Getting Ahead of Clean Label Regulations

August 31, 2016

August 2016 – Retailers are essentially standing in the middle of a track where two trains are about to collide. The first one is consumer demand for clean labels. Consumers want to know what is in the food they are eating, where it came from, that it was responsibly sourced—and on top of that they are demanding fewer, more recognizable ingredients.

The second factor here is evolving government regulations. In a number of ways, these two driving forces are coming together like never before and are creating an opportunity for retailers to rethink their approach to their private brand strategy. Here are three examples to be aware of:

1. GMO Labeling

Earlier this month, President Obama signed a bill that will put in place a federal standard for the labeling of foods made with GMOs. Under the new law, the federal government must develop a universal standard for GMO labeling.  Although it will take an estimated two years for officials to standardize labeling rules, the GMO labeling law that was adopted by Vermont just two months ago is now invalid. Some are opposed to this because as it stands now with the new law, key ingredient information can be made available through the use of label technology—so shoppers would have to scan a QR code, for example, to find out if the product contains GMO ingredients. This of course is a detriment to low-income consumers who don’t have access to smart phones or internet access.

2. Revised Nutrition Facts Label

Not only are ingredients changing, but how you display nutritional information is changing as well. Government regulations are creating more transparency that ultimately reflects the way people actually consume products, not how they “should” consume. Changes include increasing the type size for Calories, and better reflecting Servings per Container, and Serving Size. For example, the reference amount used to set a serving of soda is changing from 8 ounces to 12 ounces. For packages that are between 1 and 2 servings, such as a 20 ounce soda or a 15-ounce can of soup, calories and other nutrients will be required to be labeled as one serving because people typically consume it in one sitting. Also, be prepared to call out the sugars that are added to a product. “Added Sugars,” in grams and as percent Daily Value, will now be included on the label, not just Total Sugars.

3. The FDA’s Sodium Reduction Initiative

Just about everyone can agree that the multiple public health efforts attempted to reduce sodium intake over the past 40 years have not been successful. With the majority of sodium intake coming from processed and prepared foods, and thanks in part to products that are on the shelves now, Americans consume almost 50% more sodium than is recommended. Because of this, the FDA recently announced an extended comment period for their Draft Guidance to Reduce Sodium where they are aiming to reduce consumption levels from the current level of 3,500mg/day to 3,000mg/day in 2 years and 2,300mg/day in 10 years.

These examples offer the perfect opportunity to use consumer preferences and government regulations to your advantage. If we as good brand stewards cater to consumers’ desire for authenticity and clean label–and we also get ahead of the regulations like the sodium, GMO and Nutrition Facts guidelines, we can increase consumer appeal and loyalty far better than national brands. It’s a matter of being proactive and leading versus reactive and following.

What are your thoughts on this topic? Let me hear them at JimH@daymon.com.

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