feel the need to get on the program.”
John Mossop concurs. “Demand is the best driver of change and our youth are pretty demanding.” Interestingly, Mossop differs with Rip Curl’s Helen Sharp about the role of legislation: “Political will to legislate environmental outcomes will also help drive change,” says Mossop, while Sharp cautions “Each brand needs to drive their own internal push. It needs to be something that comes from within – not pressure from any external entity.”
The ‘gatekeepers’ of surf culture, people such as publishers, filmmakers and the WSL, do have an important role in changing market behaviour, according to Baker. He points to the Victorian Government’s Social Procurement Framework. It’s a big title for a simple idea: ‘if you want to do business with us, you’ll have to demonstrate certain social and environmental values.’ So for mags, that might read as ‘we won’t take ads that don’t meet our standards’. For contest venues, ‘you’re welcome to sell your merch here so long as you’re carbon neutral’. It’s important to remember that this stuff is not politics, nor ideology. It has real budget outcomes now, as much for a government as for a naming-rights sponsor.
Simon Krite sees opportunity in the manufacturing process. “There’s many things that can be done. The first is education, and consumer and businesses understanding of this is vital. Currently it can cost from 20% to 300% more to produce a garment sustainably. The more the general public understands that, and begins to demand their garments are made sustainably, the quicker it will become the norm.”
Maybe that educational role is not always about your own product. Boardriders’ Simon MacGregor points to the company’s twenty-year old investment in ‘The Crossing’, a boat circumnavigating the globe doing oceanic research, and its 2010 education campaign around water pollution. “As we look fifty years forward, we’re rethinking the way we approach sustainability with a refined strategy. We’re not perfect, but we are fully committed to a sustainable future.”
What’s the market opportunity? Will consumers act to their own disadvantage on price or convenience if they feel they’re supporting change?
The consensus here is that if demand factors move in the right direction, consumers won’t have to act to their disadvantage.
“At some point in the future,” says Price, “and I don’t know exactly when that inflection point will happen, it will become a strategic imperative to operate with integrity and transparency on Co2 emissions and general environmental stewardship, and it will be driven by consumer demand based on an understanding of the existential nature of the climate change threat.”
But he hastens to add that we’re not there yet. “Unfortunately, proactive strategic planning on this issue is in short supply…many of the incentives built into the existing capitalist structure reward short-term performance and in some cases like the public markets, actually punish longer term investments if they drive down short-term profitability. That needs to change.”
John Mossop thinks the market ‘opportunity’ is a stick, not a carrot. “I don’t think any business can afford not to be improving from an environmental or sustainability perspective. So the opportunity, in some respects, is get on board or else.”
You might contrast that last line with Helen Sharp’s description of Rip Curl’s position: “All consumers are different and have many reasons why they purchase a certain product. What we need to do is have all the available options and information for them to make those decisions.”
Progress, for Outerknown’s Simon Krite, is all about eliminating the need for a disadvantage. “We’re in a period of change, revolving around what consumers want for a cleaner and greener world. Hopefully everybody will have access to sustainable product one day. We’re still priced higher on many items than we would like, but we’re seeing growth, strong repeat business and we’re building a conscious consumer base. Our long-term goal is to make the same quality garments at better pricing. The danger with this, however, is there comes a point where the garment becomes disposable and doesn’t last as long. (It’s) a trap many surf brands have found themselves in.”
Let’s return to that earlier idea about the $600 million that’s up for grabs here: 50% of a $1.2 billion market that could turn toward more ethical products. It’s not a given that the turn will occur merely because the product is green. The wetsuit still needs to keep you warm. The bikini still needs to look good. The board still needs to convince its rider that they rip.
Andy Baker talks about “a world of near functional parity” – in other words, most products on the market are nearly as good as every other product, because if they weren’t, the market would swiftly sort them out. As Baker says, you want your product to be a hero, a purchase that the buyer recommends to friends because they’re proud of it. But the question is: in what wayis it a hero? Price? Performance? Appearance? All of those dimensions are near parity. Sustainability might be that crucial differentiator. The Harvard Business Reviewrecently confirmed that buyers will pay a premium for “virtue”. Translated to surf products, the premium is available not so much for “authentically surf” as for “authentically sustainable.”
Given their central role in the production of the LOHAS report, it seems fair that the last word on this topic should go to Patagonia. “Patagonia has always been focused on doing the right thing,” says Dane O’Shanassy. “We’ve stepped up our efforts, going deeper on recycled materials, Fair Trade-certified makers and keeping gear out of landfill through making it more durable and offering free repairs. We’re doubling down in our efforts to protect wild places like the Great Australian Bight. It feels like people, and surfers in particular, are responding to challenges of our times through their purchasing behaviours.”