As consumer needs continue to evolve, manufacturers are pushing the boundaries of product development that both satisfy consumers and maximize business revenue.
And, as consumers place an increasing importance on health and wellness – and associate those attributes with clean label – it is no surprise that manufacturers have turned to clean label products to help meet consumer demands, as evidenced by the 6.75% projected CAGR of the global clean label market (2021-2026).1
A first-of-its-kind study by Ingredion found that most food and beverage manufacturers consider clean label to be an important part of their business strategies and expect to increase the percent of clean label offering over the next two to three years.2
While some may view the trend toward incorporating more free-from ingredients as a costly choice, the switch to clean label has been shown to have a positive impact on brand perception and profits. Data from Ingredion’s study indicates 40% of global manufacturers report that they have increased pricing and 58% have reported an increase in overall revenue as a result of converting to clean label products.
Shifting from status quo to a successful clean label strategy is not without its challenges, including ensuring a clear understanding of how consumers define ’clean label’ in the first place, before overcoming any formulation challenges.
Defining clean labels
When evaluating quality and making purchase decisions, consumers rely on accurate and transparent product labels. Misusing or misrepresenting the term of ‘clean label’ can weaken the value for both consumers and manufacturers, making it extremely important to truly understand what the term refers to.
Clean label products contain ingredients that are recognized and accepted by consumers, free from genetically modified organisms (GMOs), and without artificial-sounding or overly complex names. Moreover, their ingredient listing aligns with consumers’ understanding of on-pack claims. As early as 2012, Ingredion’s consumer insights identified this link between recognition and acceptability, which has fueled the importance of packaging claims and their impact on consumer purchase intent.
Because consumers associate clean label ingredients and claims with high quality and value, it is no surprise many are willing to pay a premium for them. In fact, Ingredion’s ATLAS data shows that 69% of global consumers are willing to pay more for claims that are important to them, and one-fifth of all respondents are open to paying up to a 30% premium.
Barriers to clean label claims
In the mind of manufacturers, there are three main barriers that exist when advancing toward a clean label strategy: ingredient cost, perception of decreased shelf life in finished products, and a lack of formulation expertise within their teams.
1. Overcoming ingredient cost
Though ingredient cost continues to remain the biggest barrier to clean label reformulation for manufacturers, there is a bright side to the transition. While up-front costs to converting to clean label are higher, manufacturers who make the switch enjoy significant increases in overall revenue after implementing a clean label strategy.
In fact, 40% of global manufacturers report that they have increased pricing as a result of clean label products and 58% have reported an increase in overall revenue. This reflects consumer willingness to pay more for products that reflect clean labels.
Finding the right partner when looking to overcome ingredient costs can be integral in transitioning to clean label formulations. A partner with an insights-driven development strategy for your brand can help maximize consumer perceived value and pricing decisions to drive brand loyalty and market share.
2. Understanding shelf life
For both frozen and ambient products, gums and functional starches are incredibly important in providing shelf stability. Many businesses believe that by moving to clean label ingredients, the taste and texture of their products will be impacted as well as the shelf life.
However, finding a partner who is well-versed in clean label solutions can help alleviate this perceived barrier. There are a wide variety of ways clean label ingredients can provide the same (if not better) stabilization and texturization as their GMO alternatives.
3. Increasing formulation expertise
While education is an important piece of increasing formulation expertise, there can be unforeseen complexities in reformulation and limited internal resources when it comes to clean label ingredients. Because of this, finding partners with formulation expertise who are skilled in overcoming these challenges can be key to commercial success.
Partnering with formulation experts can help manufacturers understand that these three barriers can (and should) be overcome in order to help power profits going forward.
Own the AndSM
When considering shifting ingredients to convert products into clean label solutions, Ingredion encourages formulators to Own the AndSM. This approach focuses on identifying the right product attributes for your consumers and applying the most appropriate formulation solutions to achieve them. In the case of clean label, it means delivering the preferred ingredients AND claims AND delicious eating experience that consumers expect.
Ingredion empowers manufacturers to create the future of the food and beverage industry by conducting primary consumer, manufacturer and retailer research. and grounding itself in creating innovative solutions. It dials in formulas that offer the right mix of product features to increase consumer appeal and satisfy their multiplying needs.
Powering profits
Consumers are continuing to demand cleaner, simpler labels and healthier, better-tasting products. Clean label products are an opportunity for manufacturers to add meaningful consumer benefits while simultaneously creating sustainable business value. In short, developing a clean label strategy can power your business toward increasing sales, commanding premium price, and positively impacting brand perception.
References
1. Mordor Intelligence. Clean Label Ingredient Market – Growth, Trends, Covid-19 Impact and Forecast (2021-2026). 2021.
2. Ingredion Global Clean Label Manufacturer Study. 2021.
