Food Transparency is Crucial and Profitable

Brittany Blackman
Mar 3, 2022

Food transparency has become increasingly important to consumers of all demographics. The masses now have information at their fingertips like never before, and sustainability and health consciousness are at the forefront of shopping habits. In fact, market research company Innova listed Transparency as the top trend to watch for the Food & Beverage industry.

According to data analytics company IRI, food transparency is defined as “The consumer desire to know how and where food was grown or made” and “The consumer expectation for clarity, accuracy, and usefulness of food-related information from the companies that produce and sell it.” They point out two components: 1) primary product claims such as “organic” and “antibiotic-free” and 2) grower information such as “GMO-free,” “cage-free,” “sustainable,” and “fair trade.”

The industry is trying to keep up with these growing consumer demands.

Patrick Moorhead, chief marketing officer for Label Insight, reported that "Consumers expect transparency from brands, but brands aren’t delivering, only 12% of consumers consider brands as their most trusted resource for information about what’s in their food. Most consumers turn to their phones, tablets or PCs to find more information online."

So what exactly does this push towards transparency mean for food manufacturers?

What Consumers Expect

According to the Innova Consumer Survey 2020, six in ten global consumers are interested in learning more about where foods come from. Meeting today’s ethical, environmental and clean label consumer standards is a top priority. 

And a recent report by Ceres, a Boston-based nonprofit, says that two-thirds of consumers are willing to pay more for sustainable products, and that figure is even higher for millennials (73%) and Gen Z (72%).

But with so much jargon like “clean labeling” and “plant-based”, floating around, it’s important to define what these demographics are looking for when making a purchase decision. 

Similar to the “clean beauty” movement, there’s little to no regulation in regards to defining these terms. The FDA has yet to define exactly what “clean”, “natural”, or “green” is in either industry. As a result, brands, retailers, influencers, and celebrities have defined it for themselves, creating an environment filled with fear-mongering and misinformation.

The Birth of a Movement

One of the first buzzy terms that mobilized the food transparency movement was the elusive GMO. The Non-GMO Project defines GMOs as genetically modified organisms, living organisms whose genetic material has been artificially manipulated in a laboratory through genetic engineering. It breeds combinations of plant, animal, bacteria, and virus genes that do not occur in nature or through traditional crossbreeding methods. GMOs entered the public sphere on a large scale due to the infamous Chipotle controversies.

Back in 2015, Chipotle announced that they would be permanently eliminating GMOs from their products. However, the company was slapped with quite a few lawsuits for years following their new GMO policy. An ongoing suit was settled in 2019.

Chipotle paid $6.5 million to settle a class-action suit, accusing the chain of falsely advertising that its food is free of genetically modified ingredients.

The settlement entitles anyone who purchased food from any Chipotle unit in the U.S. from April 27, 2015, until June 30, 2016, to $2 back on each qualifying purchase, with the ability to claim up to five qualifying purchases without documentation. Customers with proof of purchase were to be awarded up to $20 for 10 qualifying purchases during that period. 

This marks one of the first major turning points in how consumers decide where to eat and shop. Companies began to notice major profitability in knowing how to label their goods to entice just the right paying customers. According to Label Insight, manufacturers that adopt "complete transparency" are rewarded with consumer loyalty of about 94%. Consumer loyalty is just as important as profitability.

In the same breath, modified ingredients also lent themselves as a talking point in another movement under the transparency umbrella. The rising popularity of eating a “plant-based” diet affects different categories since it catalyzes the demand for new formats, plant proteins, and better alternatives. Propelled by sustainability and animal welfare concerns, lab-grown foods have the potential to disrupt the industry by mainstreaming the use of new technologies. As consumers are using more plant proteins, new preferences are becoming mainstream.

How Companies are Meeting New Demands

One company, in particular, has capitalized on the transparency trend. Ice cream company Halo Top has caught on to the growing demand for products that contain clean and simple ingredients. And most importantly, they’ve realized the importance of consumers recognizing ingredients that they're familiar with. Its containers contain descriptions that aren’t inundated with purposefully difficult jargon. They also specify the number of calories in bold on the front of the package. Since its launch in 2012, Halo Top has seen exponential growth, including a 2,500% increase in sales in 2020. It also recently became the #1 selling pint of ice cream in the U.S., beating out legendary brands like Ben & Jerry’s and Breyers. There’s profit in transparency. 

Consumers also require food transparency to include the truth about sustainability efforts. A recent report from The Hartman Group found nearly 70% of consumers want retailers to be more transparent about their sustainable practices. But consumers now demand that sustainability include labor issues, animal welfare, and all other intricacies of the manufacturing process.

In response, Coca-Cola recently unveiled plans to collect and recycle the equivalent of all of the global packaging it sells by 2030. In 2016 PepsiCo also pledged to make all of its packaging recoverable or recyclable by 2025. Mars, Unilever, and Walmart have also made similar sustainability commitments.

Where is the Food Transparency Movement is Heading

One of the newest concepts in food transparency is single-origin verified labeling. It’s a leap up from GMO and fair trade labeling. It’s one label that shows the consumer exactly where the product came from. It's too early to say whether the idea will spread, as there is just one company that’s testing the concept out.

The Real Co. sells staples like salt, sugar, and rice from individual farms and producers and adds their respective names to the product’s label. This works towards a type of transparency that’s traceable, right to the source. 

The Real Co. products are sold in roughly 700 independent retailers around the U.S., and some major grocery chains like ShopRite and Natural Grocers, at affordable prices.

Its model cuts out the middleman, resulting in fewer people getting a cut of the profits, leaving more wiggle room for the producers to get paid, and the consumers to consume affordably.  As a result, The Real Co. can sell pink rock salt at a price point that beats out higher-priced sustainable options. 

Food transparency is a complicated concept. We’re only scratching the surface of what it means to be truly transparent, and which particular companies are excelling. There is mounting evidence suggesting that consumers are making more informed purchases, especially when they’re properly informed about what they’re consuming, and it shows no signs of slowing. If manufacturers want to see profits jump, it’s crucial for them to be honest with their practices. 

Photo by Igor Miske via Unsplash

Learn more about SUMO Heavy

If you’d like to learn more about SUMO Heavy, drop us a line, give us a call or contact us on social media.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.