SUBSCRIBE

Breaking News on Food & Beverage Development - North AmericaEU edition | APAC edition

News > Manufacturers

Read more breaking news

 

 
Soup To Nuts Podcast

Soup-To-Nuts Podcast: The rise of ‘ethical claims’ and their marketing potential across categories

By Elizabeth Crawford

22-Jul-2016
Last updated on 22-Jul-2016 at 13:43 GMT2016-07-22T13:43:57Z

The rise of ‘ethical claims’ and their marketing potential
The rise of ‘ethical claims’ and their marketing potential
Loading the player...

Consumer demand for products and companies that “do good” – such as donate a percentage of sales to a non-profit, follow environmentally friendly practices or meet religious needs – continues to rise and in doing so illustrates that doing good is not only good for the community and company moral, but it also is good for business. 

In fact, it is extremely good for business.

New research from Euromonitor shows that consumers spent nearly $217.5 billion in retail value sales in the US on products making ethical label claims in 2015. Worldwide, this number reached upwards to more than $794 billion in retail value sales in 2015.

This data complements earlier research from 2008 that found almost eight out of 10 consumers said they would switch brands to one that is associated with a good cause, provided the price and quality were equal.

To find out what exactly these findings mean for the food and beverage sector, FoodNavigator-USA caught up with Alan Rownan, an ethical labels analyst with Euromonitor, for this episode of Soup-To-Nuts podcast. He outlines what claims resonate with consumers, their sales potential and in which categories ethical labels show the most potential.

Corporate social responsibility is top priority

In the past, ethical claim and transparency into the environmental and community impact of making products might have been secondary to a company’s financial results, but “food and beverage companies can’t really sweep a bad CSR [corporate social responsibility] profile under the carpet any more. And they are making every attempt to highlight to consumers that they are ethical brands and that they are ethical companies,” Rownan said of the current ethical claims landscape.

He further explained that in 2015, food and drinks making at least one ethical claim accounted for 45% of value sales in the US, which is not to say that the ethical claims were the ultimate determining factor in sales of these product, “but there is no doubt that it is a growing concern with consumers.”

Using Euromonitor’s new Ethical Labels database, which launched May 23 and which tracks ethical labels on physical packaging in 26 countries, Rownan noted that “not all ethical labels are created equally … in terms of prominence on packaging, added value to consumers and their impact on sales.”

He explained that the efficacy of an ethical claim on a product label will depend on who the consumer is and the extent to which the claim really sets the product apart from competitors in the same category. For example, claims about no artificial colors on carbonated water will not be as effective as the same claim on confections because consumers do not expect artificial colors in carbonated water.

Likewise, claims about no artificial sweeteners or flavors will not resonate as well in the coffee and tea categories as claims about Fair Trade or forest protection, Rownan said.

Kosher claims breakout in the US

With that context, Rownan said Kosher claims were among the most surprisingly successful claims in the US and one of largest contributors to the sale of products in the US with ethical labels.

“The US Kosher label market was worth $118 billion, and that is 18 times the size of the Israel market,” Rownan said, adding, “that is too big to be ignored.”

In particular, demand for Kosher label products in 2015 reached around $13 billion in the sweet and savory snack segment, $12 billion in the dairy segment and $11 billion in the biscuits and snack bread segment, he said.  

Vegan claims trending up

Vegetarian and vegan claims are another set of increasingly popular claims, which were associated with $37 billion in sales in the UK in 2015, Rownan said. He also predicts more companies will pounce on this opportunity and food and beverage products making vegan claims will increase 5% globally by 2020.

Within the vegan segment, nondairy milk alternatives are thriving – accounting for 66% of all packaged food labeled as vegan globally, he added.

Other ethical label claims to which consumers are responding well including all natural claims, which were on products worth $25 billion in sales in 2015, and claims related to recycling, which were on products worth $114 billion in sales in the same period, according to Euromonitor.

Location of claims matters

Ethical claims on product packages have the most influence, especially on the front of the package and including certification seals, Rownan said, adding manufacturers should not make consumers work to find this information.

“Obviously, there is only so much real estate on the physical packaging,” Rownan acknowledged. With this in mind, he said more companies are using URLs or Smart Label codes to direct consumers to websites for more information on ethical claims and the products in general.

He added: “It will be interesting to see the roll of the Internet in addressing consumer concerns, whether it is by social media platforms, e-commerce product descriptions that generally allow larger word counts than perhaps physical packaging or alternative methods.”

The future of ethical labels

Looking forward, Rownan says consumer interest in ethical labels will continue to rise – making them a key component of successful sales and marketing campaigns.

In particular, Rownan says, he expects to see labels grow in popularity that relate to religion, the environment or sustainability, and clean and natural ingredients.

The only potential hitch he sees in the future with ethical labels is if legislation “eventually catches up with these labels where they eventually become mandatory at some point or at least some of them do.”

