The price of simplicity
April 26, 2011
by Keith Nunes
The SymphonyIRI Group’s 2010 Food and Beverage New Product Pacesetters underscore how prominent the clean, simple label trend has become. Four of the products ranked in the top 10 may be considered to have a clean, simple label and achieved significant year-one dollar sales across the food, drug and mass merchandising categories (excluding Wal-Mart Stores, Inc.), including Chobani Greek Yogurt, Wonderful Pistachios, Nature’s Pride bread and Thomas’ Better Start English muffins.
Consumer demand for products featuring a simple label has increased and food processors and ingredient suppliers are responding. In 2010 Cargill, Minneapolis, formed a group within its food ingredient systems platform to address the clean, simple label trend.
“One of the reasons we started it (the clean label group) is we viewed it as an opportunity,” said Sharon Walbert, assistant vice-president and technical services leader for the clean label group. “There was consumer interest in this area and we had several key customers who had started working on it. They were working to simplify the labels on existing products or clean up some of the ingredients on the label. Some were also developing new products that used minimally processed ingredients that had the same quality, safety and shelf life of other ingredients.”
Jennifer McLenighan, a marketing manager in the clean label group, said there are a number of reasons why consumers are expressing more concern about food ingredients.
“There is a growing consumer perception that what you eat can have a positive effect on your well being,” she said. “It has led consumers to be accountable for their own health. Health care costs are also a factor. People are looking for ways to be healthier. The economy has led consumers to make more mindful choices about what they are eating. On top of all that the obesity crisis has had a presence in the news.
“Then there are many initiatives that direct people to healthier eating. There is Michelle Obama’s nutrition work, front-of-pack labeling, programs like Supervalu’s Nutrition IQ effort, Wal-Mart’s initiative, and the 2010 dietary guidelines. Many of those things are contributing to people thinking about making healthier food choices.”
In 2010, the Leatherhead Food Research Group, Surrey, England, conducted a study of the clean label trend. The effort included a survey of 2,500 consumers across five markets, including the United States, France, Germany, Italy and the United Kingdom, as well as interviews with executives from 30 food and beverage manufacturers and ingredient suppliers.
“A clean label gives consumers sufficient information to enable them to make informed decisions leaving them in no doubt as to the contents of the product,” said Matthew Incles, market intelligence manager for Leatherhead Food Research. “According to this definition a ‘cleanly labeled’ product does not therefore need to be manufactured with ‘natural’ ‘additive-free’ or ‘store-cupboard’ ingredients as some suggest because the emphasis is focused on providing consumers transparent and clear information empowering them to express their consumption preferences.
“For example, consumers may be perfectly happy to eat or drink products containing artificial ingredients. The point of clean labeling is therefore simply to inform shoppers to enable them to better express their consumption preferences.”
Mr. Incles added that the limitation of the definition is that it relies on consumer knowledge and awareness of a vast array of ingredients.
“Clearly it is impossible for consumers to know all this and therefore food and drink manufacturers must accept that consumers will have limited knowledge and they will therefore encounter barriers, perceived or real, toward certain ingredients,” he said. “Two solutions to this dilemma are immediately apparent. The first is to only use store-cupboard or natural ingredients as consumer awareness is likely to be much higher. This road leads to product reformulation.
“The second solution is to raise consumer awareness by providing ingredient information on-pack, at point-of-sale, via company web sites and so on. This road leads to a big awareness raising campaign. The reality is that food and drink manufacturers are more than likely going to need to do a bit of both but in varying degrees.”
Kantha Shelke, a principal with Corvus Blue L.L.C., Chicago, said one company that is doing a good job educating consumers is PepsiCo, Inc., Purchase, N.Y.
“If you look at Pepsi Sobe products, which have products that use nutraceuticals and other chemical sounding ingredients, they have a glossary on the product written in a language that may be understood by both its core audience, young men, and their parents.
“There is an opportunity for food companies to be transparent. It is a very small step, but it is a very important step to bringing closer those consumers who are on the fence and keeping them rather than having them move away from certain products.”
