Alan Rownan, Research Analyst with Euromonitor International, Inc., presented a data-laden status report on global clean label food trends and driving value via clean label claims, followed by a surprising interchange at the end.
In his presentation titled “Increasing Consumer Confidence and Driving Value through Clean Label Claims Globally, Rowan began by noting that, “18 months ago, we launched a new database called ‘Passport Ethical Labels’…where we track up to 26,000 brands and package claims across 26 markets.” The purpose is to establish the true value of such claims in the specific markets served. International leaders in the clean label category include Nestle, PepsiCo, Unilever and Kraft Heinz (in descending order). “Clean label” is less a label policy than a corporate philosophy, posited Rownan. He segued to the recent attempted acquisition of Unilever by the Kraft Heinz Company, noting that Unilever very openly promotes its commitment to sustainability, environmental responsibility and corporate transparency. Had the acquisition been successful, “would Kraft Heinz therefore have had to adopt Unilever’s core values in order to protect all of its brands?” asked Rownan.
Another company, Mars, Inc., long was reluctant to reformulate its legacy brands but, in the end, listened to its customers, said Rownan. The language it used in its promotions clearly said to its consumers: “We hear you, and we have made an ongoing commitment to meet your needs.”
For Mars, this was a good outcome, but there are risks involved for early adopters: Rownan cited the case of The Campbell Soup Company’s highly publicized reformulations of its soup lines to significantly reduce sodium contents. “The result was that consumers equated less salt with less flavor, and the effort failed, thereby putting all the company’s brands at risk.”
Many clean label concerns overlap geographical boundaries. Common desires among clean label consumers include increased transparency, clarity and confidence in food and beverage formulations, as well as their manufacturers
Click for a downloadable version of the chart
Euromonitor estimates the global value of the packaged foods’ clean label category at US$165 billion across the 26 markets tracked. Rownan suggested that this is the outgrowth of consumer desires for clean, safe and natural products starting as far back as the 1960s. Events that fueled this trend included consumer fears of e-numbers (in Europe); melamine contamination; alleged links between artificial colors and hyperactivity; GMO controversies; and, more recently in the UK, the adulteration of ready-to-eat meals with horsemeat.
Euromonitor says that the market leader for clean label foods is North America ($67 billion), followed by Europe ($59 billion) and China ($23 billion). The global clean label category itself is dominated by retail packaged foods ($129 billion), soft drinks ($34 billion) and hot drinks ($3 billion). Rownan predicted modest CAGR growth (1-5%) in these categories over the 2015-2020 period, albeit from a conservative standpoint.
Underlying clean label concerns is the fact that consumers want to know not only what is in their food, but the contextual narrative behind it, said Rownan. Are ingredients locally sourced; produced by fair trade practices; or grown under environmentally sustainable conditions?
The most persuasive claims for clean labels was led by “all natural” (44%), followed by “no artificial ingredients” (40%). Organic garnered (31%), no-MSG (24%) and BPA-free (15%). Claims of support by health organizations (e.g., American Heart Association) garnered the interest of 22% of consumers polled. Make clean label claims as simple as possible and avoid “green washing,” cautioned Rownan, “because underpinning all clean label claims is the trust issue.” If claims are vague; inspire fear-mongering; or are so creative they lose specificity, they risk diluting the entire clean label category. Examples given included bottled water claiming to have been “made with clean water;” “say ‘no’ to sugar” claims; and a product that advertised “no added nasties.”
Rownan posited that increased transparency, possibly through QR codes, could only help the category. An audience member then asked if there was any evidence linking specific product claims in e-commerce to retail impacts? The response was that food products sold in e-commerce exhibit very few claims on the packages themselves, but offer significantly more claims on the website from where sold. Increasingly, these claims are accessible through QR codes. Both commentators may have inadvertently signaled how food-label regulations might become obsolete altogether.
“Instilling Consumer Confidence Through Clean Label Claims,” Alan Rownan, Research Analyst, Euromonitor International, Alan.rownan@euromonitor.com
This presentation was given at the 2017 Clean Label Conference. To download presentations from this event, go to https://cleanlabel.globalfoodforums.com/category/clean-label-rd-academy/
See past and future Clean Label Conference Events at https://cleanlabel.globalfoodforums.com/clean-label-events/
