CHICAGO — Nearly 4 in 10 consumers say they would switch to a new brand from a current preferred brand in favor of increased product transparency, according to a recent study from Label Insight. Moreover, 73% of consumers would be willing to pay more for a product that offers complete transparency, the survey revealed.
Label Insight is a technology company providing data and tools to enable transparency between brands and consumers.
“We surveyed consumers to understand what they really wanted from brands in terms of transparency to try to define that better, and to quantify what the possible benefit to providing that information could be for brands,” said Patrick Moorhead, chief marketing officer of Label Insight, in an interview with Food Business News. “What we uncovered in the study in a top-line way is that consumers expect and want more information about the products they’re consuming. They expect brands to give it to them. They don’t trust brands are doing that today, even though they desperately want them to… and will even pay more for those products that they perceive as providing more transparency about the whats and whys and hows of their manufacture.”
Label Insight works with consumer packaged goods companies to participate in the Grocery Manufacturers Association’s SmartLabel transparency initiative, which was introduced late last year to provide consumers access to information about the ingredients in the products they purchase. The platform includes web sites, apps, Q.R. codes and other elements to make product research easier for consumers.
Attributes included in SmartLabel fall into two categories — information companies are required by law to list on product labels and voluntary information related to such topics as vegan, fair trade, dolphin safe, etc.
Label Insight’s recent survey found 79% of shoppers are very likely or somewhat likely to use SmartLabel technology, and 44% would trust a brand more if it participated in the SmartLabel initiative.
“It’s early days for SmartLabel,” Mr. Moorhead said. “Consumer adoption is slow, awareness of SmartLabel as an option is low, and brand adoption of SmartLabel is low today, so no wonder the consumer is not aware of it or necessarily keyed toward using it. But I think that in our bet for our business that is going to change dramatically in the next 24 months.
“And certainly the marketplace activity that our team is seeing in conversations with major C.P.G.s would indicate that over the next 12 to 18 months most U.S. C.P.G. companies will execute SmartLabel for themselves, whether they build it themselves or hire a firm like Label Insight to do it for them.”
In a recent interview, Mr. Moorhead shared additional findings of his firm’s consumer research and discussed how food and beverage companies may best respond to the increased demand for transparency.
Food Business News: What factors have led to this increased consumer demand for transparency?
Patrick Moorhead: It feels like all of a sudden, but if you trace it back, it’s not. A big factor in the consumer mindset shift has actually been smartphones. We think that because of the iPhone emerging in (2007), essentially putting a robust internet computer in people’s pockets, that as time has gone on, it has created a default expectation in the mindset of consumers that they can type in any question they have and immediately get specific, relevant information in response. Google has created that expectation, and mobile has made that into a real-time, on-demand information economy that is the default setting for consumers.
What’s interesting is the sector where that information is lacking most is food and personal care products. When you turn to internet search to look for specific nutrition and ingredient information about products today, it’s hard to find, and the sources of information that you do find are often not the brands themselves.
Third-party sources, potentially the federal government, bloggers, food scientists or ag researchers at universities who are working with limited and antiquated information at best and potentially incorrect information that’s certainly not managed by the brands themselves. So there is a disconnect between the consumer expectation for on-demand specific information about anything all the time and the food and personal care industries’ ability to keep up with that in a way that is useful to them.
What can food and beverage companies do?
Mr. Moorhead: Your customer’s first contact with your products could very well be through that effort of typing the product name or product type into a search engine and making a decision about whether to even engage with that product based on the output of that search. It’s very important to be there.
And what’s not relevant in that whole economy is a television ad or a display ad that has some type of top-line brand message. If a consumer is going to look at a cereal product because they want to understand if there are ingredients that are harmful for their child’s food allergy … the television commercial is irrelevant to them. That’s the opportunity with brands and transparency today.
What if the product contains ingredients the consumer doesn’t want to see?
Mr. Moorhead: The answer is sort of surprising. We examined that specific question in our research. The short answer is: No information is a type of information. Consumers are increasingly savvy enough today that they understand that just because you’re not telling them doesn’t necessarily mean the information doesn’t exist…
Some of the ingredient information about products is not pretty information. There are chemicals and ingredients that get used in products that have to get used — whether because of safety, because of taste and consistency, because of the process of manufacture for scale — that they’re required components of doing business, and they’re not necessarily always great stories, but if we intend to build and improve trust between brands and consumers, we have to believe as brand owners that consumers know what to do with that information. I think the corresponding view from consumers is, “I understand some of this information may be hard to understand and I may not like all of it, but give me the opportunity to make that choice based on a full set of information.”
Can you share any examples of brands embracing transparency in an effective way?
Mr. Moorhead: Unilever hired Label Insight at the beginning of 2016 to help them deliver a component of their Sustainable Living initiative, which had to do with becoming more transparent about the ingredients in their products, particularly food products. They embraced this new industry standard called SmartLabel, which is a third-party digital labeling initiative led by the G.M.A. They (decided) to use SmartLabel as a way to deliver this richer off-package information that we know consumers want about products in a scalable way for the organization.
And so Label Insight helped them organize and synthesize all of the data on their side that they would need to deliver that, and ultimately we helped them publish 2,000 digital labels for their entire U.S. product portfolio…
The interesting story, though, is what happened along the way. In the process of developing the SmartLabel digital pages for Hellmann’s mayonnaise, Label Insight’s technology was able to show Unilever all of the information that we extract from a package of Hellmann’s mayonnaise: “This is all of the information you disclose, essentially, on the physical label, and then here’s all of the other information that SmartLabel provides for you to include about this product that you can’t put on the physical package.” Things like farming methods or methods of manufacture or sustainability practices around ingredient sourcing. That’s the stuff that, ironically, consumers care a great deal about when making purchasing decisions, and it’s difficult to include on physical packaging.
When the Hellmann’s team was in the process of filling out what we call that voluntary off-package information for the product, they had to engage a group of stakeholders internally that don’t normally work together across regulatory, labeling, legal, sourcing, formulation and marketing, to arrive at the right set of information to correctly populate those voluntary fields in the SmartLabel, and what they ultimately wound up uncovering was that the soybeans used to create the soybean oil that is one of the foundational ingredients in Hellmann’s mayonnaise are actually all grown from a handful of farms in Iowa.
It was like the light was turned on in a dark room, where all of a sudden the marketing people are saying, “Wow, so we actually have an interesting hero ingredient in this soybean oil as a domestic product of the U.S.A., and it gives an authentic reason for Hellmann’s to talk about mayonnaise being a part of the Americana of picnics and sandwiches and school lunches because one of the foundational elements of the product itself all come from this farm in Iowa.” They actually went out and did some ad creative with the farmers and put a human face on that.I like that story because I think it describes the value of richer information. It talks about how transparency isn’t necessarily about disclosure exclusively; it’s about a more complete picture of the details of how a product is created. In this case, those details served a great brand purpose to the consumer and the marketer. So the consumer is getting a double benefit of knowing more about the product they’re buying and finding a new reason to love this brand.