Organic products are fueling sustained sales growth across most every category, leading both natural and non-GMO (genetically modified organism) sales in many cases. They represent perhaps the single best opportunity for brands to drive profitable growth for themselves and their retail partners.

Total U.S. food sales (all outlets) were up only 1.9 percent in 2015 while organic sales were up 16.9 percent, according to Nielsen Answers (ending Oct. 24, 2015, total us food, drug, mass, Wal-Mart, Sam’s, BJ’s, dollar stores and convenience). Organic products represent only 3.1 percent of total food sales. Natural product sales were up 11 percent and represent 7.7 percent of total food sales. Non-GMO sales were up 15.8 percent and represent 4 percent of total food sales. This is great news for organic brands and their loyal shoppers.

Consumers want healthy, clean label products that they can trust and confidently feed to their families. A growing number of shoppers place quality over price. This is especially true for organic products. Shoppers look to organic products to improve their health and wellness.

Organic products by definition are clean label. Organic products contain USDA-certified organic ingredients. Organic ingredients are automatically free of GMOs, pesticides, herbicides, man-made and synthetic chemicals, etc. They are as nature intended them to be. These trends are top of mind for consumers and are fueling health and wellness trends. They are leading category growth across every channel.

Brands can capitalize on these important trends to grow sales and compete more effectively.

Retailers have three primary objectives:

1. To grow their loyal shopper base (the number of consumers who shop their stores). This can be accomplished by promotions and product assortments that meets the needs of their shopper base.
2. To encourage shoppers to make most or all their purchases in their stores (their monthly shopping list). Shoppers have myriad choices. This step is critical to helping the retailer compete and grow in their market.
3. To increase the size and value of their shopper’s market basket (the items in their shopping basket at checkout). This is accomplished by inviting shoppers to trade up to more expensive items, for example, organic milk as opposed to non-organic milk.

Retailers, generically speaking, don’t make and sell their own products—they sell products made by other companies. Retailers sell shelf space, "product real-estate" in the form of product assortments by category. They make money based on how well they manage that "real-estate" to best meet the needs and wants of the consumers in their community/market. This includes getting a fair price for the goods and services they sell. This means that retailers rely heavily on quality products that they can sell for a fair price.

Retailers can't possibly be experts in every category and in every item they sell. This creates a unique opportunity for organic brands to help educate both retailers and their shoppers. Organic brands have a tremendous opportunity here to help the retailer develop health-focused category schematics and promotions that leverage their product’s strengths, helping their retailer partners grow sustainable category sales while boosting consumer loyalty in their stores. This is a win-win for both the brand and the retailer.

The organic shopper is more valuable to retailers because they have the highest market basket. Organic shoppers who purchase organic bread are more likely to also purchase organic spreads, meats and cheeses for making sandwiches. The organic shopper carefully reads labels to search out the most transparent and authentic ingredients.

Organic brands have leverage with retailers. Savvy retailers should not treat organic brands as an ATM machine. Everything is negotiable. Retailers need those brands and much as the brands need them. Brand owners are the category experts; they know what health-focused consumers want and how to best satisfy their needs.

Organic brands need to leverage their category and shopper expertise to help the retailer drive sales across their entire store, one category at a time. This is where true category management comes in. True category management includes the best practice strategies to help organic brands effectively merchandise, price and promote the products consumers want.

Organic brands need to provide actionable insights to their retailer partners that include effective strategies that avoid out-of-stocks while maximizing every selling opportunity. Organic brands should also leverage their marketing efforts to help drive enthusiasm and shopper traffic to store shelves.

In this new era of transparency, it’s essential that the food and beverage industry keeps its eye on the ball when it comes to key issues such as sustainability in the supply chain. Issues such as advances occurring in sustainable ingredients, and developments happening in formulation, production and marketing of sustainable food and beverages were key issues discussed during the Sustainable Food Summit held this past week, Jan. 18-20, in San Francisco.

Organic Monitor, a specialist research, consulting and training company that focuses on global sustainable product industries, that organized the summit provided key predictions for sustainable foods in 2017.

Organic Food

Global sales of organic foods are expected to continue the positive trajectory, with most growth envisaged in North America and Northern Europe. Organic food sales in the United States and Canada are predicted to surpass US$50 billion for the first time this year. The market share of organic foods is also expected to approach 7 to 10 percent in the United States, Germany, Switzerland, Denmark and neighboring countries. With growth in organic farmland slowing, supply shortfalls are expected.

