The Clean Label Phenomenon for Food Retailers · and integrity of manufacturers, retailers and...

WHITE PAPER

The Clean Label Phenomenon for Food Retailers:

Enhancing Transparency for Consumers

SPONSORED BY SOLUTIONS FOR RETAIL BRANDS INC.

| THE CLEAN LABEL PHENOMENON FOR FOOD RETAILERS

Foreword Seeking Answers to Ques ons If facing a lot of ques ons could somehow equate to big revenue, then brand owners would be quite rich today. That’s because quickly changing consumer preferences have sparked a seemingly countless number of ques ons. Shoppers are increasingly disillusioned about the authen city, transparency and integrity of manufacturers, retailers and brands. This is par cularly the case with Millennials, and increasingly that perspec ve is extending to other genera ons, including Boomers.

The food industry’s emerging response, clean label, has sparked more ques ons than answers. What does clean label involve? Is it enough to please today’s consumers? How can brands benchmark their ac vi es while s ll diff eren a ng for their customer bases? What are key do’s and don’ts to help guide companies? What happens to products that aren’t clean? And ul mately, will brand owners need to more deeply address integrity across the supply chain? Hopefully this paper will answer some key ques ons and make clear that trading partners need to more closely engage with each other for best results. The clean label journey is best traveled with superior insights and collabora on.

Kieran Forsey, S4RB Co-founder and CEO North America


Table of Contents 1 The Clean Label Phenomenon

2 Details on Consumer Behaviors Driving the Trend

3 Clean Label and Millennials 3 Going from Clean to ‘Clear’ 4 Confusion Over Standards and Regula ons 5 Clean Label and Transparency 7 Na onal and Regional Brands Embrace Clean Label

7 Private Brand Retailers See Opportunity

8 Current Private Brand Strategies From Retailers

9 Retailer Ini a ves Gain High Profi les

10 Lessons from Outside the U.S.

11 Naviga ng Clean Label

11 Ten Steps for Brand Owners Don’t Ignore This Trend

Don’t Skimp on Consumer Insights

Get Customized on Strategies

Go For Compe ve Advantage

Avoid The ‘Clean-Dirty’ Trap

Leverage Experts

Find Worthy Partners

Get Engaged With Suppliers

Take The High Road

Expect a Moving Target

17 What’s Next?

18 Key Resources

2

3

4

5

6

7

8

9

10

1


The Clean Label PhenomenonIt’s an unprecedented me in the food industry as retailers and manufacturers strive to adjust to fast-changing consumer behaviors. One of the most important shi s involves how consumers perceive the healthfulness of their food products.

Increasingly, consumers are looking beyond tradi onal nutri on and food safety concepts for addi onal a ributes. They are demanding products with fewer and more recognizable ingredients that are free from ar fi cial ingredients, chemicals and preserva ves. The industry refers to this trend as “clean label.”

The trend is driven by the consumer’s yearning for transparency, trust, authen city and integrity in the food system. There are numerous ironies involved in clean label.

The term lacks a uniform defi ni on, but nevertheless retailers and suppliers are embracing it.

Some consumers view these products as be er-for-you, healthier and even safer than mainstream items, even though these views aren’t necessarily backed up by science.

Consumers want added levels of transparency but simpler lists of ingredients.

Diff erent genera ons of consumers o en seek diff erent a ributes in clean label.

The one certainty is that clean label preferences need to be understood by brand owners, including manufacturers and retailers. This phenomenon represents consumers in the driver’s seat at a me when government regulatory bodies have been mostly silent on this topic. The upshot is that clean label is part of the consumer’s insistence on transparency.

This white paper aims to illuminate the clean label trend for brand owners, and encourage the iden fi ca on of best prac ces in this quickly evolving area.

The paper’s content analyzes new consumer behaviors, the regulatory climate, responses from manufacturers and retailers, and perspec ves from outside the U.S. It also presents ten steps to help brand owners navigate in this new territory. These include embracing consumer insights and supplier engagement, customizing strategies, targe ng compe ve advantages, avoiding the impression that non-clean-label items are bad, and emphasizing ethical prac ces.

