The food shopping experience has certainly increased in complexity over the last few years. I remember the days when a trip to the grocery store didn’t involve label scrutiny, and price differentiation was mostly about premium versus private versus white-label generic brands. And, environmental and social values were certainly not top of mind when selecting a product.
In today’s environment, product labels and claims provide information, and at the same time, create noise that invades the food shoppers’ perceptions and buying habits. With so many options – organic, gluten free, non-GMO, fat-free, sugar-free, cage-free, antibiotic-free ─ consumers may leave the store wondering if they have purchased the best and healthiest foods at a fair price, but further wondering whether they were judicious with their purchasing power.
Consumers are putting their money where their mouths are
Consumers have come to understand that their purchasing power allows them to vote for product health attributes including pure, wholesome, and natural, but also allows them to express environmental and social values. These additional variables are impacting food choices. Nielsen states, “Consumers, especially younger ones, are just as interested in the companies that make the products that they buy as they are in the products themselves. They want to feel good about their purchases, and that means they’re spending more with companies that focus on things like fair trade, sustainability, social responsibility, environmental preservation, and high ethical standards.1”
Clean label and product transparency are two trends that have clearly emerged in recent years. Clean label means making a product using as few ingredients as possible, and making sure those ingredients are items that consumers recognize and think of as wholesome ─ ingredients that consumers might use at home. While, product transparency is the practice of disclosing detailed information about what a product contains, how it was produced, how it was sourced, and even how it was handled. These trends go hand in hand. Nielsen states, “the ‘why’ and the ‘how’ behind the products have become as important as the product itself, often times becoming the primary decision-making criteria that drives a purchase.1 Proof of this is illustrated in the charts below.
This has added an entirely new layer of complexity to the way fast-moving consumer goods companies develop and market their products to consumers.1
How many consumers are really reading labels?
Growth in dollars spent against key attributes suggests that consumers are reading labels and making purchasing decisions as a result. Taking it to more basic levels, according to data put forth by C+R Research, a surprisingly large number of consumers pay attention to labels. 69% indicated that labels have an impact on their shopping habits.3 As C&R further evaluated the data, four types of consumers along with their percentage of the whole emerged:
- Vigilants (20%) – These consumers take a well-informed approach to food, which they see as inextricably linked to their health. Vigilants reward companies they trust with continued business, and 72% will walk away from a product if the label doesn’t telegraph the health and goodness of the product.3
- Keep it Simple (47%) – These consumers rely on external signals for signs of the health benefits of food, like the FDA’s stance, seals of approval and manufacturer claims. This group maintains a holistic balance with regard to their health, and 67% say they don’t look at the labels of product made by brands they trust.3
- Balancers (15%) – These consumers live out the axiom “everything in moderation” Although they pay attention to labels, they are not anxious about them, and 80% of balancers prioritize the presence of positive benefits like protein or fiber, rather than looking at the possible undesirable ingredients.3
- Not bothered (18%) – This group of consumers believes they don’t have time to agonize over ingredients, due to tight budgets and schedules. They favor what’s cheap and convenient. Front-of-package claims have a profound influence on these shoppers, and 92% won’t even look at labels on products they buy regularly.3
What role is being played by Ag Tech and Food Tech?
While shoppers explore the many claims attached to products, perceptions drive purposeful purchasing behavior. As the old saying goes: “perception is reality”, and consumers are reacting to label claims with their wallets. But, is there a chance that perception is not necessarily reality? Realistically, some portion of consumers are likely looking for better validation of product claims. At the same time, food companies must be prepared to defend product claims with hard data. My thesis is that Ag Tech and Food Tech are closing the gap between perception and reality, and will provide substantiation to the consumer, the grower, and the manufacturer.
Ag Tech and Food Tech innovators are not only playing an important role in addressing the most compelling challenges facing the agribusiness and food industry, but are also addressing concerns of the consumers driving the clean label and product transparency movements. The following is a short list of the benefits from AgTech and Food Tech that track with these trends:
- Supply chain verification
- Improving yields, and therefore resource efficiency
- Minimized food waste
- Improved working conditions
- Decreased use of antibiotics with better diagnostics
- Resource management (water, soil, labor)
Taking a step forward, consumer demand, operation/validation tools, and technology appear to be converging as demonstrated by several factors.
First, Ag Tech and Food Tech innovation is attracting real money. In 2018, upwards of $1.6 billion was invested across 209 Ag Tech deals.2 One of the key trends in the Ag Tech and Food Tech ecosystem is a growing collaboration between agribusiness corporations, tech firms, and the investors behind big ideas and innovation. It’s interesting to witness corporates addressing consumers’ interest in regenerative food production systems, as well as social and environmental concerns.
Second, the conversations at Ag Tech and Food Tech conferences not only include investors and technology start-ups, but the large food manufacturers. The majors are sending their well-prepared sustainability officers to share previously unthinkable goals such as 100% recyclable packaging or 100% supply chain traceability specific to global ingredient sourcing. The timelines for these goals are within reach, and speak to consumers’ desires and preferences.
Third, technology companies are providing solutions for key gaps in supply chain linkages. For example, animal health companies and feedlot operators are utilizing technology to improve judicious use of antibiotics in beef and dairy cattle, and, in turn, reduce antibiotic-resistant bacteria from entering our food chain. Retailers and food chains both benefit from and incorporate the validated data to support clean labeling. Ultimately, the same data handling technology provides an audit trail that can be used by feedlot operators to source healthier cattle for the brand-owners enabling them to support antibiotic reduction or antibiotic free initiatives. This platform technology is also being developed for other protein species like pork, poultry, and fish.
For crop farmers, livestock producers, and upcoming and established food companies, the idea that consumers are pursuing authenticity in the foods they consume can strike a defensive chord. On the flip side, consumers are revealing what they care about, and a bond is forged between producer and consumer as the gap between perception and reality is bridged. My prediction is that the early years of the clean label and product transparency movements will usher in better understanding of how modern food systems can both feed the world and enhance the impact on the environment and human health. And, technology is poised to play an enabling role.
- The Nielsen Company, 2017
- Institute of Food Technologists – blog.ift.org/what-is-clean-label
- C+R Research, Your Guide to the Clean Label Revolution with data sourced from the following sources: http://fortune.com/2015/05/21/the-war-on-big-food/, https://foodinsight.org/articles/2016/-food-and-health-survey-food-decison-2016-impact-growing-national-food-dialogue; http://www.fda.gov/Food/IngredientsPackagingLabeling/FoodAdditivesIngredients/ucm115326.htm