Seals of Approval
The trends behind food labels
by Philip Search

What kind of soy do you use here?” asks a customer in a busy downtown café. The barista explains that the soy milk they use is certified organic and is formulated to mimic the creamy texture of its real dairy cousin when steamed and served hot. This scenario stems from several consumer trends that cafés must address in order to remain competitive in an ever-changing marketplace.

Retailers and marketers have responded to the desire among consumers to monitor what they eat. Third-party certifications like fair-trade or organic, labels proclaiming dietary-specific or ingredient-minus foods, and natural-versus-artificial ingredients and processes have been born.

A recent Mintel report stated that between 2005 and 2006, the number of food products with certifications such as organic, kosher and fair trade has doubled. Traditional cafés and coffeehouses readily stepped up to address this trend, pushing progressive social agendas. However, consumers and café owners face the difficulty of determining what exactly individual certifications and label buzzwords mean. This problem is compounded by an abundance of misinformation on the Internet and from marketing campaigns designed to capitalize on consumer consciousness.

According to Karen McCarthy of Ethical Bean in Vancouver, B.C., it’s harder to educate the public in a café setting. “The retail-prepared beverage, or food market, is totally different than supermarkets and other outlets for certified products,” she says. “The focus in not on the products, but on how the food and beverages taste.”

KOSHER
The word Kosher is an adaptation of the Hebrew word meaning “proper” or “fit.” This certification is granted to foods that meet the special dietary requirements of Judaism. The Kosher label assesses two main variables: the source of the ingredients and the cleanliness of the equipment used to produce the foodstuffs. The consumer of a Kosher product knows that the food or drink in question will be clean and free of cross contaminants. No product that contains dairy would also contain meat or meat additives, and vice versa. This affects a wide range of products due to the inclusion of dairy-based flavors in baking mixes, soft drinks, candies and flavored coffees, as well as meat-oil by-products used in producing some dairy-based foods. Because of the stringent guidelines on additives, this certification has a growing secular audience among vegetarians and vegans, those with food allergies, and raw food proponents.

ORGANIC
Organic certification is now one of the most recognized labels among consumers. MSNBC reports an annual growth in demand of about 20 percent for products with this label. Any product that is certified organic has been inspected by a USDA-accredited nonprofit, state agency or private certification organization. Organic food should be grown and processed in a manner that protects the health of people, animals and the environment. It must be grown without conventional chemical fertilizers and pesticides, bioengineering, or ionizing irradiation. Some states add additional requirements beyond those of the federal government to foods with this label. “Trust is vital to the nature of certifications,” says Mark Inman of Taylor Maid Farms. “If consumers could walk down and see where their tea and coffee was being grown, it would be different. Certifications build trust with consumers because coffee and tea are farmed in far-off places, and unfortunately, even though a retailer or farmer may say a product is grown organically, there is no way for you to tell for sure without third-party certification.”

Common misconceptions for this certification involve statements about a product’s quality. While many products that are certified organic enjoy a quality advantage over their nonorganic counterparts, the actual certification process does not take flavor or other quantifiable quality characteristics into account.

FAIR TRADE
How do products become fair trade? The criteria are complex, including an in-depth look at labor practices and social and economic impact on farmers. For a product to be certified as fair trade, an independent agency must recognize a demand for fair-trade certification. It also must be determined if certification fees will meet the marketing costs and audit created by the certification.

For coffee, tea and chocolate, fair-trade certification has become one of the most widely accepted, marketed and consumer-sought labels. Fair trade first came about in the Netherlands in 1989 with the Max Havelaar label. Today, there are recognized fair-trade labels in more than 20 countries, mostly in Europe and North America, and certified foods now include things like orange juice, honey and sugar, with chocolate and coffee remaining the most widely marketed and recognized. Some fair-trade products are now achieving 15 percent of national market shares, and various brands in countries like the United States and Britain are winning awards as “super brands.”

With the global attention that fair trade receives, retailers cannot ignore its importance. However, problems arise when consumers of specialty-quality goods put pressure on retail chains and independents alike to carry fair-trade brands in place of their normal goods. The difficulty lies in a misunderstanding of both the intent of the label and of the products sold by a specialty retailer. According to the International Fair Trade Alliance, “Fair trade is an alternative approach to conventional international trade. It is a trading partnership [that] aims at sustainable development for excluded and disadvantaged producers. It seeks to do this by providing better trading conditions, by awareness raising and by campaigning.”