Eco-Labeled Foods

Fairtrade will retain its position as the second largest eco-label for food products, however fragmentation will continue: more fair trade labels and standards are envisaged. Other eco-labels are gaining traction in specific product categories; for instance, Rainforest Alliance for agricultural commodities, and Marine Stewardship Council for seafood.

Sustainable Sourcing

The market share of sustainable sourced ingredients is expected to rise. Roughly 20 percent of all coffee is now produced according to some sustainability scheme. The share of sustainable sourced tea, cocoa, vanilla and sugar is expected to increase as large companies such as Barry Callebaut and Givaudan make ethical commitments.

Sustainability Metrics

Metrics are likely to become prominent in the sustainability programs of food and ingredient companies. While carbon and water footprints are still the most popular metrics, expect to see more metrics for energy, resource usage, waste and social parameters. More natural and organic food companies are envisaged to make carbon neutral and zero waste pledges.

Food Authenticity & Traceability

Greater investment is envisaged in ingredient supply chains to provide transparency and to reduce risks of food fraud and adulteration. Non-GMO labeling schemes are expected to continue to gain popularity in North America, although the GMO labeling bill has been passed. Retail sales of Non-GMO Project Verified food sales are predicted to exceed $20 billion in 2017.

Waste Impacts

As food waste rises on the sustainability agenda, more food companies and retailers will make waste reduction pledges. Food byproducts will get greater recognition as a raw material and become a source of new products. ReGrained is an example of a sustainable food enterprise innovating using such raw materials.

Green Packaging

The adoption rate of sustainable materials, such as bioplastics, is expected to rise. More natural and organic food companies are likely to adopt such materials as they look to reduce their packaging impacts.

Gluten-free is more than a trend; it’s a way of life for millions of Americans, with an increasing number of products carrying gluten-free claims. The landscape of what gluten-free options are available continues to expand, although companies must be mindful of the challenges in product development and regulatory oversight before embarking on the journey.

“Much like veganism and flexitarianism or going low-carb or dairy-free, avoiding gluten has become a true lifestyle choice for many Americans," said David Sprinkle, research director, Packaged Facts. “These consumers may not have a specific health-related motive necessitating the switch to gluten-free. Yet for gluten-free advocates there’s often a satisfaction from furthering one’s overall health and nutrition goals."

According to the “Gluten-Free Foods in the U.S. 6th Edition" report, dedicated gluten-free dieters have helped the gluten-free foods market demonstrate an annual growth rate of 36% over the 5-year period ended in 2015, when the market reached $1.6 billion. Packaged Facts forecasts the gluten-free foods market will reach $2 billion in 2020.

Gluten-free foods are gaining popularity partly because manufacturers and marketers are aligning new product developments with other emerging trends in the food and beverage industry. These trends include clean labels, marketer transparency, and the use of plant proteins and ancient grains.

The desire for clean labels, ease of digestion, the need or desire to avoid allergens, compatibility with vegetarian and vegan lifestyles and concerns about sustainability among the general population are putting the spotlight on plant proteins. Legumes and beans, or pulses, are found in a growing array of gluten-free foods, along with ancient and sprouted grains.

Pulse-based ingredients are particularly valuable in improving the nutrient quality of gluten-free products, as they are richer in fiber, protein and micronutrients than gluten-free staples rice and tapioca flour. There is a growing market for these ingredients in gluten-free extruded snacks and pasta. (Read more about the United Nations declaring 2016 the International Year of Pulse.)

The appeal of ancient and sprouted grains is much like that of pulses. For food processors, these ingredients provide whole food, plant-based protein sources that enhance appearance, deliver unique tastes and textures, pack a nutritional punch, and invite variety and innovation. A number of ancient grains are gluten-free, as are sprouted ingredients made from gluten-free ancient grains, nuts, seeds and beans.

A predominant trend in gluten-free product development reflects the concerns of the clean eating/clean-label movement, e.g., fewer and simpler ingredients; free-from formulations; minimally processed with organic, sustainable production methods; and transparency in business practices. (Demand for products formulated with clean-label ingredients was evident by the interest in the inaugural Clean-Label Summit as well as a host of ingredients debuted at SupplySide West 2016.)