The white paper’s content is based on a range of interviews with brand owners and others in the food industry, in addi on to analysis of the latest research on clean label. The paper was produced for Food Marke ng Ins tute with the sponsorship of Solu ons for Retail Brands (S4RB), a consul ng-led so ware business focused on boos ng private brand performance.


Details on Consumer Behaviors Driving the Trend FMI shed light on clean label in its 2017 U.S. Grocery Shopper Trends report, which is based on a wide-ranging shopper survey.

Some 65% of shoppers seek to “avoid nega ves” by seeking out claims such as low sugar, no added hormones and no allergens, according to Trends. About 59% look for minimal processing with claims such as no trans fats, no preserva ves and non-GMO. Some 25% seek ethical prac ces, such as grass-fed and cage free. Other claims were sought for good fi ber, posi ve nutri on and heart health.

The FMI report provided more insight into what shoppers want from retailers regarding transparency.

“As consumer demand for openness and transparency becomes increasingly important, shoppers want stores to establish about specifi c claims they want to know more about, shoppers were most curious about items that related to ethical prac ces or minimal processing, which are especially dubious, causing confusion about what regula ons or standards are being followed. Shoppers not only want to know more about no ons like “natural,” they also want to know the stories behind their food, from where it’s sourced (e.g., Fair Trade), how it’s made (e.g., Cer fi ed Humane) and about the ethical prac ces companies embrace.”

Even as consumers are pushing for more transparency, descriptors like clean and “simple” have le a lot of ques ons given the lack of guidance from the FDA. The lack of a formal regulatory defi ni on has also become a target of civil lawsuits throughout the country. However, use of the word clean o en frightens brand owners because it implies that products not considered clean could be viewed as “dirty” by consumers, or called out that way by the media. In that type of scenario, the term dirty could be a ached to products not reformulated to remove ar fi cial ingredients, or those heavily processed and not following verifi able “ethical” prac ces, possibly supported by cer fi ca ons. Stated this way, it’s easy to see why brand owners would want to avoid this associa on, and why the term clean raises some concerns.

65%avoid negativesof shoppers

25%ethical practices

59%minimalprocessing


Clean Label and Millennials By 2022 Millennials will represent more than 50% of consumers. This genera on has been at the forefront of changing consumer behaviors and viewpoints, which aren’t necessarily substan ated by data or science.

These include perspec ves that big brands and big retailers are ‘hiding things’ from consumers; that companies are pursuing unethical and non-sustainable prac ces; that mass produc on uses harmful ingredients. Many of these consumers crave transparency, authen city and sincerity. They want brands to do the right thing, behave the right way, and have consumers’ best interests at heart. They believe they have the right to know what a product does and doesn’t contain, the origins of primary ingredients, and the brand’s commitment to values. These kinds of perspec ves have helped to drive clean label, and in some cases clean brands.

Going from Clean to ‘Clear’ The clean label trend is a moving target as consumers raise the bar on what they are seeking in food. Consumer research organiza ons have been trying to track movements of this target to gauge how the trend is progressing. Innova Market Insights, a global market intelligence company in the food and beverage industry has described a move from clean to “clear” labelling.

“The demand for total transparency now incorporates the en re supply chain, as a clean label posi oning becomes more holis c,” Innova said.

In an ar cle about 2016 trends in Food Navigator, Robin Wyers, chief editor of Innova Market Insights, explained how clear label enhances clean label.

“Clear label takes the clean label drive to the next level. It’s about manufacturers taking a back to basics approach to product development and providing a high level of transparency in terms of ingredients and origin. Within this pla orm, products with an organic or GMO posi oning are showing the strongest growth.”

This explana on is useful in understanding the larger context around clean label. The key point is that more consumers are looking for greater authen city in an expanding number of realms.


