What retailers need to know about the revised Nutrition Facts Label

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What retailers need to know about the revised Nutrition Facts Label

By Carolyn Schierhorn - 10/26/2017

There’s no doubt that complying with the Food & Drug Administration’s (FDA) new Nutrition Facts Label requirements will be a costly and cumbersome endeavor for retailers with thousands of store brand grocery products as well as for private brand food and beverage manufacturers. It’s not just that every package needs to be reprinted with the new panel, which stresses the calorie count and a more realistically portrayed serving size in a bigger and bolder font. That emphasis on calories plus a requirement to include “added sugars” could also lead to expensive product reformulations.

By the FDA’s estimates, the conversion will cost the food industry more than $2.3 billion and will affect roughly 800,000 packaged products, with the private brands segment shouldering the expenses disproportionately as consultant Jim Wisner explains.

Consider the burden on a food and beverage company that manufactures 25,000 different items, observes Wisner, founder of Wisner Marketing in Libertyville, Ill. “Each of those SKUs is going to require a packaging change,” he points out. “So that company has to make a change individually to everybody they sell to, which produces extraordinarily higher costs.”

But as some early adopters of the Nutrition Facts Label have found, the updated panel may help win over information-demanding consumers. Chicago-based Label Insight — a data science company that captures, sorts and analyzes information gathered from food product packaging — and New York-based global data company Nielsen have conducted research indicating a correlation between products that bear the new label and sales increases, notes Dagan Xavier, Label Insight’s co-founder.

For example, in the juice category, products adopting the new label grew 34 percent in sales in the 52 weeks ending Aug. 12, while products not yet adopting the new label declined 4 percent during that period. Consequently, private brand owners might want to view the label change as an investment that could pay off in added sales, on top of providing clear benefits for consumers who are insisting on greater transparency, Xavier says.

Of the more than 6,500 products in Label Insight’s database that already sport the new label, more than 40 percent are store brand SKUs, Xavier adds. This could indicate that private brand owners are ahead of the curve in seeing value in the label revision, he suggests, noting that a number of retailers and manufacturers today are prioritizing transparency and going beyond what the FDA requires.

The challenges of implementing the new requirements have been many, however, including insufficient prepress capacity in the United States. The steps between creating a package’s print layout and the final printing of the package are often handled by overseas firms rather than U.S. companies, so the sudden surge in need for prepress contractors has put a strain on the global packaging printing industry.

Above all, ongoing uncertainty over the Nutrition Facts Label compliance deadline has been frustrating for grocery retailers and vendors. Because of arbitrary delays in implementation, President Donald J. Trump’s unpredictability and his often-voiced distaste for regulations, some retailers and manufacturers have preferred to take a wait-and-see stance.

Four months ago, the FDA announced an indefinite postponement of the Nutrition Facts Label compliance deadline, which had been set for July 26, 2018, for companies with annual sales of $10 million or more and July 26, 2019, for manufacturers with annual food sales of less than $10 million.

On Sept. 14, after stating at a conference that there would be a 12-month deadline extension, FDA Commissioner Scott Gottlieb “tweeted later that evening, apologizing for the confusion, and said it probably would be more like 18 months,” notes Doug Baker, vice president of industry relations for the Food Marketing Institute (FMI), who oversees the organization’s private brand initiatives. “So the compliance deadline could be sometime between January and July of 2020 if that date holds up. But it has not been formally communicated, so it’s still somewhat ambiguous as to when it’s going to happen.”

First major overhaul of NLEA

Signed into law by President George H.W. Bush, the Nutrition Labeling and Education Act of 1990 (NLEA) mandates the Nutrition Facts Label. Although it had to be updated in 2006 to include trans fats and there have been other adjustments over the years, the new FDA requirements represent the first major overhaul of the label.

Championed by former First Lady Michelle Obama as part of her healthful eating initiative, the revisions to the Nutrition Facts Label are intended to help combat obesity and the associated chronic health problems of diabetes mellitus and cardiovascular disease. The NLEA now requires that the serving size be based on what the typical consumer would eat and not on what a person should eat and that both this and the calories per serving be prominent on the package.

Wisner sees advantages to shoppers in being able to discern a product’s true calorie count more easily, and the larger type size specifically benefits aging consumers with worsening vision, he notes.

“The serving sizes have been made a lot more realistic,” Wisner says. “There used to be a lot of fudging on that.”

For example, Wisner points out that an 8-ounce container of Kraft Cool Whip claimed to contain 25 servings, an egregious exaggeration if one considers how people actually use the whipped topping. “The FDA is trying to put some reality into — and some teeth behind — how serving sizes are determined and the product is used, so that’s one thing that is good from a consumer standpoint,” he says.

In addition, the revised Nutrition Facts Label better reflects the latest research in nutritional science and consumer health, according to Wisner. The new label includes measures for Vitamin D and potassium because these are nutrients that Americans typically don’t consume enough of — in contrast to Vitamin A and Vitamin C, which have been removed from the panel.

