How can food businesses be transparent?
Consumers are critical of food industry claims. Increasingly, businesses need to prove what they say is true by being transparent.
There’s a lot of distrust in the food industry. According to a survey from Mintel, 72% of adult shoppers in the U.S. feel that food companies care more about profit than food ethics. That’s a problem for anyone selling genuinely nutritious, humanely produced, or environmentally sustainable food. If consumers question nutritional, social, and environmental food claims, they may hesitate to pay a premium for these benefits. Ethics doesn’t sell well without transparency.
What does transparency look like?
It’s the customer perception of transparency that matters. Customers are the ones who evaluate product claims to determine if they should purchase and at what price. A Food Marketing Institute survey of 1,000 U.S. shoppers helps to analyze how different food label attributes affect a customer’s view of transparency.
Ingredient information is important. In this survey, respondents viewed companies as transparent if they provide a complete list of ingredients (62% of respondents), a plain English description of ingredients (53%), and in-depth nutritional information (47%). A smaller group desires more specific ingredient information before they feel that a company is transparent. For instance, 38% of respondents want ingredient-sourcing information, 32% want an explanation of what ingredients are used for, and 39% want information on how products are produced.
Transparency is not all about the ingredients. Customers also weigh how companies produce or source these ingredients. In the survey, 29% of respondents viewed companies as transparent if they provided sustainability practices. This means that to some customers, transparency encompasses environmental factors. Another segment, 35% of respondents, decided a company’s transparency on a broader set of value-based metrics that include animal welfare, fair trade or labor practices. Companies attempting to sell to this segment need to demonstrate the equitable treatment of people and animals along their supply chain. Certain customers may be distrustful of a company’s claims that are not authenticated by an outside organization. Nearly half of respondents viewed companies that provide certification, such as USDA Organic, as transparent.
What’s the cost of being non-transparent?
Young shoppers especially are seeking out food product information. The Food Marketing Institute survey found that 57% of millennials (between the ages of 22 and 38) are very likely to seek more information online, compared to 49% of Gen-X (birth years 1965 to 1980), 37% of Baby Boomers (birth years 1946 to 1964) and 41% of Gen-Z (birth years 1997 to 2012) respondents.
There’s a real chance of losing those customers who question a product’s transparency. The survey indicates that 46% of customers who don’t understand a product’s ingredients will look more closely at a competing product that better states its ingredients and 27% of shoppers will outright switch to this more transparent competitor. Increasingly, transparency is an issue of dollars and cents.
MSU Product Center
The food product label is complex in regulatory requirements and marketing opportunities. Consider working with the MSU Product Center to access nutrition facts labeling and ensure regulatory compliance. The MSU Product Center is an organization that brings together on-campus expertise in the sectors of food, agriculture, and natural resources to help entrepreneurs define and launch innovative products. Field-based innovation counselors advise entrepreneurs on business planning, regulatory requirements, and product development needs. To access business development assistance, select the request counseling tab on the MSU Product Center website or call 517-432-8750.