Confusion Over Standards and Regula ons At this point, there is no regulatory defi ni on of clean label. However, if claims for clean label are made, they must be truthful and not misleading. Addi onally, depending on how brand owners focus on clean label, they could encounter regula ons that impact certain claims. Guidance about the regulatory landscape diff ers based on specifi c brand owner strategies and ac vi es.

As retailers look to make new claims related to clean label or otherwise, it is always important to consult the relevant regula ons and an a orney knowledgeable in the subject ma er. Unlike clean label, many other claims are specifi cally regulated, such as gluten free. There’s guidance, for example, that relates to certain thresholds of levels for labeling gluten free

In the absence of specifi c clean label regula ons, a number of organiza ons have promoted cer fi ca on programs. One example is the Cer fi ed C.L.E.A.N. standard from Interna onal Center for Integra ve Systems, which requires products to be minimally processed, non-GMO, and “should have beenmanufactured using humane processes.”

Another example is GoCleanLabel, which off ers a clean label cer fi ca on seal for retail and food service products, in addi on to educa onal resources. Some observers have advocated for the food industryitself to a empt to defi ne clean label, so that organiza ons can communicate to consumers with common language and standards.

However, commercial factors would likely present roadblocks. Some food industry players seek commercial advantage by taking leadership roles in clean label, and they may be re cent to share best prac ces with the wider industry.

Said one observer “Clean label will be led by innova ve brands that move faster than any standards body can agree on a standard.”


Clean Label and Transparency Clean label is an example of the food industry a emp ng to respond to the consumer’s call for more transparency. Food retailers are making bigger eff orts to provide informa on to shoppers about clean label and related a ributes, according to FMI’s 2017 Report on Retailer Contribu ons to Health and Wellness.

Some 50% of retailer respondents for the report’s survey said they are providing consumer educa on on clean/clear labeling. Retailers are calling out certain product a ributes on shelf and on private brand labels, according to the report. The most common are gluten free and organic.

2017 Report on Retailer Contribu ons to Health and Wellness

Some 89% of retailers point out gluten free on shelf and 92% on private brand labels. The comparable percentages for organic are 85% and 87%. Low sodium, an bio c free, fat free, sugar free and lactose free also draw a lot of focus. For an bio c free, 33% fl ag it on shelf and 63% on private brand labels.

Labeling Issues

Menu Labeling

GMO Labeling

Clean/Clear Labeling

55%

75%

59%

50%

68%

71%

50%


2017 Report on Retailer Contribu ons to Health and Wellness

The industry’s eff orts on transparency to reduce consumer confusion go well beyond clean label. The SmartLabel digital transparency ini a ve is a prime example. SmartLabel, created by FMI and Grocery Manufacturers Associa on, provides consumers a wide range of product details that could never all fi t on package labels. These can be accessed through mul ple pla orms, from desktop computers to mobile devices, so that shoppers can benefi t whether at home, on the go, or in stores.

Call Out of Speci Products on Shelf versus Private Brand Labels

Gluten free

Organic

Low sodium

b ree

Fat free

Sugar free

Lactose free

Kosher

Healthy

Heart healthy

GMO/Non-GMO

Local

Vegetarian

Vegan

Soy products

89% 92%

85% 87%

41% 75%

33% 63%

19% 62%

33% 62%

33% 54%

30% 50%

37% 49%

37% 46%

19% 46%

46% 63%

19% 29%

19% 29%

11% 21%

ID on Shelf

Call-Out on Private Brand Labels


Na onal and Regional Brands Embrace Clean Label A growing number of brands have commi ed to clean-label-type strategies in removing ar fi cial ingredients.

Brands see clean label as a strategic impera ve, and o en include clear target dates for the full product ranges to be reformulated. However, such ac vi es involve considerable challenges, as outlined by a July 2017 ar cle in Food Dive:

“It’s a delicate endeavor for food companies to overhaul these household staples while maintaining the holy grail of taste that drew consumers to the item in the fi rst place — and kept them coming back,” the ar cle said.