He explained that much of ethical label claims’ value to consumers remains with the fact that they currently exceed legal expectations and requirements.

Still, even if legislation does catch up with ethical labeling, Rownan said, “I imagine that it might just lead to a next stage of ethical labeling. I think there will always be value derived from being good and being a good company.”

Soup-To-Nuts Podcast: Key strategies for innovation from Kraft Heinz

Soup-To-Nuts Podcast: Key strategies for innovation & renovation from Kraft Heinz

A commonly held perception of the ongoing renaissance in the food and beverage industry...

Soup-To-Nuts Podcast: What does it take to win a pitch slam?

Soup-To-Nuts Podcast: What does it take to win a pitch slam?

For time-strapped entrepreneurs who are brave enough to take the stage, competing in pitch-slams...

Soup-To-Nuts Podcast: Can duck be a dark horse of animal proteins?

Soup-To-Nuts Podcast: Can duck become the dark horse of animal proteins?

When it comes to eating meat in the US, chicken, without a doubt, is...

Soup-To-Nuts Podcast: The business case for kosher certification

Soup-To-Nuts Podcast: The business case for kosher certification

Ethical claims on food and beverages sold in the US are almost as ubiquitous...

Soup-To-Nuts Podcast: Hemp is overcoming hurdles to become superfood

Soup-To-Nuts Podcast: How hemp is overcoming hurdles to become the next superfood star

Nutrition-packed, environmentally sustainable and already notoriously well-known – although partly for the wrong reasons...

Soup-To-Nuts Podcast: Seeds emerge as superfood powerhouse

Soup-To-Nuts Podcast: Nutrient-dense seeds emerge as superfood powerhouse

Nuts and seeds in the US are finally reaching superfood status, thanks in part...

Soup-To-Nuts podcast: 3 trends driving growth in bottled water

Soup-To-Nuts podcast: Three trends driving growth in the bottled water category

After years of steady growth in the high single-digits, consumption of water in the...

Soup-To-Nuts Podcast: grain-free vs ancient grain trends

Soup-To-Nuts Podcast: Gluten free movement spawns divergent grain-free vs ancient grain trends

As the tenacious gluten-free trend continues to grow and mature into a market behemoth...

Soup-To-Nuts Podcast: Agency enforcement and litigation targets

Soup-To-Nuts Podcast: FDA & FTC move forward with enforcement even with some regulations in limbo

New regulations and draft guidances may be on hold at many federal agencies until...

Soup-To-Nuts Podcast: Evolving views on breakfast

Soup-To-Nuts Podcast: Evolving views on breakfast create challenges, opportunities for CPGs

Breakfast has long been known as the most important meal of the day, but...

As soda sales fall, kombucha rises

As soda sales fall, kombucha rises

Tumbling soda sales have opened the door to the mainstream market for a variety...

Bonafide Provisions expands bone broth's appeal with Drinkable Veggies

Bonafide Provisions expands the reach and appeal of bone broth with Drinkable Veggies

As recently as two years ago, bone broth was virtually unheard of by the...

Defining dietary fiber at the 2017 IFT show

VIDEO: Should we define dietary fiber on the basis of what it is or what it does?

Which ingredients should be classified as dietary fibers and why? Elaine Watson caught up...

Sugar Reduction: What’s next? At IFT, companies weigh in

How will added sugar labeling change the market? At IFT, companies weigh in

The controversial requirement to list added sugar on the nutrition facts panel has divided...

Corbion's trans fat-free emulsifiers allow manufacturers to 're-engineer' cakes

Corbion's trans fat-free emulsifiers allow manufacturers to 're-engineer' cakes

"The conversion away from partially hydrogenated oils is really an opportunity to re-engineer cakes...

Cargill R&D VP talks ‘processed’ food, EverSweet, at IFT 2017

VIDEO: Cargill R&D VP talks ‘processed’ food: ‘All food is made of chemicals’

To many consumers, ‘processed food’ is just another term for ‘junk food.’ It’s hard...

Entomo Farms talks edible insects at IFT 2017

Entomo Farms: 'We’re one of the most recognized [edible insect] brands across the world now'

Canadian bug powder supplier Entomo Farms is still doing most of its business with...

Clean meat labeling and regulation in focus at IFT 2017

VIDEO: Will we need a new regulatory framework for clean (cultured) meat?

Producing ‘clean’ meat by culturing cells – instead of raising or slaughtering animals -...

IFT 2017 green banana flour in focus

VIDEO: ‘Green banana flour has the functionality of a starch and the label of a fruit…’

One product that generated quite a buzz at the IFT show this year was...

Retail competition heats up as consumers seek more ethnic products

Competition among retailers heats up as consumers seek more diverse, ethnic products

Consumer demand for products that are authentic and ethnic is not only prompting brand...

Key Industry Events