01_16 clean label

Vol. 6, No. 1 January 2016 naturalproductsinsider.com US$20.75

What'sDINNER

It's

for

Transparency,

Clean label’s shift from trendy request

to industry standard

Expo Hall April 28 & 29

2 INSIDER Clean Label Digital Issue January 2016

CONTENTS naturalproductsinsider.com

p.3

Takeaways for Your Business

p.31

What’s in a (Clean) Label? While clean label can be an area difficult to navigate, this trend also provides a wealth of opportunity for existing and new players to differentiate themselves in an increasingly saturated and competitive market, while gaining a brand loyalty foothold.

p.28

Clean-Label Supplements As the clean-label trend sweeps over the food and beverage industries, supplement labels are also getting a clean and transparent revamp.

p.22

From Trend to Standard: Clean-Label Foods and BeveragesCall it clean or clear label, the more ubiquitous clean label becomes, the more it moves out of the trend spot and into the hotspot of expectation. What’s interesting about clean label, from a consumer standpoint, is it is less driven by nutritional claims and panels, and more by ingredient transparency and reputation.

p.5

Viewpoint: From Clean to Clear

Vol. 6, No. 1 January 2016

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From Clean to Clear As a consumer, I read labels; I’ve read them for years and base

almost all of my purchases on them. If I don’t like what I see or the

product is out of my price point, I try to make it at home (salad

dressings and sweets, for example). If it’s out of reach for me and my

1950s kitchen, I will amend my weekly menu. Sure, I occasionally

purchase an item with a laundry list of ingredients, but for the most

part, even my frozen chicken tenders have some claim to health and

feature a small list of ingredients.

The reasons behind my purchasing decisions don’t stop there. I am drawn to simple,

well-designed attractive labels that give me a straightforward message about the product and

the company. And yes, I have been known to look up a product’s website and read about its

mission, work environment, interests, etc. And I’m not the only one interested in corporate

responsibility and transparency; an overwhelming number of consumers—Millennials,

Boomers and Gen Xers alike—say ingredient transparency is a driving factor when

purchasing products.

Consumers’ attraction to clean labels doesn’t stop at the ingredient list; they are

increasingly attracted to a company’s integrity—its honesty and transparency. Clean label is

no longer a mere luxury; food, beverage and even supplement manufacturers are expected to

generate clean-labeled products. The next step is engaging in transparent conversations with

consumers. They want to know you and your company, your employees, and your company’s

values, processes and practices.

In this Digital Issue, we focus on how clean label has shifted from trend status to industry

norm, and what that means for your company, as well as clean-label solutions for foods,

beverages and supplements.

Happy New Year,

Alissa Marrapodi Managing Editor [email protected]

@alissamarrapodi

Viewpoint

When it comes to your label… Keep it clean. Keep it simple.

Growing consumer demand for unadulterated ingredients is globally changing what we put

in foods, beverages and supplements. Consumers want to see labels with ingredients that are

minimally processed and free from additives and preservatives. As the largest supplier of

natural, botanical ingredients, BI Nutraceuticals can help you clean up your product label.

For natural, wholesome ingredients, the clean choice is BI.

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IN THIS ISSUE

INSIDER's Take

Viewpoint p.3 Clean-Label Supplements p.22 Table of Contents p.2

Consumers are done with convoluted labels; they want ingredient transparency, trust and product understanding.

Clean label creates cost, stability and sensory challenges in and out of the lab.

New separation and processing technologies are making natural alternatives to artificial ingredients easier to use.

Call it clean or clear label, the more ubiquitous clean label becomes, the more it

moves out of the trend spot and into the hotspot of expectation.

“Clean—or clear label as we have decided to call it—has moved past being a trend,” said

Lu Ann Williams, director of innovation at Innova Market Insights, according to Institute of

Food Technologists (IFT) 15 News. “It is the new rule. Companies will have to do what they

can to clean up labels or be as transparent as they can going forward.”

What’s interesting about clean label, from a consumer standpoint, is it is less driven by

nutritional claims and panels, and more by ingredient transparency and reputation. More than

eight in 10 (82 percent) of global consumers said “ingredient transparency is a very important

or important factor” when shopping for food and beverage products, according to

“Re: Thinking Consumption: Consumers and the Future of Sustainability,” a study

by BBMG, GlobeScan and SustainAbility.

