A growing consumer demand for transparency is being addressed both by regulation and a rise of voluntary claims marketers make on packages and media. Each industry and segment are at a different stage of transparency, according to Kristi Weaver, partner, McKinsey & Company, Chicago, who was a featured speaker at the TransparencyIQ conference held Oct. 18, 2017 in Rosemont, Illinois. This first-of-its kind event in the US, focused on the impact of transparency and best practices in the food and beverage industries.
“Consumers today expect transparency from retailers and manufacturers,” Weaver said. “This impacts their purchase decisions.”
In the overall food industry, information about product ingredients ranks highest, followed by manufacturing process and sourcing practices. Many marketers invest in clean-label claims to remain competitive. Others do so to secure a competitive advantage based on consumer demand and their willingness to pay.
Patrick Moorhead, CMO for Label Insight, Chicago, shared proprietary 2017 research showing that nearly half (48 percent) of consumers currently do not feel adequately informed about a product even after reading its label. Two-thirds of consumers hold the manufacturer/brand accountable for communicating critical product information in order for them to make an educated decision regarding purchase.
Here’s where it gets real, according to Moorhead: 39 percent of consumers would switch from their current preferred brand to one that offers more product transparency, while 81 percent would consider a brand’s entire portfolio of products if they switched to that brand because of transparency.
Label Insight data is able to put a price tag on transparency. Almost three-fourths (73 percent) of consumers are willing to pay more for a product that offers complete transparency. This is more than what, it’s why.
“People don’t buy what you do. They buy why you do it,” said Gina Asoudegan, senior director of mission, Applegate Farms, Bridgewater Township, New Jersey. She shared how Applegate Farms has driven industry change by forging alliances with non-governmental organizations (NGOs), which are non-profit, voluntary citizens’ group, and third parties.
“Transparency for Applegate Farms is less about pushing our product and more about talking to people about our product,” she said. “You need to sell them your mission because today’s consumers buy based on their values.”
Applegate Farms believes that the way food is raised can change and transform lives…from the farmer who grows it to the person who eats it.
Ludovic Meilhac, partner at McKinsey & Company, emphasized how transparency is much more than ingredient disclosure, with many layers of interdependent strategies to consider. Product developers and marketers must consider all aspects of transparency to have a chance in succeeding.
This includes being transparent along the way, not just when you reach your clean-label goals. That was the message shared by Deborah Arcoleo, director of product transparency, The Hershey Company, Hershey, Pennsylvania. She shared five lessons learned while implementing the company’s transparency program.
Lesson One: What matters is what people want to hear, not what you want to say; and consumers like knowing that even more information is available even if they don’t anticipate needing it.
Lesson Two: Consumers want to hear the whole story, not just the good bits. ‘Fess up to what you’re not satisfied with and what you are going to get better.
Lesson Three: The absence of information is information. Consumers will make up a story — often inaccurate — for why they can’t find what they are looking for.
Lesson Four: At the individual product level, your ability to be transparent is only as good as your data architecture. You can’t share what you don’t store and maintain.
Lesson Five: People are hungry for knowledge of how food is grown and where it comes from. Videos of farms and farmers brings product to life and educates them about the food system.