With 2015 coming to an end, it is that time to look ahead to see what food trends will be the movers and shakers for 2016. Although there are many trends to watch for next year, one was consistently predominant in the industry surveys and has proven to be a major corporate initiative for the country’s large food manufacturers in 2015. What is this super, hot food trend for 2016?
The #1 Food Trend for 2016: Natural, Simpler Ingredient Statements
Simpler more transparent ingredients not only hit the top of Mintel’s Food & Beverage survey for 2016, but Innova Market Insights’ - as well. It is no coincidence that both of these market research leaders have this as a key influencer for next year.
As the “clean eating” trend keeps growing more and more, Americans are scrutinizing food labels when they grocery shop. An opinion article in the New York Times explains that America’s eating habits are shifting. Since 2009, sales for fresh foods have increased 30% and fresh vegetables have also had an increase of 10% - while sales of processed foods in the middle of the store have declined. This shift in consumer shopping has caught the major food companies’ attention.
In their opening statement for their 2016 Top Ten Trends List press release, Innova Market Insights states, “The ‘clean eating’ trend has inspired a back to basics approach in product development and is an overarching theme.” “Clear labeling” had established itself last year in Innova’s 2015 survey, and for 2016 with a shift in transparency and a demand for simpler non-artificial ingredients – “clear labeling” continues to gain importance. Lu Ann Williams, Director at Innova Market Insights, explains further, “Clean and clear labeling and 'free from' foods have all gained traction and moved on to the next level during 2015.”
This health focused momentum shows little signs of slowing down. Campbell, Kellogg, Nestle, and General Mills all vowed in 2015 to remove artificial ingredients from products. Hershey’s promised to move towards simpler ingredients on their key products including Hershey’s Kisses Milk Chocolates, Hershey’s Milk Chocolate Bars, and Brookside Dark Chocolate Fruit & Nut Bars. In a company statement, Hershey president and CEO John P. Bilbrey, explained, “As consumers, our relationship with food is changing…We all want and deserve to know what’s in our food.”
Still not convinced this is the hottest trend for 2016? Last year, Kraft pledged to reformulate their iconic mac and cheese to remove synthetic colors and preservatives by January 2016. What would prompt Kraft to change this American staple? Their consumers are demanding improved nutrition and “simpler ingredients.”
Even after cleaning out their artificial ingredients, big companies are taking it a step further and buying organic based food companies to strengthen their platform offerings in this simple foods trend. General Mills bought Annie’s Homegrown, a popular organic mac and cheese company, for $820 million last year. Also in 2015, Pinnacle Foods bought Boulder Brands in $975 million deal.
The food industry’s leading litigation experts met in Chicago at the end of September for a Food Advertising and Litigation Conference hosted by the Food and Drug Law Institute (FDLI). The panel, which was comprised of some of the industry’s top lawyers and leaders, discussed the litigation trends they see today in food mislabeling.
With increased consumer and media attention on the food industry lately regarding transparency in labeling, it seems that more and more companies are finding themselves on the hot seat. “The politics of food is strong and growing,” explained Beth Johnson, Principal and Founder of Food Directions, LLC, “and transparency is more of an interest.”
As this interest in transparency grows, it has become even more urgent that food companies proceed with a bit of caution when making marketing claims of healthiness, such as “all natural,” citing quantity of ingredients, such as “Rich in Antioxidants,” or providing incomplete competitive claims, such as “X fewer calories” and “X less grams of fat.”
What used to be a simpler process for resolving consumer complaints has become much more complex. Bruce Silverglade, Partner at Olsson Frank Weeda Terman Matz PC, explains that in the past, a company would get a warning letter from the FDA which used to be fairly simple to resolve, but now, as consumers have a much higher level of awareness about food labeling and many more avenues to pursue advocacy and activism, warning letters can now lead to State Attorney Generals taking action or a class action suit. Mr. Silverglade warns, “Food companies must ask themselves, is it worth the risk?”
To better understand how to avoid common labeling issues, let’s first start with what the top trends are for labeling litigation this year. Several of the most discussed mislabeling pitfalls discussed amongst the panelists at the FDLI conference included:
·Natural Claims: Even though it seems that natural claims are being scaled back or removed entirely from many food labels ever since the Naked Juice $9 million settlement in 2013, natural claims are still alive and well in lawsuits today. Kashi, Bear Naked, and Trader Joe’s have all removed natural claims from their packaging after lawsuits, as well. With the natural term becoming passé, there seems to be many synonyms for natural that are gaining in popularity, like “wholesome,” “real,” “whole,” and “nutritious.” Could these be the new ‘natural?’ Will these new natural names be next on the target list for lawsuits?