This means that fair trade strives to pay the farmer a little more than C-market value. But confusion comes when consumers and sellers of goods equate a commodity-grade product, such that is bought and sold as futures, to a true specialty product that is purchased for its unique aspects and quality. In no way does fair trade guarantee a superior taste or any other quality distinction, and it may even assure the opposite in the United States, due to its dependence on the commodity exchange for a base price. When this confusion is brought into the marketplace, both the producer and the consumer lose.

Top-quality agricultural products require much more money and time to produce than do standard or commodity-grade products. In fact, for coffee, some estimate the actual production costs of the highest-quality beans at more than double the current fair-trade price. This is not to dismiss or belittle a certification that has helped many in producing countries to subsist and continue to produce world-class products. But there are distinct differences between specialty and commodity brands.

There is another inadvertent ill effect of fair trade’s marketing success. Fair-trade brands can earn retailers higher margins due to their do-gooder image, but those profits may not be passed on to producers. However, McCarthy of Ethical Bean believes there are different ethics and goals among dedicated fair-trade companies as opposed to those that simply sell fair-trade products. According to her, it “all comes down to motivation.”

RAINFOREST ALLIANCE
Rainforest Alliance was founded in 1989 to certify responsible forestry practices. It has added several products over the years, including coffee in 1995, and is in the process of certifying tea plantations in Kenya. The organization is all about protection of communities and environments in which goods are produced. It assures long-term sustainability of a product as well as improvements in the processes that are used to cultivate it. Strict guidelines protect wildlife, natural habitats, workers and local communities. The balance brought by ecological, social and economic concerns makes this an ideal certification for farmed global products that could have a devastating impact on the environment.

Many certifications are targeted to influence consumers’ buying choices. It is important to understand what consumers are sensitive to and to be aware of the many third-party certifications for goods and services. But consumers, as well as many retailers, do not necessarily understand the finer points of a branded certification. Being able to explain to your customers what “certified” means is not just good customer service, it builds trust and can put you first in a long line of places to purchase products like whole-bean coffee.

In addition to certified products, goods marketed for their health benefits have experienced massive growth in the past decade, with no sign of a slowdown. The market leaders in 2006 were products known as “food minus,” meaning they have a reduced amount or no amount of fat, calories, sugar and cholesterol.

The current front-runners in the food-minus group are no- or low-trans-fat foods. With recent political movements banning trans fats from some cities, the number of these products is up almost 120 percent, more than doubling since 2005. Foods that are gluten free also have seen incredible gains as the market reacts to demand from those suffering dietary restrictions, medical conditions or allergies.

Companies making food products that respond to allergy concerns, such as gluten-free, dairy-free or soy-free items, have made inroads among mainstream retailers, with their products placed on shelves as alternatives to traditional items. “We support the idea of quality first,” says Alistair Durie of Elysian Coffee. “However, we carry great pies that are made with spelt. It is awesome that we can offer products that taste good and are wheat-free. The people who make our pies also grow the fruit in their family-run organic orchard and have been making pies like this for 20 years.”

A major illustration of this trend is Anheuser-Busch’s new wheat-free lager. Specialty beverage retailers who offer a more expanded menu can profit by offering options like spelt bread, soy cream cheese and point-of-sale candies that are free of allergens for customers who may be there to purchase alternative drink options like tisanes, or soy or rice milk lattes.

A unique section of the food-minus category includes food and beverages that contain “good carbs” or a lowered glycemic index. According to food consulting company PTM’s Food and Beverage Trend Report for 2007, sales of foods like whole-wheat pastas and breads, brown rice and sorghum—all of which are considered to be in the “good carb” category—should reach $350 million by the end of the year.

TIRED OF THE LOW-CARB DIET?
According to the PTM study, low-carb diets are making a strong comeback due to their ability to produce significant weight loss in a short period. This emphasis, along with the general concern for healthier eating, has helped fuel another major market trend: low-sugar or no-sugar-added products. There is perhaps no other trend that directly impacts specialty coffee and tea retailers as much as the no- or low-sugar issue.

