The global clean label phenomena

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1 The global clean label phenomena Trends, insights & implications Lu Ann Williams March 2015

2 Topics for today Current state of clean label New clean label marketing Storytelling Power of natural health 2

3 Current state of clean label 3

4 What is clean label or natural? No preservatives 49% No artificial sweeteners 35% Natural / clean label No artificial flavors 47% No artificial colors 39% 4

raised without the use of antibiotics or added hormones. $3.

5 Revenue in billions ($) Chipotle: working to be 100% natural food with integrity Website: It means that whenever possible we use meat from animals raised without the use of antibiotics or added hormones. $3.5 Annual revenue of Chipotle (2009 to 2013) $3.0 $2.5 $2.0 $1.5 $

6 Natural colors racing ahead Even though natural colorings are already being used more often than artificial colorings, the natural ingredient group is showing faster growth as well. Development of natural and artificial food colors ( ) 250% natural (penetration) artificial (penetration) natural (NPLs tracked) artificial (NPLs tracked) 20% 200% 207% 16% 150% 159% 12% 100% 8% 50% 4% 0% 14.5% 4.3% 14.7% 4.6% 14.7% 4.4% 16.1% 4.1% 17.0% 3.9% % 6

7 - 7.0% Decrease of e-numbers on ingredient lists E-ingredients can be listed by number, full name or both. 10 years ago, 22.9% of the product launches still used e-numbers. In 2014 this dropped by 7% to 15.9%. 26% Share of NPLs with e-number in the ingredient list (EU countries, ) 24% 22% 20% 18% 16% 14% 12% 22.9% 24.8% 22.4% 21.2% 20.5% 22.0% 20.8% 18.9% 17.1% 15.9%

8 Preservative free popular in baby food and soups In 2014, 39% of new baby food products tracked has a no additives/preservatives claim. With more brands making clean label claims like no artificial colorings its power of differentiating is decreasing. 45% Penetration of no additives/preservatives claims - % per market category (Global, 2014) 40% 39% 35% 33% 30% 25% 27% 25% 20% 17% 17% 16% 15% 15% 15% 13% 10% 5% 0% Baby Food Soup Pet Food Soft Drinks Spreads Cereals Sauces & Seasonings Snacks Ready Meals Dairy 8

9 Preservative free claims generally the same No additives/preservative claims on front-of-pack are uniform and risk losing power of differentiation. 9

10 New clean label marketing 10

Ingredient list: keep it short and simple More and more brands strive to differentiate themselves by keeping

PC Blue Menu Smooth Peanut Butter (Canada, Jul 2014) Ingredients: 100% freshly roasted peanuts.

organic strawberries, organic apples, organic raspberries, <1% organic lemon juice concentrate.

11 Ingredient list: keep it short and simple More and more brands strive to differentiate themselves by keeping the product s ingredient list short and containing recognizable ingredients as much as possible. PC Blue Menu Smooth Peanut Butter (Canada, Jul 2014) Ingredients: 100% freshly roasted peanuts. Ella's Kitchen Organic Squished Smoothie Fruits (United States, Jan 2015) Ingredients: Organic bananas, organic strawberries, organic apples, organic raspberries, <1% organic lemon juice concentrate. Bear Pure Fruit Yoyos: Blackcurrant (United States, Jul 2014) Ingredients: Apples, pears, blackcurrants, absolutely nothing else (mixes vary seasonally). 11

260% 240% 220% 200% Global food NPLs tracked with naturally sweet claims (2010-2014) 200% 245% 180% 160% 140% 120%

12 Naturally sweet is more acceptable sugar Strong growth for claims such as "naturally occurring sugars or naturally sweet These claims can be seen as an evolution of no added sugar. 260% 240% 220% 200% Global food NPLs tracked with naturally sweet claims ( ) 200% 245% 180% 160% 140% 120% 100% 80% Contains naturally occurring sugars from fruit and vegetables. 100% 99% 119% We have used white grape juice as a sweetener. 60%

Real fruit based candy Dare Real Fruit Original Chews: Raspberry, Lemon, Cherry, Orange And Strawberry Flavor

With no added nonsense. Delicious pure fruit rolls with no added sugar or fruit concentrates.

13 Real fruit based candy Dare Real Fruit Original Chews: Raspberry, Lemon, Cherry, Orange And Strawberry Flavor (Canada, Jan 2015) Claims/Features: Naturally flavored candy. Dare made better. Made with real fruit juice. No artificial colors or flavors. Bear Yoyos Strawberry Flavored Pure Fruit Rolls (Sweden, Jan 2015) Claims/Features: Pure fruit. With no added nonsense. Delicious pure fruit rolls with no added sugar or fruit concentrates. Sugars naturally found in the fruit. Mentos Squeez Chewing Gum: Mixed Berry (France, Jul 2014) Claims/Features: No added sugar. Filling based on 99% real fruit. Contains naturally occurring sugars. Chewing gum with sweeteners and fruit flavor. 13

14 Freshness through frozen Brands such as McCain are marketing frozen as a natural way to keep vegetables and vegetable products fresh and full of nutrients. Production process Baked Fresh 14

