The Late, Lamentable All-Natural
The good news: Consumers really do want more all-natural products – that is, unadulterated products with clean labels. The bad news: Years of relentless legal attacks on all-natural claims have rendered the term almost meaningless. Indeed, the sheer number of lawsuits – some legitimate, some harassment – was the impetus behind a Winter Fancy Food Show seminar entitled "The Perils of Labeling 'All Natural' in 2015."
In the seminar, Bob Burke, founder of Natural Products Consulting Institute, noted that the nomenclature itself – all natural – is problematic because there is no single clear definition of the term.
USDA has a definition of natural, but USDA oversees crops, livestock and agricultural products, not processed foods, which fall under the jurisdiction of FDA. The USDA definition of natural, as it pertains to meat, poultry, and egg products, says they "must be minimally processed and contain no artificial ingredients."
According to the FDA website, "FDA has not developed a definition for use of the term natural or its derivatives. However, the agency has not objected to the use of the term if the food does not contain added color, artificial flavors, or synthetic substances."
Burke believes it would be easier for manufacturers if the term all-natural were either banned outright or properly defined by FDA, noting that FDA does not seem inclined to develop a definition. He said that Consumer Reports data indicates consumers currently think the term natural includes one or more of the following: no growth hormones, no pesticides, no artificial ingredients and no GMOs.
Suppliers, Burke said, should have their labels and marketing claims reviewed by an attorney and should avoid using the term all natural because it is passé at best and misleading at worst.
The Courts as Battleground
In 2006, the Center for Science in the Public Interest (CSPI) sued Cadbury for claiming that 7-Up was 100 percent natural. Suits were filed against Snapple in 2007 and against Arizona Beverages, Natural Valley Bars and Healthy Choice pasta sauce in 2008. By 2011, suits were being filed almost weekly. In 2012, 85 suits were filed with the number dropping off in 2013 (the last year for which numbers are available) to 58, as manufacturers revised their claims in light of what was happening. Retailers, noticeably Trader Joe's and Whole Foods Market, have also been named in lawsuits, although the lawsuits involved their private label products. The recent contretemps over dietary supplements, in which New York Attorney General Eric Schneiderman went after retailers for their "adulterated or mislabeled" private label supplements, is another indication that product labels are being scrutinized.
According to Burke, anyone who touches a product along the way can be named in a lawsuit. But, he added, he does not know of any retailers who have been sued solely because they sold a product that was the subject of a lawsuit.
Manufacturers have put the term natural or all-natural on products that contain ingredients lawyers have targeted, most commonly high fructose corn syrup (HFCS). Ingredients expected to be next in lawyers' crosshairs are citric acid, alkalized cocoa and potassium carbonate. In addition, lawsuits are being filed over genetically engineered ingredients, genetically modified organisms (GMOs), vitamins, colors and 'raw' claims.
HFCS is derived from corn, which may be why some manufacturers thought it could be labeled natural, but the process of turning corn into HFCS involves adding enzymes to corn syrup to turn some of the glucose to fructose and to render it sweeter in the process. The courts have made it clear that HFCS does not belong in a product labeled natural. Until FDA comes up with a workable definition, natural product claims will end up before a judge.
According to Scott Silverman, vice president of growth solutions at KeHE Distributors LLC, based in Romeoville, Ill., "'Natural' claims will continue to evaporate from product labels due to the costly class-action lawsuits of the last few years. Brands will replace this with other claims such as wholesome, simple and real."
GMOs in the Spotlight
The next legal battleground appears to be genetically modified organisms (GMOs). The Non-GMO Project defines GMOs as "living organisms whose genetic material has been artificially manipulated in a laboratory through genetic engineering (GE)."
GMOs run the gamut from being similar to the crossbreeding experiments done by monks in the Middle Ages (think a sped up version of Gregor Mendel's pea plants) to splicing fish genes into tomatoes to make them better able to withstand the cold (the kind of tinkering that gave rise to the term Frankenfood). Whether these ends of the spectrum are benign, malignant or somewhere in between has not yet been determined. And until it is, an increasing number of consumers are saying, "Just give us the information and we'll make our own decisions."