Makers of gluten-free bean pasta are standouts in the promise of fewer and simpler ingredients, an attribute that is touted on product packages and on brand websites from the likes of Tolerant Foods, Gold Harbor, Simply 7 Snacks and Explore Cuisine.

One of the most notable examples is Quinn Snacks, which has staked out a pioneering position when it comes to transparency about the origins of the ingredients it uses. The company, which offers a line of organic snacks that include microwave popcorn, popped popcorn, popcorn kernels for home popping, and pretzels, includes a Farm-To-Bag page on its website.  The company states that “Farm-to-Bag was created with the idea that transparency is the most powerful force for good in food. Quinn Snacks asserts that its Gluten-Free Pretzels is the first of its kind to be whole grain, ancient grain, corn-free, soy-free, dairy-free and Non-GMO Project verified with full ingredient transparency. 

Download INSIDER's “Gluten-Free Product Formulation to Meet Consumer Demands" Digital Magazine to find out how consumers are being rewarded with a wider variety of options with great taste, thanks to innovative ingredients and formulation guidance.

Snacking is a way of life for Americans, with more than 90 percent of consumers reaching for a snack at least once a day. And while salty snacks tempt the palate and keep people reaching for more, healthier formulations made from kale, chickpeas and sweet potatoes are gaining traction with the nutrition-centered lifestyles of many of today’s consumers. According to a new report from Packaged Facts, this push toward healthier snacks has created a thriving market for alternative ingredient snacks made using pulses and alternative vegetables and grains. In fact, sales alternative ingredients snacks in 2017 are forecast to rise to $1.2 billion.

“Looking at both present trends and towards the future, alternative ingredient snack sales are going to continue moderate to strong growth over the next few years, building on the larger healthier-for-you trend affecting the overall snack market and on the unique flavors and textures consumers are also craving," said David Sprinkle, research director, Packaged Facts.

The report noted the strong growth of sales of alternative vegetable-based snacks, particularly salty snack versions, was the largest factor contributing to the rise in sales in 2016. In fact, the salty snack segment carried the alternative-ingredient snack market in 2016, with growth of almost 7%, or faster growth than what was seen by salty snacks as a whole.

As the editor here at Food Insider Journal, I have witnessed this shift over the past few years. Take for example the Salty Snacks category for 2016 SupplySide CPG Editor’s Choice Award that garnered nominations for snacks packed with powerful flavors and ingredients such as whole grains, bamboo fiber and seeds along with gluten-free and non-GMO options. Finalists include indulgent crackers packed with seeds, whole grains and essential fats, gluten-free pretzels made with functional ingredients and a proprietary nutrient blend offering the same vitamin equivalent found in veggies. (Click here to see the finalists.)

But knowing your target market also is key, and according to Packaged Facts from 2006 to 2016, the percentage of all adults who usually only snack on healthy foods grew from 24% to 30%. Beyond the general uptick in healthy eating, the most important market drivers are demographic and have to do with age, specifically families with children and snackers making up the younger generational cohorts. For any given category of snack, the percentage of adults with children in the household who eat the snack is 19% or more than the percentage of adults who eat the snack and who do not have any children in the household.

While young families with children are extremely important for the alternative-ingredient snack market, it is fair to say that all younger people are an important demographic driver. There is a very large gap in the percentage of Millennials and Gen X adults who eat these snacks compared to those who are 50 and older. This type of snack, almost more than any other, appeals to younger people. While novelty is certainly a factor with Millennials, typically the reasons for why a person chooses alternative-ingredient snacks are essentially the same across all age groups; the number of those who are 50 or younger who choose to do so is simply much greater.

According to a Pew Research Center population report released by the U.S. Census Bureau in 2016, Millennials have surpassed Baby Boomers as the nation’s largest living generation, now numbering 75.4 million in the United States, compared to 74.9 million Baby Boomers. Millennials are diverse, they wield immense spending power, and they’re said to widely differ compared to preceding generations across a number of attitudes, beliefs and behaviors. This combination of factors makes Millennials, well, influential. And for marketers and manufacturers, that makes this demographic group a worthy target.