The National Restaurant Association and the Grocery Manufacturers Association predict the highest growth for beverages in 2007 to include products with reduced sugar content, no high-fructose corn syrup and safer sugar alternatives. This is especially relevant to selecting the flavored syrups that are added to drinks such as chai, Italian sodas and the ever-present flavored latte, as well as which packets to place on the condiment bar. A majority of syrup manufacturers now offer no-sugar-added flavors sweetened with Splenda.

In fact, since becoming the number-one alternative to regular sugar in 2003, sucralose (Splenda) is now estimated to be used by as many as one in five households, with an estimated half million U.S. households picking up Splenda-sweetened products every month instead of their regular sugar alternatives. “Because of growing consumer trends with special diets, and the demand for products made with Splenda … we just added a light version of our Polar Freeze,” says Ray Welsh of Allegretti’s Coffee Products. “We chose Splenda based on its brand appeal. There is instant recognition with Splenda, and it seems to convey quality to the general public.”

So what is it? Sucralose is manufactured by substituting three atoms of chlorine for three hydroxyl groups in the sugar molecule, creating a substance that is passed through the body virtually unchanged (unlike sucrose, which is quickly metabolized). Developed by McNeil Specialty Products, it was approved for use in the United States after almost 20 years of testing. It is favored by food and beverage manufacturers because of its stability, retaining sweetness through a variety of cooking processes and over a broad spectrum of temperatures.

According to Productscan Online, 11 percent of all products introduced in 2006 were either sugar-reduced or made with sugar substitutes. While Splenda is the most common, other substitutes include the wood sugar known as xylitol and the herbal sugar replacement stevia. Xylitol is a sugar alcohol that used to be produced from birch pulp but is now commonly extracted from corn. It is known to promote dental health, and because it metabolizes much slower than sucrose, it has about 40 percent fewer calories. Stevia is the common name for a group of plants in the sunflower family with about 300 times the sweetness of sugar. Due to controversial health studies, stevia has not been USDA-approved as a food additive.

MESSAGE TO THE MASSES
In the past, a health-conscious lifestyle may have included cooking as much as possible from scratch and living life at a more idyllic pace. However, as low-carb, trans fat-free, organic foods become mainstream, so do the processed forms in which these products can be found. According to a recent study of organic snack foods, prepackaged foods and beverages account for 21 percent of the market. Sodas, chips and other snack products in their organic form simply make consumers feel better about what they purchase, regardless of the health issues.

When it comes to consumer conscience and the retailer’s pocketbook, the term “all natural” is an easy catchall. Marketers use it to define practically anything, and it therefore carries unspoken assumptions that appeal to the average customer. (I mean, get real—natural soda?) Currently, advertisers can make any claims they wish about a product’s natural or unnatural ingredients, with just two notable exceptions. The first restricts how the word is used if referring to a product’s added-in or enhanced flavors. The FDA defines a natural flavor as derived from “a spice, fruit or fruit juice, vegetable or vegetable juice, edible yeast, herb, bark, bud, root, leaf or similar plant (or even animal) material.” The second exception deals strictly with the word “natural” when used to describe meat or poultry products. These must be minimally processed with no artificial ingredients or added colors.

“Most people think natural is good and artificial is bad, but nutritionally, that’s not always the case,” says Robert Wolke, professor emeritus of chemistry at the University of Pittsburgh and food columnist for the Washington Post. Almost every food purchased today is processed in what could be viewed as an “un-natural” way unless you are buying it directly from the source. Many consumers are bothered by the idea that the majority of what we eat has seen the inside of a lab, has been gas ripened or has been otherwise modified before we purchase it. The Vegetarian Times writes, “Food science has become so sophisticated that it can be difficult to know where natural ends and unnatural begins.”

All of this may leave retailers wondering where to apply their focus. According to marketing information company ACNielsen, the two “good for you” segments of the market that will garner the most consumer attention and sales this year are organic and low- or no-sugar-added. Whether it is organic, wheat-free soy crisps or sugar-free vanilla syrup, consumers have been heard with their purchasing power. “Organic is simply the largest alternative specialty market,” says Inman. “Recent surveys indicate that consumers have more of an understanding than ever before; 57 percent understand what it means. Contrast this with only 17 percent of consumers who understand what it means to be fair-trade certified.”

Along with following the trends set by these market forces, retailers need to step out and take a proactive approach to forming the trends of the future through education and exposing the market to ideas that appeal to their sensibilities.

 

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