In the U.S., FDA has taken no stand on GMOs, saying no current evidence indicates they are inherently harmful. The European Union has adopted the opposite position, banning them from food products sold there. It could take decades to discover if GMOs can be safely ingested in quantity. In the meantime, concerned consumers are asking for transparency, and "big food" is fighting back wherever a labeling requirement makes it to a ballot.
In 2013 and 2014, more than 70 bills and ballot initiatives were introduced in 30 states. In 2013, Connecticut and Maine passed GE labeling laws. Vermont's GE labeling law will go into effect in 2016. (Lawsuits to prevent Vermont from implementing the legislation have already been filed.) In Both Maine and Connecticut, the law does not go into effect unless and until the surrounding states pass similar measures; Vermont did not put that restriction into its law. In November 2014, a Washington State ballot measure was defeated 51 percent to 49 percent and an Oregon measure lost by .05 percent.
U.S. Rep. Mike Pompeo (R-Kan.) introduced H.R. 4432, the Safe and Accurate Food Labeling Act of 2014, which would block mandatory GE labeling at the state level. Opponents of the bill have dubbed it the DARK – Deny Americans the Right to Know – Act.
On Feb. 12, U.S. Sen. Barbara Boxer (D-Calif.), U.S. Sen. Richard Blumenthal (D-Conn.) and U.S. Rep. Peter DeFazio (D-Ore.) introduced the Genetically Engineered Food Right-to-Know Act, which would require FDA to clearly label GE foods.
Why Organic Works
The Organic Trade Association (OTA), Washington, D.C., focuses on organic, which is a definable and enforceable term. USDA Organic, the only U.S. government-backed food label, is certified by the USDA. The criteria for certification are rigorous and when consumers see the label, they can be assured the product is non-GMO, was grown with no pesticides or chemicals, and contains no chemical preservatives.
This is in stark contrast to the lack of guidelines for the words natural and all-natural, which opens the door for companies whose understanding of toe the line may include crossing it.
The Federal Trade Commission (FTC) is the agency tasked with overseeing use of natural and all-natural on product labels, but since there are no specifics, enforcement is difficult.
"The organic industry is working to strengthen the voice of our sector and to clear up consumer misunderstanding through a coordinated education and promotion program," says Laura Batcha, OTA CEO and executive director. "We urge the FTC and other government agencies to use their oversight authority with regards to food labeling to the broadest extent possible, to inform consumers who are seeking out verifiable food claims and to make it a level playing field for good organic farmers doing their best to raise high quality and healthy foods."
President Obama recently called for all food regulation and enforcement to fall under the purview of one single agency; if this happens, consumers should be able to have confidence in labels without trying to figure out which part of the acronym soup – USDA, FDA, FTC – had jurisdiction in making the call.
The more people are misled by one label, the more skeptical they become of other labels.
Just because natural as a marketing term has lost its cachet, it doesn't mean consumers don't want products that fulfill the dictionary definition of the word: "existing in or produced by nature; not artificial."
When it comes to product claims, all natural continues to influence 62 percent of consumers, according to the 2014 "Today's Specialty Food Consumer Report," produced by the Specialty Food Association (SFA) and Mintel International. Locally sourced sways consumers, especially those in the 55+ age group and gluten-free claims resonate with 25 percent. Sustainable, Non-GMO and Fair Trade all increased vs. 2013, according to the study.
"One of the biggest trends is food you can trust, food that is third-party audited – (USDA) certified organic, Non-GMO Verified, Fair Trade Verified," says KeHE's Silverman. "This is based on what I'm seeing in terms of what we ship to customers. It's an area that's seeing strong double-digit growth."
Cris Genovese, vice president of marketing at Walnut, Calif.-based Bare Snacks, notes, "Consumers are skeptical about what's in a package. The want nothing artificial and no preservatives. They want pronounceable ingredients – only ingredients found in a kitchen cupboard. Millennials question everything."
Provenance Gains Momentum
The original place-based appeal to consumers was buy local, and it remains an important pitch. According to "Organic & Natural 2014," a report from The Hartman Group, "'Local' is emerging as a category poised to surpass both organic and natural as a symbol of transparency and trust."