Millennial moms are a huge segment of the population, and they have the buying power to affect food companies’ flavor strategies, applications and packaging, according to a trend report from FONA International. With so many working mothers in the pool of Millennial moms, considerations should include on-the-go nutrition and a way to appeal to their personal branding—give them something to blog about. Indulgence often comes when kids are in the equation but common-sense serving sizes make Millennial moms more likely to pick up that less healthy option.

According to NDP, 67% of younger moms shop at places considered more convenient to their needs. Though online shopping plays a much heavier role with Millennials, so do well-organized, big-box retailers that offer a wide variety of items. With such a large number of Millennial moms working, this preference for big-box retailers can be attributed, at least in part, to the time it takes to shop one location over several. The more organized the retailer, the better, as moms’ preferences are for stores where their needs can be quickly found and purchased.

Among these needs is an emphasis on healthier food options for the family. More than previous generations, Millennials tend to purchase greater volumes of organic and locally sourced foods; however, many of these healthier food choices, such as fruits and vegetables, can take a considerable amount of time to clean, cut, and prepare. Time is always a key factor in the busy lives of younger moms.  As reported by the PBH Foundation, 60% of moms spend 30 minutes or less preparing a meal. Of that 60% , many spend only 10 minutes preparing a meal. There is a definite need for healthier food choices that circumvent demanding meal-prep time, whether that means vegetables coming pre-cut or healthy meals that are already partially prepared. So long as it is quick, healthy, and flavorful, younger moms are less picky as to what form the conveniently prepared food arrives in.

Food companies that focus on these two factors, convenience and health, have found considerable opportunity with Millennial moms. As seen in the snacking industry, oats and vegetable snacks are on the rise as a conscious alternative for families on the go.

Beyond food, nutrition and convenience, identity and ethos are also important for Millennial moms. With better access to information than in previous generations, younger moms aren’t just purchasing what’s most affordable, they want to be able to make a well-researched, smart and conscious decision.

Take a look at three key factors—according to the U.S. Census Bureau, almost 84% of all U.S. households have some form of computer; Millennial moms, more than any other generation of moms, are 78% more likely to consider social media important for showing support of their favorite brands; and younger moms are also 71% more likely to have blogged about their purchasing experiences and 28% more likely to have rated or reviewed products and services on social media.

This means Millennial moms aren’t just seeking out and buying certain products, they’re engaging their family and friends about the identity behind these products, too. They want to share their experiences and feel good about the choices they make. Health is important, but so is community and a sense of smart, independent decision making. And if a product also can promote a positive impact or worldly cause? Even better, as it makes Millennials more than eager to share their familiarity and fondness for products that enhance their identities.

To learn more about the power of the Millennial, check out Healthy INSIDER Podcast 24: Why Your Business Needs a Millennial Strategy to hear Rachel Adams, managing editor, and Jeff Hilton, partner and co-founder of BrandHive, discuss who Millennials are, and what makes them impactful compared to previous generations; the roles of transparency, authenticity, relatability and science in reaching Millennial consumers; and the necessity of actively and strategically marketing to Millennials.

It seems every time I write a blog, the topic revolves around clean label. Whether it’s bakery or dairy, nutrition bars or prepared foods, consumers are looking for products made with simple, recognizable ingredients. Now, the clean label trend is hitting the frozen food aisle, and free-from ice cream is churning up a lot of innovation, according to a new report from Packaged Facts.

Ice cream has a reputation for being a sugar-heavy, nutrition void calorie bomb, but today’s ice cream has the potential offer a better-for-you experience with less sugar, less fat and organic or natural dairy ingredients. Food manufacturers are churning out a variety of healthier, yet still decadent, frozen treats to please modern American consumers, according to the new report.

“Ice cream and frozen novelties remain among the top 10 food categories in supermarkets. More than 85 percent of U.S. household use ice cream or sherbet," said David Sprinkle, research director for Packaged Facts. “And despite the maturity of the ice cream market, a lot is happening in terms of new product trends and corporate development."

Ice cream and other frozen dessert products have long been included in the ongoing development of the market for free-from foods. Dairy-free frozen desserts, usually water ice but also using vegetable oil of one kind or another, have been a common alternative to ice cream for centuries. For some favored these alternatives as a matter of taste, but for others it had to do with their being lactose intolerant, and so avoiding dairy-based products. In the last century, in response to dieter demands, ice cream makers added reduced- and free-from fat and/or sugar products. They also made products that were free of milk from cows given the bovine growth hormone rBST, which was considered by substantial numbers of consumers to be a potential health threat.

