Link HERE to read an article I recently wrote for Food Business News on “The complexity of clean label.”
Today’s shoppers want more information about what is in the foods they buy. They want to know where the food comes from and why the food contains certain ingredients. It’s not that they are necessarily opposed to the ingredients, they just want to know why they are in the product.
This growing consumer demand for transparency is being addressed both by regulation and with the rise of voluntary claims marketers make on packages and media. Each industry and segment are at a different stage of transparency, according to Kristi Weaver, partner, McKinsey & Company, Chicago, who was a featured speaker at the TransparencyIQ conference held Oct. 18, 2017 in Rosemont, Ill. For example, while artificial growth hormone-free liquid milk has become standard in retail, the market for cheese has yet to tip, with not even 30% of conventional U.S. cheese sporting the claim.
“Consumers today expect transparency from retailers and manufacturers,” Ms. Weaver said. “This impacts their purchase decisions.”
In the overall food industry, information about product ingredients ranks highest, followed by manufacturing process and sourcing practices. Many marketers invest in clean-label claims to remain competitive. Others do so to secure a competitive advantage based on consumer demand and their willingness to pay.
Transparency is materializing for consumers on two different levels, according to Weaver.
“There’s mandated transparency, which regulatory agencies act as advocates for the consumer and set up rules around,” she said. This includes labeling laws, such as the Nutrition Facts and nutrient content claims; dietary restrictions, such as a ban on trans-fatty acids; sourcing claims, such as organic; and manufacturing claims, such as no hormones in poultry.
“There’s also voluntary transparency, where companies advertise product attributes that cater to their target consumer,” said Ms. Weaver. “These attributes address one or more dimensions of a product, including ingredients, manufacturing, process and more. Voluntary transparency can be a source of competitive advantage.”
She presented a scenario with retail packaged chicken, which can easily be translated to many dairy foods. With chicken, hormone-free is required. “The category has tipped towards antibiotic-free,” she said. “Vegetarian-fed and cage-free are a competitive advantage.”
Companies that are in the process of making voluntary claims are wise to communicate their goals. In dairy, if you have plans to remove all artificial colors by the end of 2018, communicate this to consumers. They appreciate the information.
This past August, Kalona SuperNatural announced that it is the first dairy brand to offer 100% grass-fed products certified by the American Grassfed Association (AGA). As part of this initiative, in early 2018, two new products with this certification will be hitting store shelves, Plain and Vanilla Organic, 100% Grass-fed Cultured Whole Milk Kefir.
The AGA certification guarantees that the milk used to make their 100% grass-fed products comes from cows that are pasture-grazed and fed 100% forage, with no use of grains or grain products. It also prohibits the use of confinements, growth hormones, antibiotics and GMOs.
“Launching new products with the AGA certification gives us a competitive advantage in the marketplace,” says Mindy Seiffert, director of sales and marketing at Kalona Organics. “Today’s consumers are seeking transparency, credibility and authenticity when it comes to label claims on their products.”
Phil Forbes, farm liaison for the Kalona SuperNatural brand, says, “Our driving force behind getting AGA certified was transparency. We strive to get third-party verification on any claim we make on our products. AGA certification helps the consumer feel confident that when we say our kefir [coming soon in 2018] is 100% grass-fed, that it indeed is just exactly that.”
“Butter is a very simple and natural product. Over the years, we witnessed a shift in consumers who want more accredited transparency in their food, we believe offering a Non-GMO Project Verified butter option would offer consumers more choices for their families,” says Trevor Wuethrich, president of Grassland.
He is right, consumers want to know more and rely on labels for that information.
At TransparencyIQ, Patrick Moorhead, chief marketing officer for Label Insight, Chicago, shared proprietary 2017 research showing that nearly half (48%) of consumers currently do not feel adequately informed about a product even after reading its label. Two-thirds of consumers hold the manufacturer/brand accountable for communicating critical product information in order for them to make an educated decision regarding purchase.
Here’s where it gets real, according to Mr. Moorhead: 39% of consumers would switch from their current preferred brand to one that offers more product transparency, while 81% would consider a brand’s entire portfolio of products if they switched to that brand because of transparency.
Why? Why? Why? It’s a recurring theme in transparency programs.
“People don’t buy what you do. They buy why you do it,” said Gina Asoudegan, senior director of mission, Applegate Farms, Bridgewater Township, N.J. She shared how Applegate Farms has driven industry change by forging alliances with non-governmental organizations (NGOs), which are non-profit, voluntary citizens’ group, and third parties.
“Transparency for Applegate Farms is less about pushing our product and more about talking to people about our product,” she said. “You need to sell them your mission because today’s consumers buy based on their values.”
This is exactly how Stonyfield Farm made a household name of itself some 20 years ago. I remember being surprised by former-CEO and Co-Founder Gary Hirshberg’s openness in discussing the company and its efforts while other company’s executives shied away from interviews. He felt it was important to inform shoppers “why,” and in doing so, they would be loyal customers. He was right.
When he and Samuel Kaymen joined forces in 1983, they were simply trying to help family farms survive, protect the environment, and keep food and food production healthy through their nonprofit organic farming school. When they commercialized their yogurt production, it was not all organic, as demand for the yogurt exceeded supply of organic milk and other ingredients. Still, they focused on producing healthy, delicious food void of “unclean” ingredients.
Like anyone who became acquainted with Gary in the 90s, I quickly learned that part of his mission was to raise consumer awareness about the health- and wellness-benefits of consuming yogurt and other dairy foods. He wanted all processors to thrive and believed by making, promoting and selling the best dairy products possible, everyone was a winner. He believed winners had nothing to hide.
At the TransparencyIQ conference, Ludovic Meilhac, partner at McKinsey & Company, emphasized how transparency is much more than ingredient disclosure, with many layers of interdependent strategies to consider. Product developers and marketers must consider all aspects of transparency to have a chance in succeeding.
This includes being transparent along the way, not just when you reach your clean-label goals. That was the message shared by Deborah Arcoleo, director of product transparency, The Hershey Company, Hershey, Pa. She shared five lessons learned while implementing the company’s transparency program. These all apply to dairy foods marketing.
Lesson One: What matters is what people want to hear, not what you want to say; and consumers like knowing that even more information is available even if they don’t anticipate needing it.
Lesson Two: Consumers want to hear the whole story, not just the good bits. ‘Fess up to what you’re not satisfied with and what you are going to get better.
Lesson Three: The absence of information is information. Consumers will make up a story--often inaccurate--for why they can’t find what they are looking for.
Lesson Four: At the individual product level, your ability to be transparent is only as good as your data architecture. You can’t share what you don’t store and maintain.
Lesson Five: People are hungry for knowledge of how food is grown and where it comes from. Videos of farms and farmers brings product to life and educates them about the food system.