KeHE's Silverman agrees local is important but believes it has expanded to include all place-based products. Even if an item is not local, it still gains credence when it is associated with a specific location. "The place-based-food movement will continue to grow as Americans change their relationship with food and agriculture transparency and knowing where our food comes from," he says. "This isn't just about local. Retailers need to become storytellers of the brands and products in their stores to meet this insatiable demand."
Rachel Doolittle, marketing manager for Heavenly Organics LLC, echoes the storyteller theme. The Fairfield, Iowa-based company makes Honey Patties, chocolate covered honey-based candies that use 100 percent non-GMO Fair Trade Certified cacao and raw, unfiltered honey.
"The story sells the product. That the ingredients are organic and taste great is important, but the story seals the deal," she says. "Our story is played up on the packaging. Our products support indigenous people in conflict areas of north and central India.
"Honey is taken from wild hives at night," she explains. "The gatherers cut out a portion of the hive and carry it away in a bucket. No smoke is used and they don't disrupt the queen. A hive regenerates in 20 days, allowing three harvests per season."
Doolittle says sharing this story benefits everyone – the people in India, Heavenly Organics, the retailers who tell the story and the consumers who buy the products.
An Unexpected Trend
Silverman says he started noticing a new dynamic in the last year or two: brand incubation compression. Mainstream grocers are adopting specialty and natural brands more quickly. Where it used to take a year or more for a brand to make the transition, now, he says, it can take less than a year. And the reason is that there is more equity money available to lift the growth. "These shifts are happening quickly so there's more pressure for innovation on the specialty retailer.
"The shift from specialty to mainstream varies by brand," he continues. "It depends on funding, manufacturing capability and management, but six to nine months is not atypical. Some small brands will never make the jump either because of funding or because they don't want to.
"I think, in more cases than not, the specialty/natural channel will always be the proving ground for new ideas, but the time is getting compressed. The mainstream grocery industry is still risk adverse, but brands from seasoned entrepreneurs can go mainstream more quickly," he says. "This jump phenomenon is anecdotal, but it's based on what I've seen over 25 years in this business."
The 10 Most Influential Natural Food & Beverage Trends for 2015
2. Paleo on parade: The paleo trend continues to gain momentum, with the emergence of a new paleo certifications, and more packaged foods made with simple, whole food ingredients that follow the paleo doctrine of no grains, processed sugars, dairy or legumes.
3. Mission matters: More and more natural products companies are starting with a philanthropic mission and building a suite of natural, organic and healthy products to support and grow that mission and create a positive social impact.
4. Heritage to hipster: "Old school," traditional ingredients long known for their nutritional benefits such as apple cider vinegar and turmeric are popping up in new ways in foods, beverages and even dietary supplements.
5. Coconut reimagined: Coconut has been a hot ingredient for several years, but now we are seeing the debut of new healthy packaged products featuring coconut in imaginative, new ways that provide the health benefits of coconut – often in place of less-healthy ingredients.
6. Probiotics pop: Probiotics also continue to be hot, showing up in new supplement formulations, cosmetics, greens powders, snacks and even fresh-pressed juice.
7. Clean, simple ingredients rule: Innovation is showing up as simplification, as the ingredient lists for products continue to get shorter and cleaner. There are many new food and beverage offerings that include only high-quality, whole food ingredients. The move to cleaner, food-based ingredients could also be seen in supplements and personal care.
8. Vegan on the down low: The number of vegan foods and beverages is once again on the rise, but this year many vegan brands choose to emphasize the quality ingredients, delicious taste or mission of their products more so than their vegan positioning. The end result is a much more accessible offering for mainstream audiences.
9. Back to the source: Local is for more than just the farmers market, with a growing number of manufacturers touting the sourcing stories behind their products. From ketchup made with only New Jersey-grown tomatoes to an entire supplement line featuring only ingredients grown in Nepal, the farm-to-field movement is taking on more local flavor.
10. Water 3.0: The success of coconut water – which is now almost a $1 billion beverage category since its emergence on the scene in 2006 – has everyone on the hunt for the next healthy billion dollar beverage concept. Emerging are numerous product concepts that are based on healthy, natural, low-calorie waters taken directly from plants. Examples include maple water, birch water, almond water, artichoke water, cactus water, olive water and watermelon water.