“We all know the shift from clean to clear labels (not just cleaner labels,

but increased transparency) is an overarching shift affecting what we’re

all doing,” said Jeff Avila, vice president of marketing, Novel Ingredients.

“Consumers want to know what they’re eating, and more than simply

knowing where it comes from, they also want to be able to trust where

it comes from. Whether due to allergens or the no-no lists we’ve seen

emerging, a huge part of that trust is connected to standards, specifically

to the ways we conform to them and move them forward, as we’re doing

with our DNA PUR™ line of 100-percent identity-verified botanical ingredients

analyzed using DNA barcode testing.”

Mintel’s “Food Packaging Trends: Spotlight on Food Labeling, US, August 2015”

report also supports transparency. “While shoppers continue to seek tasty, nutritious

food, food packaging labels struggle with relevance,” the market research firm reported.

“Boosting relevance can come from promoting transparency, enhancing functional packaging

and engaging consumers beyond the store.” Mintel said manufacturers would also do well to

focus on clean, straightforward messaging that meets consumer interest.

What’s more, transparency promotes better ingredient and product understanding.

“Manufacturers seem to be becoming more transparent on their labels by stating the individual

ingredients used, such as rosemary extract, instead of listing it in the natural-flavors category,

From Trend to Standard: Clean-Label Foods and Beverages by Alissa Marrapodi

Clean-Label Foods and Beverages

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which they’ve done in the past in an effort to keep the ingredient statements shorter,” said

Courtney Schwartz, senior marketing communications manager, food technologies, Kemin.

“Because of this, they are really seeking ingredients that are recognized by consumers as

‘pantry’ ingredients—items that don’t need any explanation and are commonly used by a

typical consumer while cooking.”

“According to Innova Market Insights’ 2015—Clean & Clear: All Aboard, 73 percent of U.S.

consumers believe most of the ingredients on a food label should be items they recognize and

would use at home,” said Max Maxwell, market analyst, Glanbia Nutritionals. “This has led to

the introduction of alternative ingredients to achieve a simpler, cleaner and more acceptable

ingredient list, for example the use of flax instead of chemical emulsifiers.”

The key, however, to this market is perspective—your customers’, consumers’, market

research firms’, etc. And according to Maxwell’s perspective, “Clean label itself is now no

longer a trend—it has become the norm. Because consumers increasingly understand the

food chain, they seek information on ingredient provenance, empowering them to demand

and expect more on the label and in the product. This increased awareness among today’s

shoppers has led to brands focusing on transparency and traceability.”

Tina Rzeha, marketing associate, beverage flavors North America, Sensient Flavors, agreed.

“Low-fat, gluten-free and other diet trends have come around and slowly faded again,” she

said. “However, we do believe that clean label is not just a trend, but rather here to stay for

good. Consumers are increasingly looking for more transparency in their food and beverage

choices and are driven by their desire for well-being.”

Who Wants a Makeover?According to Innova Market Insights, there are a few

applications that have seen tremendous growth in clean-

label claims over the past three years: breakfast cereals (24

percent growth), sweet spreads (26 percent), and soups and

sauces (19 percent).

“Breakfast cereals and sweet spreads already have a

fairly basic ingredient list because they are being made from

ingredients such as whole grains and fruits, so manufacturers

are likely adding clean-label claims without having to heavily

reformulate,” explained Rachel Wicklund, team leader, dairy

applications, Tate & Lyle. “In soups and sauces, however,

several ingredients are being exchanged with clean-label

alternatives. For example, ingredients that are labeled simply

as ‘starch’ can replace modified starches. Tate & Lyle’s line

of CLARIA® Functional Clean-Label Starches can be used

in this scenario—they have similar functionality to modified

starches in terms of process tolerance, appearance and

clean taste.”

But it doesn’t stop at sauces; dressing and condiments

have joined the ranks. “Although products like barbecue

Breakfast Cereals, Sweet Spreads and Sauces

There are a few applications that have seen tremendous growth in clean-

label claims over the past three years:

BREAKFAST CEREALS

24%

26%

19%

SWEET SPREADS

SOUPS AND SAUCES


Source: Innova Market Insights

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sauce, salad dressing and ketchup are essential sources of flavor and sensory pleasure,

they have historically been packed with high-fructose corn syrup (HFCS) and other off-trend

ingredients,” said Nathan Holleman, vice president, marketing and sales, Carolina Innovative

Food Ingredients (CIFI).” Holleman said CIFI’s sweet potato ingredients offer a clean-label

replacement for HFCS in applications such as sauces and dressings.