The inclusion of “added sugars” is another key change to the label, which “will probably lead to some reformulations,” Wisner predicts. “There has been a lot of pressure to reduce the amount of added sugars in the American diet, which have been found to be a significant contributing factor toward obesity in the United States.”

But Wisner doesn’t understand why “cholesterol” remains on the Nutrition Facts Label, given that “the FDA has come out with an opinion that dietary cholesterol is pretty much irrelevant in terms of its contribution to heart disease,” he notes. Listing dietary cholesterol simply perpetuates the myth that eggs, for instance, are not heart-healthy, when in fact they are among the most healthful foods available to consumers, Wisner adds.

Although FMI has been negotiating with the FDA over the timing of the Nutrition Facts Label rollout, the organization doesn’t mind the revisions overall, Baker says. “We support anything that helps consumers get more information about the products they use and consume,” he explains. “So we never had an issue with the Nutrition Facts Panel changes. The only issue we’ve had as an association has been the limited time to get the revisions completed.”

Xavier believes that the new FDA requirements are a step in the right direction. “Label Insight’s mission as a company is to help people make healthier food choices, and the new Nutrition Facts Panel provides more transparency on the foods that we eat,” he says. “I think it’s a great start, but it doesn’t go far enough.”

Beyond the limited confines of a package, user-friendly digital programs such as SmartLabel, a joint project of the FMI and the Grocery Manufacturers Association to give consumers comprehensive ingredient and additive information online, and a shelf-tag transparency initiative launched by West Sacramento, Calif.-based Raley’s Supermarkets go much further in providing consumers with all of the data they need for healthful eating, Xavier says. 

Strategic, stepwise rollout

Some grocery retailers refresh their store brand packaging designs every five years or so. If it’s almost time for a strategic redesign, this is an ideal time to do it and incorporate the new Nutrition Facts Label as part of the process, Baker suggests. Deerfield, Ill.-based Walgreens Boots Alliance is doing just that with the redesign of its Nice! store brand food products.

“For retailers that are in the midst of a redesign, they can incorporate NLEA updates for any categories that haven’t been touched yet,” Baker elaborates. “Then they can work with their design and prepress companies to update the Nutrition Facts Panel on the packages that were previously redesigned. It’s all about keeping costs down to deliver an optimally priced product to consumers.”

A key consideration in deciding which lines to roll out with the new label first is minimizing packaging waste. Alter the packaging on the slowest-moving categories last in order to use up as much of the current packaging stock as possible, Baker advises.

“That way you won’t have to throw away packaging because any time you throw something away, it adds cost. In order for private brands to continue to meet the needs of the consumer, they have to be cost-competitive.”

According to Label Insight’s database, the leading categories among those items with the new label are snacks and cookies, followed closely by cheese, Xavier notes. Many shelf-stable snack products have been undergoing “clean label” reformulations anyway to remove artificial colors, flavorings and preservatives, so private and national brands are simply integrating the revised panel into such programs. Xavier suspects that cheese is also at the vanguard of displaying the revised label because it is a perishable product with significant turnover.

A huge challenge, however, is that other federal government initiatives are taking place concurrently that will affect food and beverage packaging. The U.S. Department of Agriculture is expected to soon roll out GMO disclosure and labeling standards, and the Food Safety and Modernization Act (FSMA) also has some label implications, Wisner notes. “So how many times are you going to have to change the label? The industry has been pushing for more coordination,” he emphasizes.

Complementary programs

Unlike mandated changes to food packaging labels, the voluntary SmartLabel program can easily incorporate updates.

“[We introduced] a new style guide that addresses the new formatting for the Nutrition Facts Panel,” Baker says. “The nice thing about SmartLabel is that anytime there’s a new or changed reg, it’s basically a keystroke rather than a packaging change. So I see SmartLabel as being very complementary to both NLEA updates as well as new regs coming out of the USDA.”

Although the Nutrition Facts Label revisions and SmartLabel are entirely separate endeavors, they are both driven by consumers insisting on greater transparency, Xavier adds. Through the SmartLabel program, brands can share a wealth of nutrient, ingredient, free-from, processing, certification and sourcing information that consumers can access online.

“The whole purpose of SmartLabel is that it allows brand owners to have conversations with consumers beyond the package,” explains Baker, who notes that three private brand owners — Albertsons Cos., Ahold USA and Topco Associates — currently have pages available in SmartLabel. Approximately 44,000 SKUs should be SmartLabel-enabled by the end of the year, according to Label Insight.

Despite the advantages of a digital format, the package provides the first impression shoppers have of a product in the store, and the Nutrition Facts Label, along with the ingredient deck and call-out claims, provide vital information to customers.

Although transparency is a boon for consumers, reaching that ideal will continue to pose challenges for the grocery industry and especially for private brands. With the federal government trying to standardize definitions and product claims such as “natural” and “simple,” Wisner notes that label updates could remain an ongoing frustration. 

Schierhorn, the managing editor of Store Brands, can be reached at [email protected]

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