Smaller brands have also moved in the clean label direc on, and can some mes pivot faster. Some regional brands have decided to get out in front of the trend even if their geographic markets haven’t yet fully embraced it. Said one such brand owner: “In our region, there hasn’t been a hue and cry from consumers for clean label, but we decided as a company that’s where we needed to go. Even if our core customer base doesn’t care about it now, at some point it will.”

Private Brand Retailers See OpportunityRetailers interviewed for this white paper said they view clean label as an important trend to embrace in the private brands context.

“I’d say it’s a big opportunity for us,” said one retailer in charge of private brand. “Clean label is not only on the mind of our senior leadership, but something we have ac ve programs to work on and improve.”

Retailers said they look to clean label to help private brand diff eren ate from na onal brands and gain consumer trust.

“There are categories where na onal brands haven’t delivered on this type of product,” said a retail execu ve, whose company takes a leadership role in clean label, including with natural and organic items.

Retailers were mixed on how they view the life-cycle of this trend, with some an cipa ng a long runway, and others seeing a more limited run. Some said the trend will con nue to be important, and will have implica ons for a wide range of ini a ves, including health and wellness and sustainability strategies.

However, some cau oned that pricing factors may pose a challenge when clean label ini a ves extend into certain areas.

Another predic on is that the trend will eventually become more fully mainstream and take share from other parts of the business.


Current Private Brand Strategies From Retailers Certain retailers have been seen as early prac oners of clean label strategies. Today, a wider range of supermarkets and other food retailers have taken leadership posi ons.

Many U.S. food retailers are taking a hybrid approach to clean label

They have created dedicated private brand ers with free-from ingredient lists

These ers some mes include both natural and organic items.

There is clear messaging to consumers about removal of ingredients. A ributes - ranging from no ar fi cial sweeteners to no high fructose corn syrup - are called out, o en on front-of-pack.

Free-from lists usually appear online as well.

Clean-label packaging o en a empts to relay a less-clu ered feel to support the simplifi ca on theme.

Pricing tends to be in line with non-clean-label items, although certain a ributes like organic tend to carry a premium.

The balance of a retailer’s private brand range may include some free-from items, but clean label is not usually a core component of the more mainstream parts of a private brand line.

Not all food retailers have been out front on the clean label trend. Some mid- to smaller-sized retailers are just now wading into the clean label waters and s ll deciding how far they want to swim. “The big ones have been doing it for a while, but others are now realizing they need to get on board with this,” said one private brand expert who works with retailers on clean label.


Retailer Ini a ves Gain High Profi les Clean label private brand eff orts from a number of larger retailers have been prominently promoted and have received considerable media a en on. Retailers typically tout clean label programs with press releases and other forms of messaging, o en linking the eff orts to the brand’s larger mission. Such was the case with a July 2017 online announcement from Target about kids’ snacks.

“Today, more than 75% of Target’s owned brand kids’ snacks, from Simply Balanced fruit snacks and granola bars to Market Pantry fruit squeezers, are completely free of ar fi cial fl avors, preserva ves, sweeteners, colors—and you won’t fi nd any ar fi cial trans fats or high fructose corn syrup, either,” Target said. “And now we’re pledging to do even be er. As part of our Corporate Social Responsibility commitments, we just announced that by 2018, all of our kids’ owned brand foods will meet these high standards, so you can always feel good about grabbing our Market Pantry or Simply Balanced snacks for your kiddos.”

Some retailers post full lists of free-from ingredients online for their private brand clean label ers. Such is the case with the Wakefern Food Corp/ShopRite dedicated web page for its Wholesome Pantry line, which removes some 110 ar fi cial ingredients, including ar fi cial fl avors, colors and preserva ves. Consumers can view the list of free-from ingredients, in alphabe cal order, running from Acesulfame-K (Acesulfame Potassium) to Vegetable Monoand Diglycerides.