In the current market, ice creams and frozen desserts have added more items to the list of food components from which they are free. These include soy, gluten, artificial colors, flavors, preservatives and genetically modified ingredients.

According to the report, factors currently shaping the ice cream market will, for the most part, continue to be the same ones that will determine its direction through the next several years. These include the introduction of products that fit in with the trend to free-from products in the food and beverage industry in general; increases in gelato, frozen custard and super-premium ice cream introductions and sales; reduced sales of packaged frozen yogurts; and more variations on already popular flavors. What’s more, the market will continue to see new packaged ice cream and frozen dessert products emerging that feature successful local or regional foodservice brands.

While ice cream and frozen desserts usage rates have seen some decline over the last several years in terms of the percentage of total households using them, one category showing a marked increase has been that of non-dairy frozen desserts. These include plant-based products that use milk from coconuts, almonds, cashews, bananas, avocados, etc., as an alternative to dairy milk. Of course, there have been soy and rice-based frozen desserts on the market for years. But just as in the fluid milk market, these have lost ground to the newer arrivals.

Invariably this avalanche of new, free-from introductions will help the market overcome some of the lukewarm sales growth of recent years. Packaged Facts estimates that in 2016 the market for all ice cream and frozen dessert sales, including packaged ice cream and frozen novelties sold through retail channels and ice cream purchased at foodservice outlets, was just shy of $28 billion. Foodservice sales outpaced the retail channel by slightly more than $3 billion. Both segments are expected to see gains looking ahead to 2020.

Year after year, the food & beverage industry has responded to changing consumer attitudes regarding health and wellness, and 2016 was no different. There was a flurry of regulatory activity that will impact the industry going forward, and the release of the 2015 Dietary Guidelines for Americans (DGAs) called for consumption of a variety of nutritious foods such as vegetables, fruits, grains, low-fat and fat-free dairy, lean meats and other protein foods and oils, while limiting saturated fats, trans fats, added sugars and sodium. The industry is in a constant state of innovation and food & beverage manufacturers are responding to consumer demand for better-for-you products. It would be impossible to sum up 2016 in one or even 10 blogs, so the following key areas I believe have, and will continue to, influence industry growth.

Clean Label

The clean-label movement is moving out of the trend spotlight and becoming the new norm with current trends driven by an emphasis on health and wellness, and a desire for products formulated with simple ingredients. Nowhere is this more apparent than in the food & beverage industry where global sales of clean-label products hit US$165 billion in 2015 and are projected to reach $180 billion by 2020. The food & beverage industry is undergoing a paradigm shift in how they process, create and deliver their products to consumers; however, going clean label isn’t as easy as 1-2-3. In fact, there are a lot of uncertainties and often clean label is more about consumers’ perceptions than it is about anything concrete and tangible. This was the topic of the “Delivering on the Clean Label Expectation" Summit at SupplySide West 2016. Innova Market Insights predicted clean label will be the No. 1 trend in 2017, stating the demand for total transparency now incorporates the entire supply chain, as a clean label positioning becomes more holistic.

Sugar Reduction

In May, FDA unveiled new requirements for the Nutrition Facts label of packaged foods, including the reporting of a product’s added sugar content. This new attention to added sugar intake on packaging—as well as consumer demand for sweeteners that are natural, sustainable and healthful—provides brands the opportunity to increase use of alternative sweeteners when developing or reformulating products. This was the topic of the “Selecting Appropriate Sweeteners for Chocolates, Gummies and Chewables" panel discussion at SupplySide West. This hot issue is expected to continue for the foreseeable future across all food & beverage applications. This creates a huge opportunity for clean-label sweeteners that don’t add calories or detract from taste.

