22 May 2014
With a market value that's expected to reach $226 billion by 2018 according to New Hope Natural Media, and a growth rate projected to hit almost 16 percent for the next four years running according to Research and Markets, the natural and organic category is the Powerball of the food and beverage industry. What red-blooded American company wouldn’t want to try winning market share with its own 'natural' products?

Like the ancient Roman saying ‘buyer beware,’ this is a case of ‘maker beware.’ In the food and beverage industry, the definition of ‘natural’ depends on whom you ask. Consumers likely believe one definition, while companies may follow another. And state and federal government regulators may at some point offer still other definitions.
  Yet, if more states choose to develop such regulations, state governments and companies may face high costs for enforcement and compliance. It’s also possible that state regulations will be held up in the court system, which could prevent them from ever affecting actual package labels, notes the same Food Processing article.

Going back to basics, Merriam-Webster dictionary defines natural these ways:
 
  • existing in nature and not made or caused by people : coming from nature
  • not having any extra substances or chemicals added : not containing anything artificial
Despite the ongoing ambiguity and potential challenges, companies may not want to completely shy away from incorporating the word natural into their labeling or marketing, as it appeals to health-oriented consumers. In fact, New Hope Natural Media surveyed 5,000 consumers and found that the shoppers who were most focused on health included a racially diverse group of young married men and married professional women with children. In both cases, the consumers were more concerned about health than price.

See our previous piece on the rise in consumer demand for natural foods in Healthy and Natural Foods: What Customers Want. And learn about the misinformation regarding what foods are truly healthy in Healthy Foods Aren’t Always Healthy.

Other considerations for manufacturers weighing whether to pursue the natural label include:
 
  • Consumers willingly pay a premium for natural products. Studies have shown that sizable majorities--77 percent of respondents in a large European survey conducted by Kampffmeyer and reported by Food Navigator--want to buy foods that are more natural with less additives and are willing to pay higher prices for them. About a third of respondents to the survey, "Clean Label Study 2012," said they would pay 10 percent more for most products.
     
  • Genetically modified organisms (GMO) are a touch point. Though FDA has not ruled whether a food can be labeled natural if it contains GMOs, some consumers object to the ingredients’ use. The strong demand in the ingredient market for conventional, non-GMO inputs, as reported in The New York Times, also reflects consumers’ concerns and purchase patterns.
     
  • High fructose corn syrup (HCFS) spurs suspicion in some consumers. They deem the sweetener, by virtue of the synthetic ingredients sometimes used in its production, to be less than natural. And FDA has offered conflicting opinions on whether HCFS can be included in a natural product, based on the method used to create it.
     
  • When in doubt, leave it out. It is, of course, imperative that companies balance their input costs and production methods with the projected return in the product’s price. But consumers who are highly concerned with health and nutrition are, by definition, label readers. Living in an age of social media, it’s best to err on the side of truly natural rather than try and rehabilitate a product from damaging consumer suspicion or backlash.
     
Check out this Store Brands story, which considers additional facets of natural products.

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