Friday, June 24, 2016

Dairy Industry Game Changers: Nutrition Facts, Serving Size and E-Commerce

By now you should be fully aware that on May 20, 2016, FDA released mandatory nutrition labeling revisions. FDA made changes to the content and format of the Nutrition Facts label as well as to the reference amounts that determine the serving sizes of conventional foods. The compliance date for manufacturers with more than $10 million in annual food sales is July 26, 2018. For manufacturers with less than $10 million in annual food sales, the compliance date is July 26, 2019.

If you would like to read the two final rulings, here are the links:

“Food Labeling: Revision of the Nutrition and Supplement Facts Labels.” This rule revises FDA regulations to provide updated nutrition information on the label and improve how nutrition information is presented to consumers.

“Food Labeling: Serving Sizes of Foods That Can Reasonably Be Consumed at One Eating Occasion; Dual-Column Labeling; Updating, Modifying, and Establishing Certain Reference Amounts Customarily Consumed; Serving Size for Breath Mints; and Technical Amendments.” This rule defines a single-serving container; requires dual-column labeling for certain containers; updates, modifies and establishes several reference amounts customarily consumed (RACCs); amends the label serving size for breath mints; and make technical amendments to various aspects of the serving size regulations.

“The new label features a reformatted design with greater prominence for calories, updated Daily Values intended to indicate to consumers whether a product is high or low in particular nutrients and revised serving sizes and labeling requirements for certain package sizes,” says Cary Frye, vice president of regulatory and scientific affairs at the International Dairy Foods Association (IDFA). “Also, vitamin D and potassium will join calcium and iron on the label as nutrients that must be declared.”

One of the biggest changes taking place is with the carbohydrate category. For the first time, the label must declare “added sugars,” and “sugars” now will be declared as “total sugars.” The value for total sugars will include all naturally occurring sugars, such as lactose in milk, and added sugars. No Daily Value was set for total sugars; however, for added sugars, it is 10% of calories, or 50 grams for adults and children over four years of age.

The FDA based this new requirement on a review of the science underlying the 2015-2020 Dietary Guidelines. It is intended to help Americans make healthy dietary choices by monitoring their intake of added sugars.

Responding to comments on the proposed rule’s definition of added sugars, FDA issued the following definition:

Added sugars are either added during the processing of foods, or are packaged as such, and include sugars (free, mono- and disaccharides), sugars from syrups and honey, and sugars from concentrated fruit or vegetable juices that are in excess of what would be expected from the same volume of 100 percent fruit or vegetable juice of the same type, except that fruit or vegetable juice concentrated from 100% juices sold to consumers, fruit or vegetable juice concentrates used towards the total juice percentage label declaration or for Brix standardization, fruit juice concentrates which are used to formulate the fruit component of jellies, jams, or preserves, or the fruit component of fruit spreads shall not be labeled as added sugars.

To read an article about reducing added sugar in beverages, including flavored milk and drinkable yogurt, link HERE to an article I recently wrote on the topic for Food Business News. It provides a detailed explanation on the sweeteners that won’t count as added sugar on the new Nutrition Facts label, as well as how fruit juice can be used as a natural sweetener, color and flavor in dairy beverages.

There are numerous other Nutrition Facts modifications that will be required because of changes in the Daily Value for fat, sodium, fiber, and select vitamins and minerals. THIS WILL IMPACT MANY NUTRIENT CONTENT CLAIMS.

Then there’s the changes made to serving size, because after all, who really eats only a half-cup of ice cream in a sitting? When making these serving size changes, FDA used various sources of data to determine the “Reference Amount Customarily Consumed” (RACC).

The FDA amended the serving sizes for ice cream and frozen desserts, including frozen novelties from a half cup to two-thirds cup, (5 fluid ounces). Initially, FDA proposed an increase to one cup. Thanks to efforts by IDFA, the agency reevaluated the decision tree used to determine the serving size, and agreed that two-thirds is more reasonable than a full cup.

For yogurt, the serving size dropped from 8 ounces to 6 ounces, to better reflect current pack sizes in the market. This request came from the yogurt industry. The final rule stated that this serving size also applies to drinkable yogurt, which for some marketers, may not be a favorable change. FDA did clarify; however, that “smoothies,” including blends of fruit with yogurt, milk or ice cream, are included under the category of “shakes and shake substitute, e.g., dairy shake mixes, fruit frost mixes.” This category has a serving size of 8 ounces. So, for all those drinkable yogurt marketers in 8 ounce bottles, you might want to consider a product description change, reformulation or package size reduction. 

FDA’s final rule did not make any serving size changes to other milk, cheese or dairy products.

Processors should be aware that the RACC changes for ice cream and frozen desserts, as well as yogurt, may have an impact on the nutrient content claims currently used on labels, according to Frye.