15 Visual support for natural products Reference to the farm Reference to the barrel Life size ingredients in its natural state 15

16 16 Traditional packaging communicates naturalness

17 New clean label buzzwords New marketing words to describe food products as more natural are experiencing strong growth. The following words were tracked more often in 2013 and Global NPLs tracked with new buzzwords ( ) index: 2010=100% 250% 225% 200% 175% 150% 125% Raw Pure Real Wholesome 241% 206% 188% 152% 100% 75% 50%

Pure, real and raw work in all categories Ski D Lite Real Yoghurt Peach And Mango (Australia, Dec 2014) Claims/Features:

A natural source of calcium and protein.

crystal light pure lemonade flavored naturally sweetened drink mix in a carton box.

18 Pure, real and raw work in all categories Ski D Lite Real Yoghurt Peach And Mango (Australia, Dec 2014) Claims/Features: Made with real yogurt and real peach and mango. With natural probiotics. Natural source of protein and calcium. A natural source of calcium and protein. Crystal Light Pure Lemonade Flavored Truvia Drink Mix (United States, Nov 2014) Description: Seven individual packets of crystal light pure lemonade flavored naturally sweetened drink mix in a carton box. Better Oats Raw Pure and Simple Quick Oats (United States, Oct 2014) Claims/Features: Good source of fiber. 40g of whole grain per serving. Pure, raw and simple is a better way to eat. 100% organic, whole grain oats for a wonderfully wholesome breakfast. 18

19 Bold, fresh and booming clean label claims Paleo is one of the latest marketing words for unprocessed foods, mentioned on 5 times more NPLs in 2014, compared to Cold pressed is often tracked on juice and vegetable drinks, tracked almost 4 times as often on NPLs in 2014, compared to

20 Story of origin 20

Consumer groups call for more transparency The current Country of Origin Labelling (COOL) requires fresh beef products to display the animal s country of birth, rearing and slaughter.

21 Consumer groups call for more transparency The current Country of Origin Labelling (COOL) requires fresh beef products to display the animal s country of birth, rearing and slaughter. As of April 2015, fresh pig, poultry, sheep and goat meat will also have to indicate the animal s country of rearing and slaughter. However, origin information is not required for meat used in processed food. The European consumer group BEUC calls for greater transparency on meat products. 21

A clearer message for consumers A parliamentary report in Australia recommends a change to the regulation on origin of food labeling. The report proposes to be clearer about where food comes from.

22 A clearer message for consumers A parliamentary report in Australia recommends a change to the regulation on origin of food labeling. The report proposes to be clearer about where food comes from. Currently, food products need to have country of origin claims but this can result in a claim such as made in Australia from local and imported ingredients, which is found to be too confusing for consumers. Under the proposed new rules a product made from more than 50% overseas ingredients and processed in Australia would be labeled as made in Australia from mostly imported ingredients. Parliamentary report proposes to use the following for ingredient origin claims: - Made from mostly local ingredients (>50%) - Made from mostly imported ingredients (<50%) - Made from [country] ingredients - Grown in [country] (100% sourced there) - Product of [country] (in case of 90%) 22

Iglo Forever Food ensures that its products are sourced in a sustainable way.

We make sure our suppliers comply with the internationally agreed CSR standards.

Our carefully controlled supply contracts with family farms in the region guarantees you the best quality spinach.

23 More transparency: big versus small Multinational brand Positioning for Millennials Iglo Gourmet Wild Salmon With Spinach (Germany, Jan 2014) This wild salmon is caught in the north Pacific. Iglo Forever Food ensures that its products are sourced in a sustainable way. All fish comes from MSC certified fisheries. We make sure our suppliers comply with the internationally agreed CSR standards. The spinach comes from Iglo s main growing area in Münsterland. Our carefully controlled supply contracts with family farms in the region guarantees you the best quality spinach. Fish Tales Meinderts Plaice Fillets With Lemon And Butter Sauce (Netherlands, Apr 2014) Meindert the fisherman comes from a traditional fishermen s family in Urk (see map). It is early in the morning when Meindert sails his boat the Good Hope to the North Sea. Once the full nets are emptied on deck, the men rapidly clean the fish. And then quickly back to the harbor. 23

Single origin chocolate In the chocolate market, origin claims such as single origin are a way to premiumize.

exclusively in the cocoa plantations located along the Guayas River, are then sorted, roasted and made into bars in their

Marou Faiseurs De Chocolat 72% Dark Chocolate (Germany, Dec 2014) Description: So Co LaDen single origin dark chocolate

24 Single origin chocolate In the chocolate market, origin claims such as single origin are a way to premiumize. Trader Joes Ecuador Dark Chocolate with 65% Cocoa (United States, Jan 2015) Claims/Features: The beans are grown exclusively in the cocoa plantations located along the Guayas River, are then sorted, roasted and made into bars in their factory next door. Marou Faiseurs De Chocolat 72% Dark Chocolate (Germany, Dec 2014) Description: So Co LaDen single origin dark chocolate with 78% cocoa. Intense taste from the cocoa from Mekong Delta. Duffys Nicaragua Chuno, 70% Dark Chocolate Bar (United Kingdom, Oct 2014) Description: This single origin dark chocolate bar is made from fine flavor Criollo cocoa beans from Nicaragua. 24

