Kerry Group and Danone in van­guard re­spond­ing to ‘clean la­bel’ global move­ment, says bro­ker

Irish Examiner - - Business - Ea­mon Quinn

Ire­land’s Kerry Group and France’s Danone are “in the van­guard” of sat­ing global con­sumer de­mands for nat­u­ral foods but they face huge chal­lenges, ac­cord­ing to a ma­jor re­port by Davy.

The bro­ker says many food firms may strug­gle to re­spond to the “clean la­bel” con­sumer move­ment that de­mands nat­u­ral in­gre­di­ents. Kerry has ac­knowl­edged by its 2015 pur­chase of food flavour­ing firm Red Ar­row and, through its ac­qui­si­tion last month, of Fleis­chmann’s Vine­gar Com­pany in the US, of the im­por­tance of the move­ment, Davy says.

Ac­cord­ing to the re­port by an­a­lysts Katy Hutchin­son and Liz Coen, Red Ar­row’s smok­ing and grilling tech­nol­ogy meet global con­sumer de­mands “to clean up prod­uct la­bel ”, while Danone “is at the fore­front of this move­ment”.

The re­port, how­ever, finds food firms can­not eas­ily re­spond to the chal­lenges as “the prac­ti­cal­i­ties of re­for­mu­lat­ing food prod­ucts are com­plex”, while con­sumers in dif­fer­ent parts of the world re­spond to dif­fer­ent food la­bel mes­sages. And while many con­sumers may be will­ing to pay more, “in re­al­ity price re­al­i­sa­tion is a ma­jor chal­lenge for food man­u­fac­tur­ers”.

On Kerry, Davy says it has re­placed the com­mon food flavour­ing dis­odium in­osi­nate with chicken fat, stock, and spices, be­cause “its chem­i­cal sound­ing name ren­ders it un­de­sir­able by con­sumers”. It has also re­placed mod­i­fied corn starch and tapi­oca starch, which are used to boost tex­ture, with po­tato starch and car­rageenan, the bro­ker says.

“Th­ese in­gre­di­ents are likely to be per­ceived as more favourable — ie of more nat­u­ral ori­gin and less pro­cessed — than pre­vi­ous in­gre­di­ents. Car­rageenan, used as a thick­en­ing or emul­si­fy­ing agent in food prod­ucts, also has ad­di­tional preser­va­tive prop­er­ties.” Davy said Danone’s in­tro­duc­tion of its Greek yo­ghurt range is “an in­ter­est­ing ex­am­ple of clean la­belling in ac­tion”.

“Clean la­bel prod­ucts are lead­ing the path­way to growth — prod­ucts con­tain­ing claims such as ‘noth­ing ar­ti­fi­cial’, ‘free of ad­di­tives and ar­ti­fi­cial in­gre­di­ents’ and ‘all nat­u­ral’ have grown in dol­lar terms by 3.6%, 8% and 7.8% re­spec­tively,” the re­port says. “Brand own­ers are iden­ti­fy­ing con­sumer needs and show­ing th­ese clearly on prod­uct la­bels, us­ing clean la­belling as a mar­ket­ing lever,” ac­cord­ing to the an­a­lysts.

“De­mo­graph­ics also have a part to play — ac­cord­ing to Nielsen, mil­len­nial con­sumers rank claims of ‘or­ganic’ on food prod­ucts higher in im­por­tance than any other age group, view­ing it as more im­por­tant than hor­mone-free or GMO-free foods. In con­trast, older gen­er­a­tions do not rank any of the three claims as highly im­por­tant. Smart mar­ket­ing cam­paigns, in­clud­ing a strong so­cial me­dia pres­ence, clear com­mu­ni­ca­tion with cus­tomers, and trans­par­ent prod­uct la­bels are im­per­a­tive for win­ning in this cat­e­gory.”

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