Ingredion observes higher revenue from clean label ingredients outweigh rising sector costs

20 May 2022 --- In a study by global ingredient solutions company Ingredion, the company has reported that 58% of manufacturers have experienced an increase in revenue after converting to clean label products.

Amid price inflation, this higher revenue has not been offset by the rising costs of manufacturing these types of ingredients, Daniel Haley, global platform leader at Ingredion, tells FoodIngredientsFirst.

“When Ingredion reformulates a product with a clean label, the impact on the final cost to make is no more than two to four cents added per package,” he outlines.

“Compared to the clean label high growth rate, this is far outweighed by the additional business from higher sales that can more than make up for the limited cost increase that comes with clean label.”

According to Haley, consumers are willing to pay extra for clean label formulas, which adds consumer value to the company selling the products. 

However, one-third of manufacturers surveyed by Ingredion responded that the cost of clean label ingredients is still a barrier for the reformulation of their products.

According to Haley, consumers are willing to pay extra for clean label formulas.Manufacturers raise the issue of shelf life
Respondents to the study noted that reduced shelf life across all clean label product categories was a challenge to clean label formulation and acceptance, flagged one of the key barriers to clean label development. 

Haley counters these claims: “Despite conventional wisdom, clean label products do not have a shorter shelf life; rather, these products are often in the refrigerated section and thus have an inherently shorter shelf life versus shelf-stable foods.”

“In fact, many clean label ingredients are designed to withstand the various conditions between manufacture and a consumer’s home, and the recent emergence of technology to extend short shelf life products only supports this further,” he continues.

Bread and beverage dominate clean label
Among the surveyed companies, the highest demand for clean label is observed in beverage and bakery categories. Manufacturers project that both savory and sweet bakery will see the highest clean label product growth levels. 

“Bakery and beverages make up a significant portion of a consumer’s daily diet, hence the importance placed on those categories,” says Haley.

“They can also be associated with health and wellness; for example, consumers would tend to select fruit-based beverages that list all-natural ingredients, as opposed to options with artificial ingredients.”

However, Haley underscores that other categories will need to keep up. This is not without challenges, as the study highlights that nearly three in ten companies “experienced difficulty formulating with clean label ingredients due to inexperience with specialized ingredients”.

“Looking at other categories, next-generation plant-based products will need to address criticism that they are highly processed,” says Haley. 

“Though consumers tend to prioritize clean labels with goods that they consume on a more daily basis, it’s still critical for categories like plant-based meat to factor in the eating experience.” 

Asia-Pacific a recurring positive outlierHaley: “next-generation plant-based products will need to address criticism that they are highly processed.”
While Haley highlights that “all regions show promise”, some of them, such as the UK, are ahead of the pack compared to the EU or the US.

“Countries such as Germany and Italy still show tremendous opportunity for clean label growth. Looking at other regions, the  US has only recently gained steam, and Asia-Pacific is the fastest-growing clean label market globally.”

The Asia-Pacific region appears to be an oasis in a year of uncertainty – from food export bans to sky-high inflation – and the study hails this region next to South America as the one with the highest opportunities to market clean label products.

Research from the UK Food and Drink Federation recently spotlighted Asia as one of the regions with the most “encouraging signs of recovery” together with Africa and South America, with UK businesses seeing sales up 62% in those regions.

Clean label advances
Among recent clean label developments, Hydrosol and Plantaneer showcased a phosphate-free stabilizing system for sausages at IFFA 2022, held in Frankfurt, Germany.

Kerry recently highlighted the importance of clean label in the bakery section. The company stated that egg replacers have experienced a significant drive in clean label formulations, especially in sweet baked goods and chemically leavened cakes.

Meanwhile, in response to robust consumer demand for label-friendly ingredients, Cargill has expanded its processing capabilities of its sweetener plant in Cikande, Indonesia, to “more than double” the company’s production capacity for clean label, organic, non-GMO tapioca syrup.

By Marc Cervera