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26 Power of natural health 26

27 An apple a day. Consumers are looking for more natural ways to consume vitamins and minerals The supers are still growing Development of cereal NPLs with a superfood claim (Global, ) 500% 450% 400% 350% 300% 250% 200% 150% 100% 50% 0% Share of total NPLs NPLs tracked 472% 236% 174% 100% 109% 1.2% 1.1% 1.5% 1.6% 2.7% % 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 27

28 Diversity in superfood claims Super grain Super tea Super food energy salad Super cocoa Super veggie chips Super power tea Super fruit Five super beans 28

29 New carbs are booming Still more room for growth for alternative grains like spelt, quinoa, buckwheat and oats. Global NPLs tracked with new carb claims and ingredients ( ) index: 2010=100% 300% 280% 260% 240% 220% 200% 180% 160% 140% 120% 100% Ancient Grains Oats 287% 200% 187% 163% 152% 127% 116% 107%

Ancient grains claims for better-for-you options Ancient grains claims are combined with health claims.

perfect breakfast to start your day with only 5g of sugar and ancient grains like Kamut wheat, spelt, and quinoa 247

free. Source of fiber. Goodness of wholegrain oats. Healthy all day everyday.

30 Ancient grains claims for better-for-you options Ancient grains claims are combined with health claims. General Mills Cheerios Plus Ancient Grains Cereal (United States, Jan 2015) Claims/Features: Cheerios + Ancient Grains is the perfect breakfast to start your day with only 5g of sugar and ancient grains like Kamut wheat, spelt, and quinoa 247 Breakfast Biscuits: Banana, Fig, Honey And Golden Flaxseed With Ancient Grains (Australia, Nov 2014) Claims/Features: Nut free. Source of fiber. Goodness of wholegrain oats. Healthy all day everyday. Baby Gourmet Plus Organic Yumberries & Plum With Ancient Grains Puree (Canada, Oct 2014) Claims/Features: No added sugar or salt. No gluten ingredients. Excellent source of vitamin C, a dietary antioxidant. 30

Working on heart health with the power of oats Oats are positioned as part of a heart healthy diet, available in different formats.

(United States, Jan 2015) Claims/Features: Can help lower cholesterol as part of a heart healthy diet. Made with 100% wholegrain oats.

Vitasoy Oat And Almond Milk Drink (Australia, Jan 2015) Description: Oat and almond milk drink with Australian cold pressed almond oil.

31 Working on heart health with the power of oats Oats are positioned as part of a heart healthy diet, available in different formats. Half of EU participants believe dietary changes can help treat/avoid heart disease General Mills Cheerios Toasted Whole Grain Oat Cereal (United States, Jan 2015) Claims/Features: Can help lower cholesterol as part of a heart healthy diet. Made with 100% wholegrain oats. American Heart Association Certified. Vitasoy Oat And Almond Milk Drink (Australia, Jan 2015) Description: Oat and almond milk drink with Australian cold pressed almond oil. Claims/Features: Oats actively lower cholesterol. With betaglucan. From Australian oats and almonds. Oat Works Oat-Powered Fruit Smoothie: Peach Mango (United States, Jan 2015) Claims/Features: Beta for you: oat beta glucan loves your heart so you can love what you do. 31

32 Natural benefits of dairy In 2014, 10% of the dairy products launched in North America have a pre- or probiotics claim. In North America, protein is still on-trend with a penetration increase of +3%. 20% 18% 16% 14% 12% 10% 8% 6% 4% Penetration of dairy NPLs tracked in North America - % per claim (2013 versus 2014) % 0% 9% 10% 16% 19% Pre- or probiotics Protein 32

33 Natural benefits of dairy: pre- and probiotics In North America, 20% of NPLs with pre- or probiotics are dairy products. Pre- or probiotics claims are often seen on (on-the-go) dairy drinks. 33

34 Natural benefits of dairy: protein The trend of protein for mainstream consumers has caused dairy brands to make front-of-pack protein claims. 34

The milk man is back Fresh Wholesome Nutritious Shake before

delivered fresh milk. Well, it was awesome!

it. And, did I mention that there are no hormones or

35 The milk man is back Fresh Wholesome Nutritious Shake before using It reminds US consumers of the days when a milkman delivered fresh milk. Well, it was awesome! I had to take a spoon and break up the cream before shaking it. And, did I mention that there are no hormones or antibiotics in this milk? The bottle is returned and re-used using a deposit system. 35

36 36 On GMO.

37 What s next? Clean label isn t a trend anymore and it isn t just about the ingredients It is more like clean conscience Innova: from clean to clear label our #1 trend for 2015 This is a fundamental shift that is here to stay Lifestyle changes: Millennials: I don t want to eat the same brands my parents eat Connected lifestyles Gen Z: Prefer more face to face connections More critical (prove it to me) 37

38 Thank you

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