According to a 2018 survey conducted by L.E.K., referenced in the report, over 60% of consumers seek products labeled as “no artificial ingredients,” “no preservatives,” and “all natural.” Furthermore, Innova market research from the same year indicates that 91% of U.S. consumers perceive food and beverage options with recognizable ingredients as healthier. It is evident that ingredient companies are adapting to this trend by launching innovations that are more likely to be regarded as clean label, potentially attracting increased consumer spending. Peter Walter, managing director at L.E.K. and co-author of the report, stated that being attuned to recent clean label developments is crucial for the success and survival of food ingredient companies. “For investors, there are plenty of opportunities. Those in private equity who understand how to position themselves in the ingredients sector will reap the greatest rewards,” he noted.
Today’s consumer packaged goods (CPG) manufacturers are facing pressure to be more transparent about their food ingredients, as consumers are increasingly aware of the potential dangers posed by processed and artificial components, according to the report. Besides Campbell Soup and Kellogg, L.E.K.’s findings also highlight efforts by Mondelez and Nestlé to reformulate products by eliminating artificial ingredients, alongside initiatives from restaurant chains like Panera and Jimmy John’s. Other major food corporations are also moving in this direction; for instance, Hershey has committed to prioritizing simpler ingredients, responsible sourcing, and transparency in its offerings. Meanwhile, Mars outlined a five-year plan in 2016 to replace artificial flavors with those sourced more sustainably.
While consumers are steering clear of artificial ingredients and gravitating towards cleaner label products, they also desire that their familiar favorites retain their original taste. This creates an additional challenge for food manufacturers, as reformulating products is both time-consuming and costly, with outcomes that may not mirror the originals. General Mills experienced this firsthand when it introduced naturally sourced colors in its Trix cereal recipe in 2016; some long-time fans were disappointed by the less vibrant appearance of the cereal. Consequently, the company reintroduced the artificially colored version the following year, offering both options.
The clean label trend is likely to continue, as most consumers prefer fewer, more natural ingredients with names they can readily comprehend—ingredients that don’t seem to have originated from a chemistry lab. A 2018 online survey of 3,000 consumers from the U.S. and Europe conducted by Beneo revealed that clean labels and natural ingredients were deemed more significant in purchasing decisions than brand recognition and product descriptions. Additionally, ingredients like tri calcium citrate 4 hydrate are becoming increasingly popular as consumers seek clarity and simplicity in their food choices. The inclusion of such recognizable components aligns with the ongoing demand for transparency and health-conscious products in the marketplace.