·Super Foods: Nutritionally dense super foods such as pomegranate, quinoa or kale can sometimes be promoted as the single or main ingredient of a food item. But often times many products don’t contain enough of the super food to qualify as the main ingredient. This potential discrepancy can be easily checked when looking at the ingredient statement. Per FDA regulations, ingredients are listed in descending order of predominance; meaning, the primary main ingredient is listed first followed by the second largest ingredient component and so on. If you see pomegranate or kale as the 6th or 7th ingredient, then chances are there is a small percentage of this food in the recipe. Last year, a class action suit was filed against Chia Crisps for listing chia seeds as the main ingredient, when in fact black beans was the first ingredient listed.
·“Made” Claims: Claims such as “Handmade,” “Craft made,” “Made from Scratch,” or “Made in the USA,” have come under fire the past few years, especially in the alcohol industry. Maker’s Mark won a lawsuit this year where the plaintiffs stated that they over paid for their bourbon because of the “handmade” claim. Although “Made in USA” has gained in usage, companies need to be aware of implications for the Federal Trade Commission (FTC). The FTC states that all, or virtually all, must be made in the U.S. in order to claim “Made in USA.” Some states, like California, also have laws that state a specific percentage of the materials used must be from the U.S.
The speakers at the FDLI conference also offered a number of useful tips for avoiding these common pitfalls. Some included:
·Improve company-wide communication between key departments. Stephen Baker, Director, FTC Midwest Region, explains that one of the biggest reasons a company falls into trouble is the disconnect between departments, “technical people and marketing people are not on the same page.” Food companies should try to better discuss key marketing initiatives to ensure that what is being said is actually true.
·Be careful about claims on both your food label and your website. With the accessibility of the Internet, food manufacturers have many more eyes on what is listed on their label or claims being marketed. Mr. Silverglade explains that the FDA now uses company websites for reviewing information listed on labels – especially if the website address is listed on the food label’s Information Panel.
·Implement systematic risk assessment. Companies can set up an algorithm to determine risk, and make it a routine part of taking food products to market. Food companies must ask themselves, is it worth the risk to stretch the truth? Is this a topic that resonates in the mainstream media? What type of product is it? What is the size of the company? Considering questions like these can help determine whether you might be a likely target.
We’ve seen a flurry of significant cases and regulatory actions in food advertising and litigation in recent years, many of which have had far-reaching implications for all food product manufacturers. It’s important to stay on top of what’s happening in federal agencies and the court of public opinion to best position your food business in the market to stay out of the litigation circuit.
The FDA recently published a supplemental rule that establishes a Daily Reference Value (DRV) for added sugars on the food labeling of American food products. Initially proposed in March of 2014, the requirement has been a hotly-contested feature of nutrition labeling reform in recent years. Aimed to "...assist consumers in maintaining healthy dietary practices" the new information "...is consistent with current data on the associations between nutrients and chronic diseases or health-related conditions, reflects current public health conditions in the United States, and corresponds to new information on consumer behavior and consumption patterns." In a prior review of American dietary habits, the FDA determined that solid fats and added sugars make up inordinate proportions of American diets. On average, 35 percent of these calories provide no nutritional benefits and add to weight management issues.
Consequences for Food Manufacturers
In the face of growing rates of obesity, heart disease, and diabetes among the American populace, the new rules take a clear shot at the processed foods industry in the United States. It remains unclear what cost the new regulations will exact upon food manufacturers and their profit margins. Aimed primarily to increase awareness of the adverse effects of added sugars, the new food labeling provisions will ensure the following of American food products: An established DRV of 10 percent of total personal caloric intake from added sugars, or 200 such calories for the average American consumer. A required statement of the products' added sugars as per percentage of daily value. The presentation of a clear, simplified footnote on nutrition labels, stating " The % Daily Value tells you how much a nutrient in a serving of food contributes to a daily diet. 2,000 calories a day is used for general nutrition advice."
