The X FactorClean Label Considerations

Phoenix, AZThe clean and natural labeling movement continues to gain traction, not just in the U.S. but globally, with fully 17% of new food and beverage launches around the world now positioned as natural, additive-/preservative-free or both. Innova research indicates clean label product launches in the U.S. from 2007 to 2012 constituted 18% of the market.

Manufacturers should carefully consider market drivers, consumer perception, ingredient choices, and even the legal ramifications of the use of the word natural on a label. In a webinar, Natural & Clean Label Trends 2013, presenters discussed research data, trends and warned of potential legal tangles involved in this market opportunity.

Tom Vierhhile, innovation insight director, Datamonitor, London, discussed clean and natural versus organic and consumer opinions about ingredients titles. He said no matter how small a change is instituted, companies manufacturing almost any product type can take advantage of this trend, even something like clear packaging to show the ingredients a product contains, telegraphs to consumers their products are more wholesome."

Vierhile and other presenters warned attendees that consumers can be skeptical of natural claims and authenticity is one key to success. In addition, Vierhile predicted it is inevitable" that the U.S. will eventually institute GMO-labeling regulations.

Aaron Edwards, global director of wholesome ingredients, Ingredion, Westchester, IL, shared proprietary research showing 62% of U.S. consumers are reading food label ingredients statements. For global manufacturers Edwards cautioned they be aware of regional differences between markets in different countries as consumers in France will react to different package claims than those in Germany, for example.

A unifying trend overall globally is that market drivers are young mothers, acting as nutritional gatekeepers" for the family, most specifically concerning foods and beverages purchased for their children. In the baby food category for example, as a countrys economic status improves and purchase power increases, clean label expectations rise.

Companies examining product labels for reformulation were told consumers look for simple ingredients they recognize from their own kitchen and do not like those with chemical sounding names," or names difficult to pronounce, giving as an example, ingredients that start with the letter x, with Edwards saying consumers can find long ingredient titles scary."

Consumer expectations for clean label do vary depending upon product category with dairy products for example, viewed as inherently healthy and benefiting from a wellness halo," while carbonated soft drinks are viewed as less healthy. Consumers have lower expectations for natural labeling on products viewed as indulgent, such as soft drinks or confections, because they arent considered part of the mainstream diet, however natural and clean labeling is creeping into these product categories.

On the legal side, Rebecca Cross, attorney, BraunHagey & Borden LLP, San Francisco, CA, warned legal firms are filling the vacuum left by the lack of FDA definition for natural. In addition the landscape is muddied as cases are being decided on a state-by-state basis, leading to a patchwork" of definitions, rather than a national standard.

The major risk lies in frivolous class action lawsuits, with the newest trendasbestos lawyers putting forth claims that companies are falsely advertising products as natural." Even when a company might win a lawsuit, associated costs range beyond legal fees into business distractions, brand issues, and exposure to other potential lawsuit claims due to the discovery phase, when legal teams gain access to a broad swathe of business documents. Certain states lead others as hotbeds for litigation with California ahead of the pack, followed by New Jersey and New York.

On a final note presenters said while consumers were initially willing to pay a premium for products with clean and natural labels, although ingredient costs and reformulation might be expensive, todays consumers expects products to not only have clean labels but is often unwilling to pay a higher price.

The best tactic might involve shooting for the middle of the bell curve," in terms of balancing natural ingredients while striving to maintain price points.