Ingredion research reveals clean label food formulations can increase profits

04 Aug 2022 --- Ingredion EMEA has shared the first-ever research highlighting the profit potential of clean label formulations. In this study conducted with global product developers across large and mid-sized food companies, 40% of global manufacturers reported taking price increases, and 58% reported an increase in overall revenue after converting to and making clean label claims.

“The new research shows that clean labels can generate increased revenue in addition to creating substantial consumer value,” says Daniel Haley, global platform leader for Clean and  Simple Ingredients at Ingredion. 

He explains how conducting the research was an opportunity to build on the consumer insights portion of the company’s Atlas program and to give perspective into the future of clean label. 

“COVID-19 impacted so much of our lives and our industry and it created a great deal of uncertainty,” he tells FoodIngredientsFirst. “We felt it was the right time to explore how food manufacturers were addressing the challenges they’ve faced in innovating clean labels, how they’ve succeeded and their growth plans.”

The results of Ingredion’s global study paint a clear picture of how vital clean label ingredients are to consumers.According to Haley, clean label’s popularity is by no means regionalized; regions worldwide are showing promise for clean label advancement and expansion. “For example, Ingredion’s research shows that while the UK is currently well ahead of the pack in Europe and the US when it comes to clean label, other European countries – such as Germany and Italy – still show tremendous opportunity for growth.”

Looking elsewhere, the US has only recently gained steam, while Asia-Pacific is the world’s fastest-growing clean label market. This progress diversity made it the ideal time to look at to what extent brands prioritize clean labels, he further explains. 

Paying for premium
The results of Ingredion’s global study paint a clear picture of how vital clean label ingredients are to consumers. 

“Seventy-one percent of consumers are willing to pay more for the reformulation of their current brands for ‘natural’ and other claims in ingredients they seek, and 82% indicated a high likelihood of switching from current brands not offering these claims to new brands that have these claims or benefits, and express willingness to pay more for these new brands,” notes Haley. 

“What’s more, 70% of them would not only switch but pay more for the alternative. Therefore, consumers are willing to pay for additional benefits in current and new brands. Current brands risk attrition and missed revenue opportunities if manufacturers do not convert their offerings and remain static.”

“The fact that consumers are willing to pay more for clean label and that clean label drives profits gives a view of what to expect in terms of clean label innovation – that is to say, that we will see more companies including more clean label in their strategy,” he continues.  

Companies have historically singled out cost as a barrier to clean label conversion. Yet, this study shows the value creation in terms of top-line growth and profitability at the bottom line far outweighs what a relatively small investment is. “It is clear that the biggest rewards are there for those that move the fastest,” adds Haley.

Clean label; a priority?
More than half of the respondents shared that offering clean label foods or beverages is a priority within their company’s overall business strategy. 

Globally, all four regions reported at least half of their portfolios have already converted to clean label formulations and have plans to increase their clean label efforts in the next two to three years. 

Europe reported more than 50% conversion across their product portfolios while projecting further growth in the next two to three years, with an additional 17% of their product portfolios projected to convert to clean labels. 

The finding also revealed that partnerships between R&D, procurement and marketing proved critical in successful conversions to clean label.

Surveyed companies revealed they are planning clean label formulations in all food categories; the highest priorities are in the beverages and bakery categories. Europe’s nutritional and More than half of the respondents shared that offering clean label foods or beverages is a priority within their company’s overall business strategy.meal replacement beverage category is projected to grow by 13%.

Demand rises
Haley predicts that consumer demand for clean label products will continue to grow and “looks forward to manufacturers innovating in this space more boldly than others.”

“These are the clean label advocates interested in discovering solutions for consumers and manufacturers that offer holistic, sustainable value. Following the pandemic, the label listing for foods and beverages has become even more important as consumers scrutinize what they eat as wellness has become an overarching goal,” he comments. 

“We will start to see this supplemented with sustainability credentials to enable consumers to take a holistic view of their purchase and health/nutrition credentials through natural fortification with dietary fibers, for example.”

Meanwhile, amid global price inflation, higher revenue has not been offset by the rising costs of manufacturing clean label ingredients. In a previous study conducted in May, Ingredion revealed that 58% of manufacturers had experienced an increase in revenue after converting to clean label products.

By Elizabeth Green