17 December 2018

Analysis

Open and honest: moving the industry towards transparency

As mobile technology and ubiquitous connectivity have created an expectation among consumers for on-demand, specific information, brands have an opportunity to acquire new customers by prioritising full product transparency. Callum Tyndall explores what brands can and should be revealing to consumers.

Consumers now have access to more information than at any other point in history and, as such, can be expected to know more about the products they purchase and brands to match that level of information. As consumers become increasingly ingredient-attentive, particularly with diversifying dietary requirements, brands would do well to consider what their consumers want and need to know. There are obvious efforts to be made, such as with required allergen information and, increasingly, suitability for various dietary restrictions, but manufacturers can go further to provide a truly transparent experience regarding their products. Rather than simply providing required information, nutritional percentages and ingredients listing for example, it may be time for manufacturers to actively seek to make products as transparent as possible.

Allergen cases such as we covered last issue make for an obvious case in increased transparency, putting the onus on companies to properly ensure their consumers are fully informed regardless of regulatory loopholes, and the increased popularity of various alternative diets gives companies an incentive to inform consumers whether or not their product matches such diets. However, beyond these more ‘required’ attempts, there are a variety of other reasons why companies should be considering switching to more transparent approaches.

Aside from the aforementioned increase in ingredient-attentiveness, there is the burgeoning authenticity & heritage trend which places a premium on transparency (particularly as it pertains to process and sourcing). Although it may require reformulation and rethinking accepted approaches, there is a rising consumer demand to meet.

Recalls on the rise and labelling loopholes

Perhaps the foremost reason for transparency is to avoid the risks that opacity can bring to consumers. Two recent deaths have brought the spotlight to Pret a Manger and concerns over its practices regarding allergens and the information provided on their inclusion in products. The first death seems to have resulted from a loophole in labelling regulations that allow companies such as Pret A Manger to not use allergen labels on individual food items while the second, although as yet to be subject to inquest, has been claimed by Pret A Manger to be as the result of a miss sold dairy-free yoghurt (this claim is disputed by the yoghurt company).

Such tragedies are the ultimate cost of failures of transparency, whether in the supply chain or point-of-sale, and hold important lessons for the industry. Furthermore, general practices around transparency can alleviate potential risks in other areas such as recalls. According to Epicor, a global provider of industry-specific industry software, there have been 121 recalls made since the beginning of this year, such as the notable Wayne Farms recall of nearly 450,000lbs of ready-to-eat, frozen chicken after discovering they may contain metal pieces. The reputational damage such recalls can inflict on brands can be enormous, but ensuring broader transparency throughout the supply chain can help to guarantee traceability that may prevent such events.

Talking about the risks in the industry’s current approach to transparency, Duncan Moir, senior principal product manager at Epicor, told us, “Current attitudes towards traceability and transparency in the food industry are one of the primary risks when it comes to consumers. Just last month, there was a fatal allergic reaction due to a lack of accurate labelling at Pret A Manger—and at the time of writing, honey and oat biscuits being sold in major UK supermarkets have not been labelled for containing gluten, sparking an urgent recall.

“Relaxed labelling protocols and a lack of transparency are two factors posing a risk to human life, and having a drastic effect on food producers and the ongoing viability of their businesses. For these reasons, traceability and compliance must remain top of the agenda in the boardrooms of all food businesses.”

Blockchain and digital channels: the gateway to increased safety and millennial spend

In order to address the transparency issues within the industry, manufacturers must be prepared to consider new technologies and techniques. One of the more prominent technologies being suggested as a potential game-changer for transparency within the industry is blockchain, the digital ledger network that is best known for Bitcoin but is rapidly expanding into ever more industries. By providing a verified chain of transactions, the technology could be vital to improving the transparency of the supply chain. To return to recalls; if a supermarket were to find that one of their products was contaminated, they would be able to, with a speed impossible via current methods, ascertain the entire history of the contaminated items and where they have ended up and act accordingly.

The use of technologies such as blockchain not only promises to positively affect the safety of food, but could increase the appeal of manufacturers and sellers to a key market: millennials. Label Insight’s 2016 Label Insight Transparency ROI Study found that 94% of survey respondents were likely to be loyal to a brand if it offered complete transparency. Of particular note, is that 86% of millennials mothers said they would pay more for completely transparent food products as opposed to 73% of all respondents. With millennial parents representing roughly $200bn in spending power according to the US Chamber of Commerce Foundation, this group’s valuing of transparency combined with their preference for digital channels should be of particular consideration for brands.

Moir said, of the key to preventing recall events, “The key to preventing events such as product recalls is in the implementation of robust standard procedures. These need to be supported by fully-integrated computer systems, which minimise the cost of capturing traceability information, and can provide the ability to pinpoint those impacted by the problem in seconds.

“The earlier a problem is identified, the faster it can be acted on—in order to minimise the risk to life and the impact on reputation. While complying with traceability legislation is important, it is only one part of a food producer’s business. Embracing traceability as an integral part of business process will remove significant risk and support the running of a profitable business.”

Beating the ‘big is bad bias’: rebuilding consumer trust

Recent years have seen the food industry experience somewhat of a trust crisis with consumers, along with notable recalls such as the aforementioned Wayne Farms case there have been prominent incidents such as the 2013 horse meat scandal. Introducing greater transparency to the industry is vital not only to winning over new customers but reassuring consumers that may have strayed that brands can be trusted again. Whether via new technologies or simply increasing the rigour of labelling procedures, brands should look to provide consumers with certain core information and reassure them of an overarching transparency regarding procedures and operations.

At the Future Food-Tech conference in March, as reported by Food Business News, Deborah Arcoleo, director of product transparency at The Hershey Co, said during a panel, “There is definitely a ‘big is bad’ bias with respect to both big agriculture and big food, and the bottom line is the American public no longer believes that we have their best interest at heart. They obviously trust smaller companies and smaller family farms more than they do big ones, but even there the statistics aren’t terrific. So, we have a real trust crisis in our country for sure.”

A report published earlier this year by sustainability consultants Veris Strategies and UK food producer and supplier of added-value food products Cranswick, ‘Radical Transparency: The rise of disruptive consumerism’, warned that, with public trust in the food system at an all-time low, consumer demand for transparency will be one of the key disruptors for the sector. Rising to meet this demand is not only a smart move for attracting new consumers but may become an unequivocal necessity for brands if only to maintain their current consumer base. Whatever method they choose by which to change, manufacturers, producers and retailers alike should be paying close attention to their level of transparency with consumers.

Recalls on the rise and labelling loopholes

Blockchain and digital channels: the gateway to increased safety and millennial spend

Beating the ‘big is bad bias’: rebuilding consumer trust

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