Clear opportunity

Global market research firms Mintel Group and Euromonitor describe the clean and clear label movement as a revolution. The Netherlands-based Innova Market Insights ranks “Clean Supreme” as the top food and beverage trend for 2017.

While the movement is more entrenched in Europe, consumer demand for clean and clear label products is surging in the United States, especially among U.S. millennials — those born between 1982 and 2000, who now number 83.1 million, according to the U.S. Census Bureau, and will have $1.4 trillion in spending power by 2020 per some estimates.

Manufacturers, large and small, are responding in a big way to consumer preferences for simple, wholesome food without chemical additives. Late last year, Campbell’s Soup Co. debuted its Well Yes! clean label line of canned soups made without artificial colors, flavors or ingredients and without bisphenol A (BPA) in its can linings. And since 2015, General Mills and Kellogg’s have been racing to remove artificial dyes and flavors from all of their cereals.

Nothing But Real, a clean label snack start-up in Palm Beach Gardens, Fla., launched its first product last year — Oat Chocolate, a high-protein vegan beverage. “Let’s take food back. Let’s make products only from real ingredients — ingredients that are grown in fields and orchards or by Mother Nature,” the company states on its website.

Helena Lumme, who founded Nothing But Real with her husband, immigrated to the United States from Finland 20 years ago and was immediately struck by the heavily processed and chemical-laden nature of American food products. “Growing up in Scandinavia, it was a given that the products were healthy and didn’t have any chemicals,” she says. “So you can imagine the culture shock we experienced when we moved to the U.S.”

Lumme is heartened that American consumers of all generations are finally embracing natural food that is free from synthetic substances.

“The trend is very real,” says Scott Lindsay, president of Product Development Plus in Toronto, Ontario. “Consumers are becoming more and more informed about how making the right food and eating choices impacts their overall health and their longevity.”

With several notable exceptions, grocery retailers with store brands have been slower than national brands to introduce clean label lines or reformulate their existing products, overwhelmed by the perceived investment costs and by the sheer number of categories they carry. But retailers would be remiss not to seize this tremendous opportunity to win over health- and sustainability-conscious shoppers, industry experts insist, noting that there are ways to do this strategically to get the best returns on investment.

“You don’t need to make massive-scale changes right away,” says Diana Sheehan, the Chicagoland-based director of retail insights for Kantar Retail. “But you need to get started in this now.”

Beyond organic

No official definition or standards exist for “clean label” or “clear label” — unlike the “USDA organic” label, which means that a product meets specific production requirements (grown without synthetic pesticides, for example) and does not contain prohibited substances such as GMOs.

Many clean label products feature the same claims as organic products without having undergone the same rigorous certification process. For a product to be labeled organic, at least 95 percent of its ingredients must be organically produced, according to the USDA’s National Organic Program. That said, many organic products contain a multitude of ingredients or contain ingredients that consumer advocacy groups have deemed questionable. In its white paper “The Organic Watergate,” the Cornucopia Institute points out that organic products can contain what the food and farm policy watchdog organization considers to be harmful ingredients such as carrageenan and decosahexaenoic (DHA) algal oil.

When it comes to eschewing chemical additives, keeping ingredient decks short and explaining the origin of product ingredients, the clean and clear label movement surpasses the federal government’s organic requirements.

“Although there is no formal definition for either ‘clean label’ or ‘clear label,’ there is consensus gathering that consumers are looking for shorter ingredient lists, and they’re looking for ingredients that they can understand that don’t sound too much like chemicals,” notes Carl Jorgensen, director of global consumer strategy and wellness for Stamford, Conn.-based Daymon Worldwide.

Journalist and activist Michael Pollan has been credited with creating the clean label movement’s rallying cry in his 2008 book In Defense of Food: Avoid food products containing ingredients that are unfamiliar, unpronounceable or more than five in number.

The broadening of the movement to “clean and clear label” underscores the growing clamor for transparency. A product can be clean label without being clear label, Jorgensen says. “For example, a common ingredient in clean label products is ‘natural flavorings.’ That term is very obscure,” he maintains, “because it doesn’t explain what those flavorings are.”

Consumers don’t just want to know what’s in the foods they eat and the personal care and cleaning products they use; they also want to know the provenance of those products and their ingredients. Transparency today applies to the entire supply chain. Millennials in particular care not only about a product’s health and wellness profile, but also about whether all parties involved in the item’s production and distribution are committed to environmental sustainability, humane work practices, animal welfare and other social causes.

While the clean and clear label revolution seems to demand much from retailers with private label lines, small steps can pay big dividends, Jorgensen says.

Overcoming skepticism

It’s easy to be skeptical of and overwhelmed by the hundreds of substances that currently raise consumer concerns, most of which the FDA deems generally recognized as safe (GRAS).

Although she applauds the desire to eat healthfully, Heather Mangieri, RDN, a spokeswoman for the Academy of Nutrition and Dietetics, believes that easy access to questionable information online perpetuates food phobias.

“Putting fear in food is never a positive thing,” Mangieri contends. “We have one of the safest foods supplies in the world. Yet we have so much controversy surrounding it.”

Consumers have long had concerns about food ingredients, which have shifted over time, adds Carol Spieckerman, founder of Bentonville, Ark.-based Spieckerman Retail. What sets the clean and clear label movement apart is that “it’s more complex and it’s getting more granular,” she observes.

Although some consumer concerns are misguided, that shouldn’t matter to retailers, which need to sell their products and have little hope of disabusing shoppers of their fears and aversions, Jorgensen notes.