Plant-Based Proteins

Protein has experienced substantial growth recently, marked by an unprecedented increase in consumers’ perceived deficiency of the nutrient, a growing awareness and usage of plant-based protein, and the resulting proliferation of protein-rich and protein-enriched products across an array of food and beverage categories. In 2016, plant-based proteins took center stage in 2016, thanks in part to the United Nation’s declaring 2016 as “The Year of the Pulse." The desire for clean labels, ease of digestion, the need or desire to avoid allergens, compatibility with vegetarian and vegan lifestyles and concerns about sustainability among the general population are putting the spotlight on plant proteins. Consumer notions of what constitutes a good protein source are expanding to include a wider variety of plant-based protein ingredients. Subsequently interest in plant protein ingredients among food manufacturers and foodservice operators is intensifying,

Sodium Reduction

In June, FDA issued a draft guidance to the food industry calling for voluntarily reducing sodium in processed and commercially prepared food. Average daily intake of sodium for Americans is estimated at approximately 3,400 mg/day. The draft short-term (2-year) targets seek to decrease sodium intake to about 3,000 mg per day. The long-term (10-year) targets seek to reduce sodium intake to 2,300 mg per day. The targets, which extend to nearly 150 food categories, are intended to complement many existing efforts by food manufacturers, restaurants and foodservice operations to reduce sodium in foods. But sodium reduction doesn’t just mean taking the salt shaker out of someone’s hand. Sodium is found across all sectors of food including snacks, bakery and cereal, sauces and soups, convenience foods, condiments, bread, cereal, processed meat, desserts, dairy and frozen foods. The fact is sodium plays many functional roles in foods like texture improvement, color enhancement and microbial control, and the solution to sodium reduction isn’t as simple as cutting a percentage of salt from processed foods.

GMOs

The issue of whether the labeling of genetically modified organisms (GMO) in food and beverages has been contentiously debated by consumers, activists, the food and beverage industry and lawmakers for years. However, the debate over mandatory versus voluntary labeling heated up over the past few years as a number of U.S. states introduced ballot initiatives calling for mandatory labeling of genetically engineered ingredients. In July, President Obama signed S.764, which established the National Bioengineered Food Disclosure Standard act. Under the federal law, products sold in the United States that contain genetically modified organisms (GMOs) will be required to disclose those ingredients to consumers. USDA has two years to create a set of rules that brands must follow to disclose GMO content. The Act preempted the nation’s first state GE-labeling law: Vermont’s Act 120, which would have taken effect July 1. Read more about GMOs by visiting the INSIDER Law Blog.

Defining Natural & Healthy

In 2016, the food & beverage industry witnessed increased action on the legislative front to define nutritional claims in a number of key sectors. Most recently, FDA has taken on two key definitions—“healthy" and “natural"—that have been the source of confusion for both industry stakeholders and consumers. After nearly two decades, FDA in September began the public comment process to redefine the “healthy" nutrient content claim for food labeling as part of an overall plan to provide consumers with information and tools to enable them to easily and quickly make food choices consistent with public health recommendations and to encourage the development of healthier foods by the industry. Although FDA has not established a formal definition for the term “natural" or its derivatives the agency considers the term “natural" to mean that nothing artificial or synthetic (including all color additives regardless of source) has been included in, or has been added to, a food that would not normally be expected to be in that food. While this policy has been in place for decades, today’s health-conscious consumers are pushing for more transparency about how foods are manufactured and seeking out products made with clean-label ingredients. With the amount of litigation that has surrounded this claim, FDA began working on a formal process to define “natural," and in May closed the comment period for the use of the term “natural" on the labeling of food products, including foods that are genetically engineered (GE) or contain genetically modified organism (GMO) ingredients. No timeline has been given for either final guidance.

Fats & Oils

In 2015, FDA determined partially hydrogenated oils (PHOs), the primary food manufacturing source of artificial trans fats, are not  GRAS (generally recognized as safe) for foods, giving food and beverages manufacturers three years to remove them from food products. Trans fats have been maligned for years because they raise “bad" low-density lipoprotein (LDL) cholesterol levels and lower “good" high-density lipoprotein (HDL) cholesterol levels, and have been shown to increase the risk of developing heart disease, stroke and type-2 diabetes. Since 2006, FDA has mandated nutritional labels on foods specify the level of trans fat content and allowed less than a half gram of trans fats to be labeled as “0 g." That loophole now is closing and the “no trans fats" label on food products will become obsolete by 2018. The “Non-PHO" trend carried over into 2016 particularly important for the bakery industry where PHOs are used to improve the texture, shelf life and flavor stability of baked goods.

