Health-Conscious Americans Will Pay More For Products With Greater Transparency — Sometimes The Story Sells The Product

Health-Conscious Americans Will Pay More For Products With Greater Transparency

Retailers and brands should make it easier for consumers to find information online — whether that’s through offering in-store wi-fi or by creating robust SmartLabel pages.

by Patrick Moorhead, Chief Marketing Officer at Label Insight

November 2018 – American shoppers who are dieting or on health-related programs are more likely than others to say they’ll pay more for products that provide more in-depth information. This key finding comes from a report titled, “The Transparency Imperative” produced by the Food Marketing Institute (FMI) and Label Insight. In a survey of more than 2,000 U.S. grocery shoppers, nearly half of American households (47 percent) reported having someone who is following a diet or on a health-related program, and one-third have a family member dealing with allergies, intolerances or sensitivities.

The study found these shoppers are more likely to put a premium on transparency and typically spend more than the average shopper, about $136 per week. In fact, when looking at health-conscious shoppers in particular, 61 percent will pay more for products that offer in-depth product information, compared with  54 percent of general shoppers. The converse also holds true for these shoppers: 76 percent said not knowing an ingredient makes them less likely to buy a product.

In an effort to address as many consumer needs as possible, the industry has found labels have limitations, leaving shoppers both informed and confused. Two-thirds of shoppers admit they sometimes or always find themselves confused about ingredient lists. What do confused shoppers do? More than half (56 percent) look at other products, and 77 percent look elsewhere for information. For those health-conscious shoppers, 89 percent are very likely to seek out information elsewhere. In this digital age, it’s not surprising to hear 9 out of 10 of these shoppers would use a smartphone in-store to find additional information.

Consumers are trying to educate themselves about the products they use and consume, but that leaves the door open to a wide range of sources. Retailers and brands should make it easier for consumers to find information online — whether that’s through offering in-store wi-fi or by creating robust SmartLabel pages. The industry also needs to control the narrative they want shoppers to hear and become the single source of truth for product information.

This need for more in-depth product and ingredient data and the relative ease of finding that information online also may be driving a move to grocery e-commerce for this market segment. The study found that 26 percent of U.S. shoppers have purchased groceries online in the past 30 days. About half of online shoppers say it is easier to learn about products and shop for a specific diet or allergy online. In support of this belief, 65 percent of health-conscious shoppers report purchasing online, compared with 47 percent of general shoppers. Furthermore, 76 percent of online shoppers want more product information online than when shopping in-store, and 72 percent say it’s more important than when shopping in-store.

When asked about the implications of this data, Doug Baker, vice president of industry relations at FMI, noted “the new shopper mindset requires companies to recognize and communicate the importance of transparency and perform a thorough review of their unique consumer audiences and commerce channels.”

Yet, consumers do not agree on what exactly transparency means. It is proving to be a personal definition based on individual needs and preferences or key life events. For example, all shoppers agreed ingredients and general nutritional facts are the most important data to provide. But health-conscious shoppers are more likely to want product claims such as organic, grass-fed; dietary claims such as high fiber and low sodium; and details on how the product was manufactured or grown. Increasingly they’re interested in the sourcing of ingredients, production of ingredients, and diet compliance such as paleo or keto.

The study also showed generational differences on what elements define transparency. Baby Boomers and Generation X are more likely than Millennials to focus on a complete list of ingredients, ingredient descriptions and nutritional information. It’s true Millennials also focus on these indicators, but they are more likely than older generations to look at allergen information, certifications and claims, explanations of ingredient usage information, and other details such as animal welfare, fair trade and labor practices. It was also clear the presence of children in the home increased the desire for transparency. Shoppers with children are more likely to place greater importance on ingredient information, nutrition and health benefits.

For brand marketers and retailers who are adjusting to the transparency imperative, there are actions that can be taken to meet consumer expectations. It starts with understanding transparency is the currency of trust and ensuring that everyone in the organization is on board with communicating with consumers in a way that builds trust and brand loyalty. Transparency goes beyond ingredients. From product manufacturing to ingredient sourcing to diet compliance, consumers are more motivated than ever before to understand more about what they put in their bodies and what it means for the world around them. Finally, the industry must become the single source of truth for consumers, particularly in the online world. Grocery e-commerce is very likely to be the next battleground for share of basket, and the winners are yet to be determined.

