Monday, April 11, 2011

A Natural Food Dilemma

One of the hottest food-industry trends is the increased interest in products that can be called natural. While the analyses behind the trend could go into innumerable pages, the general consumer perception is that natural foods and beverages and natural ingredients are in some way better: better for your health, better tasting, better quality, better for the earth or better because they hearken back to simpler, better times. Context Marketing recently surveyed 600 more-affluent U.S. consumers to determine which nonhealth product claims were most important in grocery and restaurant products: 57% said they were concerned about safety (the highest-ranking issue), while 50% said a natural label was important.

So, the industry faces a formulation dilemma. What exactly is “natural”?

Organic is definitely a subset of natural. Organic has a very clear definition in the USDA’s National Organic Program (NOP). However, the Context survey found “organic” is ranked lower in importance (35%) than natural, and the market bears that out. After nearly a decade of double-digit growth, organics have stalled to a modest 5% rise—and that’s on perhaps 5% of the total food market. For three years running, the percentage of U.S. consumers purchasing organic products has held steady in the 38% to 39% range, reports TABS Group, Inc. In our recessionary world, the organic upcharge is a significant issue. Plus, despite the NOP rules, many consumers don’t understand organic, and it may even carry the baggage of being too elite, especially given the oft-referenced organic and natural grocer “Whole Paycheck.”

Could it be green? Products that affect social, environmental and sustainability issues, like fair trade–certified items, appeal to the socially conscious consumer and are becoming more popular. Sales of U.S. food and nonfood fair-trade products in 2009 reached $1.2 billion, with ready-to-drink coffee and tea products growing by 39%, according to Fair Trade USA and SPINS. But “greenwashing,” falsely portraying or overestimating a positive environmental impact, seems prevalent, and fewer than 50% of consumers “don’t know how to verify a company’s claim that they’re ‘green,’ and that number has declined compared to 2008,” according to Mintel.

According to a recent survey of 1,000 natural product consumers by Mambo Sprouts Marketing, 34% were either “not very” or “not at all” confident in current natural labeling, and 65% were very interested in a uniform standard to certify natural products—including ingredients and processes—that are labeled as “natural.” Such standards would also be helpful to the product designer to aid ingredient selection. Are only plant- and animal-based products natural? What about the processes used to make various ingredients, including chemical, physical and enzymatic reactions? Just look at the current sweetener controversies to see the tangled web of perceptions, claims and facts.

However, it’s hard to see that any standards other than the FTC’s “false and misleading” stricture and the definitions that currently apply to meat and flavors will be coming soon. Who will be willing to untie that particular Gordian knot?

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