The case for private brand transparency

Today, consumers crave information the way some individuals crave sweets: They just can’t get enough of it. And while consumers want to know more about everything, they especially want to know more about what they are eating. They want specific information about the ingredients — for example, how they were sourced, where they were farmed and whether or not sustainable farming practices were used.

But retailers typically share very little information regarding their private brand products with shoppers. Usually on-pack information is limited to a product description, a list of ingredients/nutritional facts and a “distributed by X retailer” statement. But if retailers want consumers to become loyal to their store brands, more than likely they’re going to have to become more transparent concerning their private brand products.

Learn the term

To enhance “transparency,” retailers first have to understand what the term means from a consumer point of view.

According to Chris DuBois, principal at Chicago-based IRI, transparency in the food and beverage world often refers to consumers’ desire to know how and where food was grown or made. It also includes the expectation for clarity, accuracy and usefulness of food-related information from the companies that produce and sell the food.

According to The Center for Food Integrity, six specific components make up food system transparency. Those components are the impact of food on health, food safety, the impact on the environment, human and labor rights, treatment of animals raised for food, and business ethics in food production, says Steven Rodgers, vice president, business development, analytics, supply chain & promotions, HAVI Global Solutions, Downers Grove, Ill.

In theory, food labels are supposed to help consumers make informed and — ideally — more health-minded decisions, says Carman Allison, vice president of consumer insights for New York-based Nielsen. Therefore, transparency should also allow consumers to easily understand the information on the labels.

“Transparency, however you define it, in today’s digital, instant world, is information that is easily and readily available for access,” says Jason Malmassari, senior director, promotions management, HAVI Global Solutions.

Why the interest?

One reason for the rising interest in transparency could be skepticism.

“People won’t accept the authoritative word from a company that a product is good; they want to see tangible proof on ingredients, manufacturing processes, etc.,” DuBois says.

A constant stream of product recalls, withdrawals and safety alerts within America’s food and beverage world — some of them with serious consequences — could be one of the factors leading to a lack of trust between consumers and food and beverage manufacturers.

Another possible reason consumers are more interested in transparency is the sheer volume of information that is immediately and easily available at their fingertips through the Internet, DuBois says.

“It becomes as self-perpetuating cycle,” he adds. “As people know more, they expect to see this information everywhere.”

Alan Rownan, analyst for London-based Euromonitor International, agrees.

“The flow of information is greater than ever, driven by awareness campaigns and supported by the companies that have made this step beyond compliance to have products certified,” he says.

Retailers that willingly engage with consumers at this level of transparency will create trust between the shopper and the brand. In turn, retailers might find that increased trust could help them to build a long-lasting relationship with the customer, Rownan adds.

“Consumers appreciate when brands they know and trust, including retail brands, come together to communicate how they are adapting sourcing and disclose how they are implementing supply chain traceability,” says Carla Fantoni, vice president of communications, Tetra Pak U.S. & Canada, Denton, Texas. “Meeting consumers’ need for transparency is an opportunity that retailers, manufacturers and suppliers are poised to take on together.”

For its part, Tetra Pak informed all of its key suppliers in 2015 that they will be expected to file ethical performance reports on the Supplier Ethical Data Exchange as part of its commitment to help improve supply chain transparency. Reporting data include labor practices, health and safety practices, business ethics and environmental performance for its packaging material and closure manufacturing sites worldwide, Fantoni added.

Use labels effectively

Including more information on product labels is one way for retailers to satisfy consumer demands for transparency. However, this practice could seem overwhelming, given the wide divergence of food categories and the various supply chain elements that could play a part in production, Rownan says.

“A solid foundation and starting point in fostering transparency on product packaging is captured in the principles put forward by ISEAL when identifying credible claims on packaging,” he notes. “The information should be adequately delivered in a ‘clear, accurate, relevant, transparent and robust manner.’”

Retailers should be hesitant to use national brands, in general, as their benchmark, DuBois says.

“Many national brands are moving too slowly to get aligned with changing consumer needs,” he says. “Ingredients don’t match the trends, and too many labels still look like chemistry experiments.”

Instead, retailers should look to the fast growers within categories. DuBois gives the example of Amy’s Kitchen, a brand covering single-serve frozen meals and more. As a whole, the single-serve frozen meals category has been declining for the past five years. But Amy’s has had “rocket-like growth at a slightly higher price point,” he notes.

Why is that?

“Shoppers are willing to pay more in that category for a brand that matches their transparency needs such as clean labeling, organic ingredients, etc.,” DuBois explains. “Store brands should look to companies like that for inspiration.”

However, retailers must also keep in mind packaging space constraints, which could make it difficult to provide complete transparency, Malmassari says. To overcome this challenge, retailers could opt to include a website address where consumers could go to learn more.

“Ultimately, effective labeling and packaging need to succinctly express the key message of a brand and product,” he continues. “While full transparency requires additional space such as a website, many consumers expect to see key messages directly on the product. For consumers sensitive to transparency, key certifications or messages such as organic, grass fed and nitrate-free are key factors in purchasing decisions.”

Recognize, overcome the challenges

As Bob Dylan once sang: “The times they are a-changin’.” And today they’re not only changing; they’re changing fast. This reality could be a major challenge for retailers that are trying to enhance transparency. The information they offer might be enough one year and not enough the next.

“Retailers are going to have to be strategic and ensure that their partners stay up [to date] with the rapidly changing consumer demands,” DuBois stresses. “Setting a long-term vision by category is critical. Cost matters less than the ability to reformulate and stay relevant to consumers.”

One way retailers could ensure they are able to provide enough information is to require suppliers to provide detailed traceability, supply chain and sustainability information on a product or SKU basis, as part of their contract, Malmassari says.

“If it is not a contractual requirement, it can quickly become an ignored secondary priority,” he adds.

Another challenge retailers must address is how much information to divulge to customers. To overcome this challenge, retailers could ask consumers and other key stakeholders what information they want or expect to see, and then determine the best way to communicate that information, Malmassari explains.