Patrick Moorhead is the chief marketing officer at Chicago-based Label Insight, where he leads all aspects of brand marketing and communications. With a heavy focus on efficiency at scale, his key initiatives include the deployment of robust marketing automation tools, development of brand strategy and assets with long value horizons, and establishment of repeatable marketing ROI methods and metrics.


Sometimes The Story Sells The Product

In produce, it may not be transparency that is the issue as much as communicating a narrative, telling a story.

by Jim Prevor, Editor-in-Chief, Produce Business

It is a fascinating study, but, certainly when being applied to produce the response has to be … interesting, if true.

The first big problem is that the question is not a neutral question. If someone says he or she is committed to a diet … or is protecting a child with an allergy … or meeting the nutritional needs of an elderly parent… or ensuring that workers are treated well … to follow up those claims by saying you don’t care about getting nutritional information or allergen information or knowing where your food comes from is nonsensical. It makes a person look like a hypocrite.

So, you really need a different type of study to see whether consumers act in the way they are claiming. Maybe by putting out the same product with two different labels, researchers will see if the consumers choose the more extensive one. In other words, we can’t really rely on what people say here but need studies of what they actually do.

Second, even taking the study on its own merits, it is not actually clear that providing all this information will increase sales. This assumes that transparency is always revealing of what things consumers want. This is an assumption without support. Isn’t it at least possible that consumers, as often as they will find reasons to purchase, will find reasons not to purchase when given much more information?

Third, many of these concerns don’t seem directly related to produce. Certainly, if a parent has children with a peanut allergy, if they are responsible, they will look at labels and gather other information carefully when buying, say, chocolate or baked goods. These can have peanuts in them or be made in facilities with peanuts and so they may be subject to cross-contamination. But do parents really want labels and other information saying their bananas or oranges are peanut-free?

One very interesting part of the study is the implication that ordering online may be much easier for these consumers who are focused on a particular diet or avoiding an allergen or any other preference.

How to best serve consumers with specific dietary needs has long been a question for the food industry, both for producers and retailers. It is why some stores have an “organic section” or a “kosher” section. The idea that consumers can set their screen to only give Kosher options, only Organic options or only Made-in-the-USA options, gluten-free, peanut-free, etc., is quite possibly going to be an attractive reason to buy online. Indeed, one can see a threat to ethnic retailers, health-oriented retailers, etc.

In effect, the largest stores or online portals with broader product assortment can use this long tail of the Internet to function as many stores. They can be kosher stores with more options than local kosher markets, for example.

Of course, this is only part of the story. Prior to the acquisition by Amazon, many bought from Whole Foods because they liked the ethos of the company. Equally, people certainly sometimes buy from ethnic markets because they feel comfortable there or because they want to support their co-religionists or people of similar culture or background.

Still, we have good experience that the power of price and service can overwhelm a lot of this, and if consumers can get the products they want, when they want them, at a better price, the business usually moves in that direction.

We’ve also seen some evidence that many of the values-based shopping decisions tend to be driven only by an epic failure. So, if news reports show that a retailer was keeping workers in the basement to be whipped and was using child labor, people will stay away from that retailer. But it is less clear that doing good things attracts clients. Whether a store pays workers 5 percent better than some other store or has a better benefit package, etc., doesn’t seem to move sales.

In produce, it may not be transparency that is the issue as much as communicating a narrative, telling a story.

It is nice for consumers to know that certain apples were grown by ABC farmers on a 400-acre farm, but the narrative that this land was settled by the great-grandfather of the present farmer and that this family has sustained the soil through the generations, has discovered a new variety right on one of its own trees, and has sustained a relationship with a local supermarket for 150 years and no box leaves the door without a family member giving an OK … now this is a story that goes beyond merely being true and transparent — it’s a kind of communication that builds relationships.

After all, if this family has been selling to this grocery store for so long and your family has been living here for several generations, it means these apples were probably in the apple pie grandma made for you, and if you can smell that pie every time you pass the apples — you are bound to buy more.