The change in serving size will require possible reformulation to adjust the product to meet the current claim or discontinue use of the voluntary claim, if reformulation is not possible. For example, per the legal definition for the descriptor “low,” under the current, soon-to-be-former half-cup RACC, “low-fat ice cream” was required to have 3 grams or less of total fat. With the RACC increasing 32% in volume from half cup to two-thirds cup, the fat must be reduced in the final product by 32% to continue using the term “low-fat.”

“Novelties can still listed as one piece or one cup, but the serving size for novelties is also two-thirds cup,” says Frye. “Also, the new regulations define that a single-serving package is defined as containing less than two servings. For ice cream, that’s less than 10 fluid ounces.”

So, if you had a package of three 3-ounce ice cream mini-bars, the package would have to be labeled as one serving of three bars, for a total of 9 fluid ounces, listing the nutrition information for the total of the three bars. The marketer can voluntarily also provide the nutrient information per single 3-ounce bar.

Single-serve units is where things get complicated. A big thank you to Cary Frye for this explanation.

All containers with less than 200% of the RACC will now be labeled as a single-serving container, resulting in more products labeled as containing a single serving. This change removes the current flexibility for products such as fluid milk with “large” RACCs (of 100 grams or milliliters or larger), under which manufacturers may decide whether a package that contains more than 150 and less than 200 percent of the RACC be labeled as one or two servings.

For example, currently a 14-ounce container of milk could have been labeled and provide the nutrient information either based on “one serving” or “approximately two servings” per container. Such products with less than 200% of the RACC, such as a 14-ounce container of milk, must now be labeled as one serving and provide the product’s nutrition information based on the entire single serving container amount.

There are additional mandatory, and some voluntary options to provide dual columns of nutrition information based on package size, in particular, packs that contain multiple single units, as well as containers with at least 200% and up to 300% of the RACC. For example, a pint of ice cream that contains three servings will require dual-column labeling: one column with information for a two-thirds cup serving and the other column for the entire pint package…as some folks have long thought a pint was a single serving! (Thanks to Wells Enterprises for hosting me this week, including that very generous serving of ice cream at your store. Great time!)

In order to assist IDFA members with making the necessary changes to product labels, IDFA will be providing detailed information about what changes are needed for dairy products in a soon-to-be-issued comprehensive “IDFA Regulatory Update” reference guide. The association will also offer webinar training for the industry in August and repeated in September that will cover information on each element of the changes. Additionally, IDFA will be updating their labeling manuals with the new regulations. Thank you IDFA for assisting with this expensive and time-consuming labeling overhaul.

Are your products e-shopper friendly?

There’s no denying that online grocery is rapidly growing and it’s having a major effect on the dairy industry. In 2015, dairy category sales accounted for 15% of eCommerce sales, according to MyWebGrocer. In fact, dairy products were included in 93% of all carts, which was 8% more than the next most popular category (produce).

The propensity of online shoppers to buy dairy products makes them an increasingly important audience for all dairy brands. MyWebGrocer, a leader in digital grocery services, has compiled The Grocery eCommerce Index for dairy based off of its data, which provides extensive insights into consumer habits.

For example, online milk sales soared 24% in 2015. In contrast, Information Resources Inc., reported that overall retail milk sales declined 5.2% during the same period.
Online grocery shoppers are also proven consumers of cheeses. Cheddar and mozzarella accounted for more than 50% of online cheese sales in 2015.

“Online grocery platforms provide a terrific opportunity for dairy brands to leverage shopper data and analytics, to run campaigns that drive sales,” according to Michelle Cote, vice president of data and insights at MyWebGrocer. “With the expanding capabilities of eCommerce and mobile marketing tools, dairy brands can effectively engage online shoppers, even while they’re making in-store purchases. Reaching customers at the point of purchase is critical to a dairy brand’s eCommerce success.

“Data-driven-shopper targeting is a key strategy, where dairy brands can target heavy yogurt buyers, for instance, with their brand message or target cereal browsers with a message from a milk brand,” she said. “Keyword search targeting is also very powerful and allows a dairy brand to reach shoppers as they search for products to add to their cart. Milk, for instance, is a top keyword that can be leveraged by dairy brands.”

There’s a misconception in the market that shoppers don’t buy perishable items online; however, this is not the case. Grocery shoppers do buy dairy products online. For the millions of consumers who use online grocery, dairy products make up the largest category they purchase.

According to the study, online shoppers are boosting their purchases of all dairy products. The largest-selling dairy product categories—milk, cheese and yogurt—all posted impressive sales gains of between 20% and 24% in 2015. If the trend continues, dairy products could account for an even larger share of the online grocery pie. Last year, online dairy sales soared +20%, well above the +15% sales gains posted for all online grocery purchases, according to MyWebGrocer.

The culinary curiosity of online grocery shoppers makes the eCommerce platform a reliable proving ground for brand extensions or new products, according to Cote. Because online shoppers are clearly open to trying foods that are new to them, dairy brands can quickly determine the viability of product introductions. Online sales data can then be used to negotiate valuable in-store shelf space with grocers.

It’s time to up your game to make your products are getting into the eBasket.

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