Packaged food manufacturers that continue to ignore the lure of including ethical claims on product packaging are thin on the ground in Western markets. In 2015, Euromonitor’s Passport: Ethical Labels data show that categories traditionally cast as villains by health conscious consumers are especially ripe for ethical claims and reformulations. At the heart of the ethical movement is the US market, where consumers in 2015 spent US $48.1 billion on clean label packaged food. This was led in no small part by industry heavyweights including PepsiCo, Nestlé and General Mills as the wide-ranging commitments to removing artificial ingredients from flagship brands shows no sign of coming to a halt.
Another factor driving this trend is the grassroots of the industry, as emerging start-ups embrace clean label innovation, showing the movement is flourishing from all rungs of the packaged food ladder. A rising tide lifts all boats, and as the re-imagination of packaged food continues, manufacturers will be eager to keep pace with the commitments of market leaders.
Clean label and locally sourced; a high priority for savvy consumers?
Snacking categories remain prime candidates for claims. Value sales of clean label sweet and savory snacks will grow globally by US $1.5 billion by 2020 with around half of this coming from the US alone. It is also worth noting that this is a relatively conservative estimation of the true market potential designed to act as a baseline.
Another key factor swaying consumer preference is local sourcing. In 2015, sweet and savory branded snacking products bearing a prominent domestic origin claim stood at approximately 9% of total category sales. Adequately conveying the origin of a local product to consumers within the country/region in which the product is being sold is in many cases a factor through which trust with consumers can be nurtured, building on the tenets of trust and familiarity. Looking forward, conservative estimates of sweet and savory snack products with a prominent locally sourced label will grow by US $2.1 billion in absolute terms by 2020. While understanding the characteristics of millennial consumers may be the flavor of the month in packaged food and other industries, local sourcing is a trend that transcends specific demographics and represents another viable platform whereby consumer trust can be solidified.
In many cases, clean label and local sourcing claims may be considered luxury additions to a product, however not all ethical labels fall into this basket. Some claims are of an unquestionable necessity for consumers. Globally, sweet and savory snacks with a kosher certified/kosher friendly claim stood at 12% of total category sales in 2015, amounting to US $14 billion in value sales. The majority of this is accounted for within the US market where there is a strong Jewish population. As such, within US sweet and savory snacks, 35% of value sales came from products bearing a kosher claim, as manufacturers continue to foster partnerships with third party certification agencies such as Orthodox Union (OU).
Transparency and trust remain key snacking ingredients
There are a wide variety of potential ethical claims, all with varying underlying narratives and all with varying degrees of necessity. They all serve the same purpose, and that is instilling trust, familiarity and answering the additional needs of consumers that regulation often overlooks. The removal of artificial ingredients and growth of clean label have helped establish a much need layer of insulation of protection from consumer critique and will bolster sales in tandem with consumer confidence.
For Jewish consumers seeking products that align with their beliefs, the value of an OU or similar kosher certified label cannot be underestimated. Although manufacturers have been slower to embrace halal reformulation and claims, the industry is keeping a keen eye as demand for this label in Western markets steadily grows. Overall, ethical labels are flourishing in Western markets. The gamut of claims will continue to play a leading role in pro-actively generating, and more importantly, sustaining confidence in many categories, but especially those that have historically been open to criticism from wary consumers.