The business and consumer media have widely covered the free-from trend. Typical of media coverage was this August 2017 story in Supermarket News, called “Hy-Vee ‘cleaning’ up store brand products. “Hy-Vee Inc. has announced plans to eliminate more than 200 ar fi cial ingredients or synthe c chemicals across 1,000 Hy-Vee label products by July of 2018,” the ar cle read. “The removals include high-fructose corn syrup, ar fi cial fl avors and colors and par ally hydrogenated oils. The move is part of the company’s Clean Honest Ingredients ini a ve.”


Lessons from Outside the U.S. The free from trend has made big inroads in Europe, where private brand comprises a much larger share of sales compared to the U.S. Many European retailers operate with extensive private brand lines and mul ple ers. In a 2014 report called “The Clean Label

Guide to Europe,” Ingredion, a global ingredients solu ons company, reported that the strength of the trend varied by country, but that the momentum was unmistakable:

“It is clear that clean label has become important across Europe, with an average of 27% of all new product launches in packaged food in 2013 being clean label,” the report said.

Retailers in the United Kingdom have embraced this trend. U.K. retailer Sainsbury’s website promotes a wide range of free-from products, including its “Deliciously Freefrom” line. The accompanying descrip on touts Sainsbury’s long involvement in off ering these types of products. “In 2002, we were the very fi rst supermarket to bring customers own-brand freefrom products,” it read. “Now, through responsible sourcing and working with exclusive suppliers, we’ve re-imagined free-from, and it’s back, bigger and be er than ever.

Among the choices of a ributes covered in the line are wheat free, milk free, gluten free, egg free, nut free, and soya free. The products are showcased online with a large number of shopper reviews, such as this one for the product called Sainsbury’s Deliciously FreeFrom Greek-Style Coconut Based Alterna ve To Cheese. “I am very impressed,” wrote this shopper, who described it as soya based, and “not too many other ingredients at all for a processed product.”

Free-from merchandising is part of the intense compe on among U.K. retailers. Sainsbury’s last fall introduced an en re range of own-brand vegan cheeses, which sharply exceeded sales predic ons, according to VeganFood&Living.com. The seven types of cheeses were promoted as suitable for vegans, people with milk allergies or intolerances, and consumers who seek gluten-free products. Compe tor Tesco wasn’t about to be outdone by Sainsbury’s. This year Tesco, which itself promotes a wide range of organic and free-from products, launched its own line of vegan cheeses, made by the same manufacturer Sainsbury’s is using, according to the same media outlet.

Hungary

Czech Republic

Switzerland

Ukraine

Finland

Greece

Norway

Ireland

Austria

Portugal

Belgium

It is clear that clean label has become important across Europe, with an average of 27% of all new product launches in packaged food in 2013 being clean label.

UK 33%

Italy 22%

Poland 18%

France 35%

Netherlands 23%

Spain 19%

Germany 32%

Turkey 24%

Russia 21%

The percentage of new clean label product launches in 2013

Data source: Mintel GNPD, % share of clean label new product launches from new product launches in packaged food per country in 2013

>25%

<20%

20–25%


Naviga ng Clean Label

Ten Steps for Brand Owners Clean label is a growing trend that needs to be be er understood by brand owners. Many clean label strategies will be specifi c to local market factors. However, there are some general steps - do’s and don’ts – that apply to clean label eff orts in general. They are relevant to companies of all sizes, but are more challenging for larger ones, because of complexi es related to scale. Here are ten steps iden fi ed from interviews and other research.

1 Don’t Ignore This Trend

Retailers need to decide how much they will embrace clean label, but they can’t just ignore the trend without fi rst understanding it. The stakes are too high for that.

This trend is about the consumer’s larger desire for more transparency. It’s partly about free-from, but it also es into even bigger consumer ques ons. These include, where do products come from? How were they made? How much were they processed?

Honest and informa ve answers will boost consumer trust. Brand owners prac cing clean label will need to make sure products contain ingredients that consumers recognize as something they’d fi nd in their own cupboards. That’s part of the consumer preference for simpler ingredients.

There are many ways for companies to be transparent, including with informa on on pack, on a retailer’s website, and through digital disclosure programs such as SmartLabel. These op ons are almost certain to increase in the future as emerging technologies like augmented reality provide new avenues.

