This paper examines the systematically differentiated sustainability strategies employed by brands amid an overall rise in the preference for sustainability in unregulated consumer packaged goods (CPG) markets. Analyzing the health and beauty care categories between 2013 and 2019, we find that the growth in prevalence and market share of products with sustainability features is primarily driven by fringe - not historically dominant - brands, with sustainability features playing a limited role in product pricing. Our model estimates reveal a consistent explanation for these patterns: although overall consumer preference for sustainability is increasing, most consumers continue to prioritize non-sustainable product attributes and favor sustainability features that smaller brands are better positioned to provide. These preferences imply that dominant brands face limited incentives to offer sustainable products, explaining the market equilibrium where dominant brands offer less preferred, lower-cost, and lower-priced sustainable alternatives, whereas smaller brands offer more preferred, higher-cost, and higher-priced options to differentiate themselves. These findings have implications for brands and policymakers promoting sustainability.