“I don’t think there is any doubt that some of their fears are unfounded,” he says. “Consumers sometimes get worked up about things when there is no scientific basis for their concerns.

“But who are you selling your products to? You’re selling them to consumers; you’re not selling them primarily to food scientists. You need to find out what consumers’ beliefs and behaviors are and tailor your brands, your product lines and your marketing to reflect that.”

Getting started

Deciding how to respond to the call for clean and clear labels requires a dedicated, robust corporate effort, according to Spieckerman. But it’s important for U.S. retailers not to wait too long before making their initial foray, she maintains.

“The granular free-from movement has more traction in European countries, which tend to be earlier adopters,” Spieckerman explains. With Lidl about to open stores in the United States, American retailers need to be ready because the German chain is already well-versed in how to address consumers’ concerns about chemicals in food, she says.

“Competition is going to drive the pressure for adoption because if other retailers are doing it and you’re not, you’ll look like you’re behind; you’ll look like you’re in the Dark Ages,” Spieckerman adds.

Off to a good start, certain U.S. retailers are already doing an impressive job in the clean label realm, Jorgensen observes. San Antonio, Texas-based H-E-B, for one, is taking a bold approach with its new clean label H-E-B Select Ingredients brand, which proactively excludes some 200 ingredients, described on the retailer’s website. “It’s a forward-looking and really on-trend list that shows a very clear understanding of the ingredients that consumers object to and why they object to them,” he says.

It’s not necessary, though, for every chain to launch such a comprehensive free-from private label line. Jorgensen suggests that retailers prioritize those ingredients and additives that consumers most want to avoid.

“If you look at the hierarchy of ingredients that consumers object to the most, the top three are artificial colors, flavors and preservatives,” he says. In addition, many consumers today want to avoid trans fat and high-fructose corn syrup.

Jorgensen points out that Batavia, Ill.-based Aldi U.S. has made strides in the direction of clean label with its own brands (see sidebar on page 30) without creating a completely clean product line.

“Aldi eliminated just a few things from its private brands — artificial colors and flavors and trans fats — and made a big deal about it,” he continues. “So even though Aldi didn’t make its products totally clean, the chain made good steps in that direction and it has been rewarded for it.”

Whether to reformulate existing store brands or roll out new clean and clear label lines should be based on retailers’ knowledge of their customers and long-term goals.

“The most important thing is to understand what your corporate strategic objectives are and have a very firm understanding of who your customers are and what their hot buttons are,” Lindsay says. “That will help inform the degree to which you want to embrace clean ingredients and avoid certain harmful ingredients.”

Austin, Texas-based Whole Foods Market and Fletcher, N.C.-based Earth Fare, for example, have been championing wellness and sustainability for years and have customer bases that have long been strict about what they put in and on their bodies, Lindsay notes. Consequently, he is not surprised that these organic food retailers are getting a lot of mileage out of the clean and clear label movement. Whole Foods recently introduced its “Eat Real Foods” marketing initiative, while the Southeastern chain has an audacious new slogan and program: “Live Longer with Earth Fare.”

It isn’t necessary for a chain to mimic Whole Foods and Earth Fare, however. Rather than reformulate an entire product line or launch a new clean label brand, retailers could test the waters by adding clean label SKUs to an existing line, Sheehan advises.

“Retailers that have multiple tiers could use one of their existing lines and reformulate a few items in two or three targeted categories,” she suggests. “If you have a low-priced line and a premium line, look to the premium line for reformulating or launching the clean label items. Alternatively, if you have a third tier that is organic, maybe that’s where you introduce the clean label SKUs.”

From a cost-benefit perspective, incremental changes tend to be the way to go, Jorgensen agrees.

“If you take an established private label line, it’s pretty hard to totally reformulate it overnight,” he notes. “But if you start a new brand like H-E-B Select Ingredients, you’ve got a clean slate and you can set new specs for your manufacturers to follow.”

Retailers should take heart that the barriers to entering the clean label realm are not as significant as one might imagine, Jorgensen says, noting that he was amazed by the ingenuity on display at the Clean Label Conference last spring in the Chicago area.

“It was an eye-opening experience for me to see the range of highly effective clean label solutions that ingredient manufacturers have already come up with,” Jorgensen shares. “For example, a couple of companies were showcasing ingredients made from plum juice that are just as effective at preserving deli meats as nitrites and nitrates are.

“The world of food technology is loaded with extremely intelligent and creative people who are coming up with natural alternatives to the ingredients that consumers object to. Sure, there is a little bit more cost. But many of the companies were demonstrating that the incremental cost per unit of doing this is actually very small.”

To be clear

The transparency aspect of the clean and clear label revolution may actually be more daunting for store brands, which even while disclosing exactly what’s in or not in a product may not always reveal the item’s provenance, including the contract manufacturer or private label vendor that made it.

“Traditionally a private label puts a little bit of a barrier between the consumer and the origin of the product,” Jorgensen notes. “But rather than viewing this as a problem, it’s really an opportunity for private brands to engage in authentic storytelling. That means telling where a product is made and who made it. What’s the story behind the product, and what was the thinking behind it?”

Storytelling begins with the package, Jorgensen says. But also playing key roles are the retailer’s website, its social media presence and in-store merchandising, including shelf talkers and digital signage. And in the near future, smart phone apps combined with geolocation technology and SmartLabel bar codes will likely increase in importance.

“When retailers operate honestly and transparently — as many already do — consumers have a good understanding of what those brands stand for,” Lindsay says. “They reward those retailers because they trust them.”