The more honest and informa ve a brand owner’s approach, the more engaging and responsive consumers will be.


2 Don’t Skimp on Consumer Insights

Retailers interviewed described a variety of ways they gain customer insights for clean label, including qualita ve and quan ta ve research, trends monitoring, educa on at trade shows, and directly interviewing customers. Some use call centers or engagement centers to hear directly from consumers.

One of the biggest challenges for private brand retailers is to iden fy and make use of all the inputs that can drive insights. These include product tes ng and benchmarking such as sensory test results, product returns feedback, and social media comments, to name just a few. S4RB, which sponsored this paper, describes this challenge and its solu on as the need to gain “One View” of all inputs for private brand retailers.

This view is specifi c to a par cular retailer and can lead to highly relevant and unique insights about consumer preferences and product performance. Moreover, sharing this informa on with the broader team, including relevant suppliers, unlocks the resources needed to act on the insights.

If having a wider view is necessary for private brand in general, it’s even more crucial when it comes to clean label own-brand. That’s because retailers need to understand the complex consumer preferences that drive these products, and ul mately work closely with suppliers to reformulate items in ways that please consumers.

Customer engagement & innovation

center

Advance returns likes and dislikes

Product quality

tests

High volume

call center

Basicreturns

ONE VIEW

Extended consumer

benchmark monitors

Product reviews/

panels

Social media monitors

In-store tasting

Online survey / reviews

Basic data

Shopper insights


3 Get Customized on Strategies

Clean label isn’t a cookie cu er endeavor. Far from it. This trend means diff erent things to diff erent customer bases. Brand owners would do well to recognize the lack of consistency and standards for clean label. “The best thing is to face head on the fact there’s no clear defi ni on, no consistency,” said one private brand execu ve. “It’s for private brand owners to work out what they want to do about it.”

These owners need to defi ne clean label for their brands, and put in place a means of measuring, monitoring and audi ng suppliers. This can be a combina on of training and educa ng suppliers, providing access to reference materials and knowledge about clean label, and other self-help resources. (For more on supplier engagement, see Step 8)

For some, clean label will be about showcasing easy to understand labels. For others, it will also be around ac vely taking out certain ingredients. Retailers will need to decide if the resul ng products will be segregated on shelves, integrated with mainstream items, or both. Retailers also need to make sure internal team members know what clean label stands for. For organiza ons with thousands of store associates, that can be a big educa on eff ort, but it’s an important one.

4 Go For Compe ve Advantage

The retailers that best please consumers deserve to win. That makes clean label a compe ve strategy. This involves both defensive moves to protect businesses and off ensive ways to take leadership posi ons.

Retailers should consider how clean label strategies provide benefi ts in compe ng against diff erent types of retailers. For example, limited assortment discount retailers are drawing lots of headlines as they raise their profi les in the U.S. supermarkets and other food retailers are ac vely considering how to compete with these low-priced, private-brand-focused players. The clean label trend may provide a compe ve tool.

That’s because these discounters have small footprints with limited private brand ranges. In contrast, supermarkets and other mainstream food retailers tend to have mul - ered private brand ranges that can target specifi c sub-segments of a customer base with more choice. For example, a er can focus on free-from in general, or target specifi c sub-segments, such as dairy-free, gluten-free or vegan.

“This is a chance for clever brand managers to ba le compe tors,” said one private brand industry expert.


5 Avoid The ‘Clean-Dirty’ Trap

Many food retailers are devo ng part - but not all - of their private brand ranges to clean label. Retailers need to determine this balance specifi cally for their own customer bases. They also need to consider how consumers will perceive the balance of the range that isn’t part of the clean label program. For example, will it inadvertently create ques ons or confusion about the health and safety of those products? This understandably worries retailers, who never want to give the false impression that partof a line is “dirty.”