The challenges of reformulation
Reformulation efforts may become complex endeavors for companies interested in simplifying food and beverage labels.
“Food ingredients are modified and refined for a reason — it makes them more functional,” said Ms. Walbert of Cargill. “We use modified and refined ingredients for excellent functionality. You can get that same functionality with minimal processing, because there have been a lot of the advances in new technologies, enzymes, thermal processing as well as agronomy.”
But the switch to alternative ingredients that may be more label friendly also will force manufacturers to consider tradeoffs.
“With ‘natural’ reformulation efforts there are definitely some tradeoffs, and I think that companies are facing fundamental cost, benefit decisions,” Mr. Incles said. “For example, natural additives, such as colors, flavors, preservatives, etc., are in high demand and are, for now, less available because production levels are still growing to meet demand. Consequently, there are increased production costs to consider.
“The sustainability of some natural additives is in question so many large food companies are concerned about security of supply if they do make the switch to natural. Additional factors include manufacturing performance, the heat stability of some natural colors is not as optimum as artificial colors, and end result, some natural colors are less vibrant than their artificial counterparts. In terms of functionality I think what is clear is that manufacturers of functional food products are having to go further afield to find natural alternatives — we have seen this recently with the use of guarana and ginseng in energy products.”
Before initiating a reformulation effort to develop a product that features a clean, simple label, Ms. Shelke of Corvus Blue recommends companies do quite a bit of research.
“Cleaning a label is a very complex matter,” she said. “It is very important to clarify the objective. It would be good for manufacturers to ask why they are doing it? (Are they doing it) to make a claim — natural, organic, lesser evil — or are you doing it for taste or health or to be compliant with regulations? Is the objective to cater to a particular consumer demographic or need?
“If you figure those aspects out then the chances are you are going to go in and look at your food product very differently. And most importantly you will now identify, you will be able identify, what aspects of your product are more important to your target audience.”
Ms. Shelke pointed to high-fructose corn syrup as an ingredient that poses a particular challenge to replace in a formulation.
“Consumers have come to expect a certain taste or texture for specific products; they have a preconceived notion of what it should taste like,” she said. “The industry has tailored HFCS to specific applications, making their replacement unique to each application tedious, complicated, specific and therefore, more expensive than it would have been had it been just one kind of HFCS across the board. Each replacement has to match not only the sweetness but also the other functionalities within the company’s processing and economic constraints.The replacements that have come in do not deliver in terms of sweetness. Now you have to redo the whole formulation.”
The impact of overlapping trends
At the same time that the simple, clean label trend has emerged, value and health also have emerged as concerns for consumers, and convenience has ranked high as a consumer trend for many years. How each overlaps with the other heightens the challenges companies face.
Speaking to the issue of health, Mr. Incles said, “There is a definite overlap in many areas, most notably products that promote health and well-being and low-, no-, reduced-sugar, -salt and -fat. It’s very hard to define where one issue ends and the other begins because the boundaries are blurred.
“Whilst I see sugar, salt and fat reduction as fundamentally different issues to clean label I equally don’t think consumers think this way. I think there are multiple issues that food companies need to address at the same time such as reducing salt and fat, making the product gluten-free and with entirely natural ingredients and provide a clean label. Of course, they need to do this and remain competitive.
“At some level all food companies will need to address these multiple considerations — the extent to which they need to do so will vary depending on their product portfolio; for example, gluten-free will be a higher priority for cereal products.”
Ms. Walbert said a past issue related to cleaner label products that focus on value and convenience has been availability, but that the emergence of retailers such as Whole Foods and Trader Joe’s has expanded market opportunities for manufacturers and translated into consumers demanding similar products from other retailers.
“In the past, some consumers went out of their way to buy cleaner label products they perceive to be healthy,” she said. “Today, they have more choices.
“And it is all about choice. I don’t think modified and refined ingredients are going to go away, because they have good functionality and good value. It is not an either- or situation.”