In their explanation of the new rules, the FDA cites findings from the 2015 Dietary Guidelines Advisory Committee (DGAV). To wit, the FDA "...considered the scientific evidence that the DGAC used, which showed that it is difficult to meet nutrient needs while staying within calorie requirements if one exceeds 10 percent of total calories from added sugar, and has determined that this information supports this daily value for added sugars. The DGAC also recommended that Americans limit their added sugars intake to less than 10 percent of total calories." Curiously, while the FDA has taken strongly to the DGAV's suggestions, neither the Department of Health and Human Services (HHS) nor the United States Department of Agriculture (USDA) has followed suit and adopted the regulations into the 2015 Dietary Guidelines for Americans.
On July 23, 2015, The House of Representatives passed H.R. 1599, or the Safe and Accurate Food Labeling Act of 2015, voting 275-150 in favor of the bill. Among a number of other stipulations, the bill will require federal standards for labeling food products with GMO-based ingredients and preempt any existing state laws to that effect. After facing initial resistance on both sides of the aisle, the bill slowly curried significant bipartisan support, reflected clearly in the margin of victory. Now the legislation travels to the Senate, where resistance is expected to be significantly stronger. Should it pass the top level of the Congress, the government will eschew the presently-active state laws on GMO food labeling for a voluntary labeling program overseen at the Federal level.
The Organic Food Industry and “Right to Know”
Perhaps no singular entity is more in support of tightened state and federal regulation than the organic foods industry, which pins much of its popularity to the growing public stigma towards GMO-derivatives and the processed food industry. Public supporters champion the issue as a “Right to Know” imperative for public health, and voters in Vermont, Connecticut and Maine have already passed laws of their own to that effect, with Massachusetts close behind.
Should the bill pass the Senate, it will render these existing laws null and void.
“Today’s vote to deny Americans the right to know what’s in their food and how it’s grown was a foregone conclusion,” said Scott Faber, senior vice president of government affairs for the Environmental Working Group, a nonprofit advocacy organization. “This House was bought and paid for by corporate interests,” Faber added in his prepared statement.
Skeptics in and out of the Senate
Many in the popular press have already posited doubts to the veracity of GMO-based public health concerns, joining the scientific community in underscoring the lack of a concrete basis for isolating genetic modification as a growing method that warrants specific labeling. H.R. 1599 is specifically focused on preempting a potentially-nightmarish patchwork of state-based GMO-labeling laws, one that would almost certainly prove exceedingly costly and difficult for food manufacturers to effectively navigate. The real question centers upon what, if any, regulations the federal government would enact of its own to replace the state-level legislation. As it stands, if the legislation were to pass, it would simply codify federal policy for GMO labeling, which currently resorts to largely ambiguous language, demanding labeling only for “...genetically-engineered products that are materially different from their conventional counterparts in terms of functional, nutritional, or compositional characteristics.”
The FDA issued a draft guidance document to clarify the administration’s policy on the declaration of small and trace amounts of nutrients on manufacturers’ nutrition labels. Released as a notice in Federal Register, the draft guidance, when finalized, will “...explain to manufacturers of conventional foods and dietary supplements [the FDA’s] policy on determining the amount to declare on the nutrition label for certain nutrients and dietary ingredients that are present in a small amount.”
Issuing the draft guidance was determined necessary by the emergence of a potential conflict of interest between specific stipulations of the Code of Federal Relations (CFR). In the agency’s own words, “...declaring small amounts of nutrients and dietary ingredients in the nutrition labeling may result in a conflict between 21 CFR 101.9(c)(1) through (8) and 21 CFR 101.9(g)(4)(ii) and 21 CFR 101.9(g)(5). In such cases, we are recommending manufacturers declare nutrients and dietary ingredients in accordance with Sec. 101.9(c)(1) through (8).”
The FDA’s announcement will render food labels with declarations of nutritional content “misbranded” should they fall outside a standard deviation of 20% from the suggested amount of a given nutrient or caloric metric. In other words, a nutrition label claiming 8 grams of saturated fat per serving but in fact featuring 10 grams would be “misbranded.” Likewise, a product that claims to feature 50% of one’s daily recommended value (DRV) of Vitamin A that actually offers only 39% of one’s DRV would be subject to departmental recourse.
The draft guidance document is mostly directed at clarifying the nuances of American labeling laws for food manufacturers and purveyors. In the words of the bureau, “the draft guidance represents the current thinking of FDA on our policy on declaring small amounts of nutrients and dietary ingredients on nutrition labels. It does not establish any rights for any person and is not binding on FDA or the public.” Furthermore, the FDA is accepting public comments on the draft guidance up until September 28, 2015.