Retailers interviewed said they haven’t yet encountered problems in pursuing split strategies, partly because customer bases tend to be diff erent for free-from and mainstream segments of private brand lines. While retailers have played up clean strategies for dedicated free-from ers, they have typically avoided messaging about clean for mainstream ers, even if the products are partly free-from.

Retailers need to make sure their messaging is clear and they don’t create the impression there’s something wrong with parts of their lines. Said one retailer: “Give consumers the informa on and let them make their own decisions. It’s not about good or bad, it’s just a choice. Tell them the ingredients and why they are in the products. It’s be er to call it free-from than clean.”

Retailers also need to regularly monitor whether customer demands are changing in favor of having more parts of the range become clean label. Some brand owners may decide to avoid any clean label messaging un l a full line is reformulated. That was the strategy of one small branded manufacturer interviewed for this white paper. That company decided to wait to draw a en on to its eff orts un l all the work was completed.

6 Leverage Experts

Retailers need to tap the exper se of a range of internal and external players to eff ec vely run a private brand business, and this is even more true of clean label programs. Experts are needed in areas including food science, legal, consumer research, vendor rela ons and other areas. As one retailer put it, “There’s a fair amount of complexity, you can’t just say ‘let’s make a clean list.’”

One example is making sure products meet regulatory requirements and claims. It’s o en helpful to have many sets of eyes on this, both from the retailer and supplier, and one or more third par es. Ul mately, of course, retailers have the fi nal voice in decisions. For example, some mes suppliers may want to add too much to a label, which may run counter to the retailer’s clean label goal of simplifying informa on.


7 Find Worthy Partners

Retailer brand owners face a diff erent set of challenges than brand manufacturers. Retailers typically have far more brands, products and suppliers. Clean label complicates these challenges because it adds levels of complexity.

It’s crucial for retailers to fi nd capable and mo vated supplier partners for these eff orts. Said one retailer: “Not every supplier is ready for clean label; that’s the biggest challenge.”

The lack of readiness slows retailer progress and possibly becomes a compe ve disadvantage in rela on to na onal brand eff orts. Some observers said it’s easier to fi nd supplier readiness in the fresh food segments, because of wide adop on of organic products, but that wasn’t a universal opinion.

8 Get Engaged With Suppliers

Beyond the need to fi nd suppliers for clean label, there’s an impera ve to work with suppliers in ways that will produce the best results. S4RB uses the term One Team to describe the need for closer engagement with suppliers. Here’s how it outlines this concept:

“One Team enables partners to be on-boarded correctly, meet deadlines and create innova ve solu ons. It helps suppliers become brand ambassadors.

For suppliers to be engaged, they need to understand retailer goals and have all the right contacts in the retail organiza on. They need frequent interac on with the retailer, and regular feedback abouttheir own performance. They must respond quickly to product data collec on exercises. The results of all these eff orts are improved product performance and cost savings, with the ul mate goal of be er customer experience.”

How does this play out with clean label? It’s important for suppliers to be fully up to speed on a retailer’s free-from requirements. Retailers need to verify that the supplier base is delivering on the brand’s promise and claims, and that the resul ng products are appealing. All of these fi ndings need to be shared with suppliers.

The best rela onships produce a trust situa on between retailers and suppliers.


9 Take The High Road

Clean label is about “boos ng consumer trust and doing the right thing, from ingredients to sustainability,” said one private brand expert. This requires ethical prac ces and claims.

Observed this expert: “Clean label is all about ingredients from good sources in food being prepared with good prac ces. Everything is declared in an open and honest way, with the whole process open to scru ny. It assumes complete integrity on the part of the brand owner and all contributors. It’s just doing what consumers hoped you were doing in the fi rst place.”

However, there’s a danger in promising more than a brand can actually deliver. For example, there’s a fi ne line between promo ng clean label and linking it to improved health and wellness. The two don’t always line up.

Claims should be truthful and not misleading. Said one private label observer, “You shouldn’t claim gluten free for a product that never contained gluten. It actually undermines both clean labels and the brand’s equity. The goal is to build a level of trust around your brand, because that will outlive any specifi c ac ons taken on product reformula on.”