Whole Fruits, Powders and Concentrates

The push toward natural colors and flavors was evident this year as whole fruit, powder and concentrate ingredients were abundant both at IFT and SupplySide West. While whole fruits, including fruit pieces, have bee commonplace as inclusions in foods such as bars, desserts, bakery and cereal, they are gaining more traction thanks to their nutritional values and clean-label claims. What’s more, fruit powders and concentrates are in demand in both the food and supplement sectors for their ability to support a number of health issues like cardiovascular health, digestive health, immunity and brain/mood health.

The concept of clean label food and beverages--products containing clean and simple ingredients that consumers recognize—is nothing new, but it has been thrust into the spotlight over the past few years as health-conscious consumers want to know what they are putting into their bodies.

Clean label is no longer a fad or a trend—it’s the “new norm" that is spurring innovation across all CPG categories. But nowhere is this more apparent than in the food & beverage industry where global sales of clean-label products hit US$165 billion in 2015 and are projected to reach $180 billion by 2020. The food & beverage industry is undergoing a paradigm shift in how they process, create and deliver their products to consumers; however, going clean label isn’t as easy as 1-2-3. In fact, there are a lot of uncertainties and often clean label is more about consumers’ perceptions than it is about anything concrete and tangible. This was the topic of the “Delivering on the Clean Label Expectation" Summit at SupplySide West 2016. In fact, clean label is predicted to be the No. 1 trend in 2017 as demand for total transparency now incorporates the entire supply chain, as a clean label positioning becomes more holistic.

This concept is supported by results of a recent survey commissioned by specialty PR agency Ingredient Communications that found as many as 73 percent of consumers are happy to pay a higher retail price for a food or drink product made with ingredients they recognize and trust.

In a survey of 1,300 consumers across Europe, North America and Asia-Pacific, 52 percent of respondents said they would spend over 10 percent more on a food or beverage product that contained ingredients they recognized and trusted. Meanwhile, 18 percent said they would pay 75 percent or more extra. Overall, 76 percent of respondents said they would be more likely to buy a product that contained ingredients they recognized and trusted.

The findings underline the growing importance of clean and clear labeling and the use of ingredients that are familiar to consumers. They also suggest that there is a significant opportunity to harness the potential of co-branding between food and beverage manufacturers and their ingredients suppliers.

“Co-branding of ingredients in the food and beverage industry is still fairly unusual, and yet our survey suggests it would resonate with many consumers," said Richard Clarke, director, Ingredient Communications. “We have seen the power of the ‘Intel Inside’ concept in the home computer market. If it works for selling laptops, then why not food and drink? Co-branding can develop consumer trust and provide a clear signpost for differentiation, which can be converted into higher spend, loyalty and repeat purchases."

He noted marketing finished products that contain ‘branded’ ingredients that consumers recognize could be key to commanding a substantial price premium in-store. “One barrier to co-branding is a perception among food and beverage companies that it reduces their ability to shop around among suppliers of raw materials to achieve the best price. However, with consumers willing to pay such large price premiums for products made with ingredients they know, this factor might easily be offset by increased sales and profits," he added.

Interestingly, U.S. consumers were willing to pay the highest prices—with 44 percent stating they would pay 75 percent or more extra for ingredients they recognized and trusted. This was followed by consumers in India (32 percent), the Philippines (29 percent) and Malaysia (26 percent), indicating a strong preference for recognizable ingredients among consumers in Asia.

According to Neil Cary, founder of Surveygoo Market Research Consultancy that conducted the survey, “Our survey reveals significant convergence in the way consumers across the globe share similar priorities in sourcing and consuming high quality foods. However, there are also key differences between markets. Willingness to pay more for recognizable ingredients is strongest in the US, highlighting the importance of clean and clear labelling in the American market. Asian consumers also put a very high value on the quality of their food and are willing to pay a premium for the best ingredients, even though average incomes are lower."

The survey found recognition of ingredients to be one of the biggest drivers of product choice, with more than half of respondents (52 percent) considering it to be an important factor. This was comparable with an ability to see nutrition information on-pack (considered important by 53 percent) and acceptability of price (55 percent). An ability to recognize ingredients by name was rated more important than both an ability to tell that a product was high quality (selected by 32 percent) and taste (50 percent).