10 Expect a Moving Target

Consumer demands with clean label are likely to change and evolve over me. As more product lines are reformulated, the bar is likely to be raised for inclusion of other a ributes. This means free-from lists will grow as consumers become ever more knowledgeable.

“Consumers are aware of so many ingredients and terms, now, and it blows my mind that they know what this all means,” said one retailer. “The focus will be on every ingredient.”

Remarked another retailer, “Realize this is a moving target. Right now it may only be part of a line. But that will likely change.”


What’s Next?This report provides an in-depth look at how brand owners are impacted by the clean label phenomenon. It contains consumer and industry insights, and steps that can be employed immediately. However, the learning doesn’t stop here. FMI plans addi onal work on this topic, including more explora on of consumer and industry insights.

The FMI Private Brands Council will further explore clean label impacts on retailers as this trend plays out over me. FMI encourages readers of this report to provide feedback and to become involved in future industry eff orts to improve customer sa sfac on around this trend.


Key ResourcesFMI 2017 U.S. Grocery Shopper Trends reporth ps://www.fmi.org/our-research/research-reports/u-s-grocery-shopper-trends

FMI 2017 Report on Retailer Contribu ons to Health and Wellnessh ps://www.fmi.org/forms/store/ProductFormPublic/2017-report-on-retailer-contribu- ons-to-health-wellness

SmartLabel digital transparency ini a veh p://www.gmaonline.org/issues-policy/health-nutri on/smartlabeltm-consumer-informa on-trans-parency-ini a ve/

Solu ons for Retail Brands h p://www.s4rb.com/

S4RB three-part thought leadership book seriesh p://info.s4rb.com/book-series-ubx

FMI Private Brands Councilh ps://www.fmi.org/industry-topics/private-brands

European clean label reporth p://emea.ingredion.com/content/dam/ingredion/pdf-downloads/emea/87%20-%20The%20Clean%20Label%20Guide%20to%20Europe%20from%20Ingredion.pdf

Target announcement on kids’ snacks h ps://corporate.target.com/ar cle/2017/07/kids-owned-brand-snack-commitment

Shoprite free-from lineh ps://www.shoprite.com/wholesomepantry/

Trade media ar cle on simple ingredients: h p://www.fooddive.com/news/food-makers-bulk-up-on-simple-ingredients-as-consumers-embrace-clean-labels/446389/


Food Marke ng Ins tute proudly advocates on behalf of the food retail industry, which employs nearly 5 million workers and represents a combined annual sales volume of almost $800 billion.

FMI member companies operate nearly 33,000 retail food stores and 12,000 pharmacies. FMI membership includes the en re spectrum of food retail venues; single owner grocery stores, large mul -store supermarket chains, pharmacies, online and mixed retail stores. Through programs in public aff airs, food safety, research, educa on, health and wellness and industry rela ons, FMI off ers resources and provides valuable benefi ts to almost 1,000 food retail and wholesale member companies and serves 85 interna onal retail member companies.

In addi on, FMI has almost 500 associate member companies that provide products and services to the food retail industry. For more informa on, visit www.fmi.org and for informa on regarding the FMI Founda on, visit www.fmifounda on.org

www.fmi.org | www.s4rb.com

Solu ons for Retail Brands (S4RB) is a private brand grocery retail specialist. It enables be er communica on between retail teams, their suppliers and their customers through innova ve so ware solu ons.

Working with some of the world’s largest retailers and brands, S4RB’s clients include Asda, Musgrave Group, Safeway, Waitrose, Walgreens Boots Alliance and Walmart.

The company was founded in 2006 and provides retailers and suppliers with unique insight into product performance by colla ng all customer feedback and product tes ng data into one shareable format. This informa on can then be used by private brand teams to develop compe ve products that meet their value proposi on, as well as increasing sales and customer loyalty.

For more informa on on Solu ons for Retail Brands visit www.s4rb.com

The Clean Label Phenomenon for Food Retailers · and integrity of manufacturers, retailers and...

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