Kemin has focused on developing new product offerings for the fats and oils industry,

specifically a natural option for extending the shelf life of frying oils, oils used within dressings

and sauces, as well as bakery and snack applications. Schwartz said its new products for fats

and oils have shown effective at helping to remove ethylenediaminetetraacetic acid (EDTA) as

well as butylated hydroxyanisole (BHA)/butylated hydroxytoluene (BHT) from oil, dressing and

sauce labels, making for a cleaner label.

Another trend inside of clean label is meat. “There is a trend in meat production [that’s]

replacing modified corn starch in the United States with clean label, non-GMO (genetically

modified organism) rice starch for poultry,” said Jon Peters, president, BENEO Inc.

Kemin, too, has developed a line of plant extracts and natural offerings for the

meat and poultry industry—both fresh and processed.

This meat trend also includes “uncured meat with no added nitrates/nitrites, no added

MSG or hydrolyzed vegetable proteins, and no artificial flavors or colors,” pointed out Jean

Shieh, marketing manager, Sensient Natural Ingredients. “With healthy protein sources now

taking the center stage of snacking, premium jerky is the new gourmet popcorn where new

products with exciting flavor combinations, high-quality ingredients or attractive packaging are

rolling out one after another.”

In fact, proprietary consumer research performed by Ingredion in May 2015 found American

consumers consider the meat category to be the most important category to have a clean

label. And to Shieh’s point, Mintel’s GNPD said from a new product introduction perspective,

snacks showed the largest penetration of clean-label products in the past year.

From Savory to Sweet“Consumers still like their indulgent foods, and if [they] can eat the same item that was

once considered ‘unhealthy’ and is now clean, then [they] don’t have to give anything up; in

fact, they [could] benefit from the change,” said AnnMarie Kraszewski, food scientist, Wixon.

“Additionally, it also makes an emotional connection; for instance, when eating a clean-label

“With healthy protein sources now taking the center stage of snacking, premium jerky is the new gourmet popcorn where new products with exciting flavor combinations, high-quality ingredients or attractive packaging are rolling out one after another.”–Jean Shieh, marketing manager, Sensient Natural Ingredients


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pie, the consumer may be brought back to a time when grandma used to make the same

thing using the same ingredients.”

The confectionery category isn’t exempt from clean-label’s powers. “In confectionery

coatings, rice starch is also popular as a clean-label alternative to titanium dioxide,” Peters

explained. “Due to its very fine particle size and white color, rice starch fills up micro

pores on the surface of coated candies, allowing for the creation of perfectly smooth and

white coatings.”

According to Alice Chin, quality control (QC) director, ingredientsonline.com, bakery and

dairy products are most likely to get a clean-label makeover because they play such a large

role in people’s daily meals. And Rikka Cornelia, product manager, BI Nutraceuticals, said

beverages are in the spotlight for two reasons: “They utilize several artificial ingredients

compared to other product applications,” she said. “And they are easier to makeover than

food applications since artificial ingredients in beverages have better natural substitutes

compared to others. For example, in shelf-stable snacks, consumers expect to have a

consistent texture and a long shelf life; however, it is sometimes difficult without certain

additives—additives that serve a function like preservatives, stabilizers and emulsifiers—[that]

consumers may perceive as more of a chemical than a food ingredient. A more specific

example is soy lecithin, an ingredient that consumers find ‘chemical-sounding’ but helps keep

the fat (usually cocoa butter) evenly distributed in chocolate-based products.”

When it comes to specific ingredients, Dan Grazaitis, senior food scientist, TIC Gums,

said, emulsifiers and surfactants are coming into focus. “While many of the emulsifiers on

the market are highly processed, there are only a couple natural emulsifiers available,” he

said. “Gum acacia is a naturally sourced emulsifier derived from tree sap that is traditionally

used in flavor emulsions. Outside of flavor emulsions, gum acacia has not been fully utilized

for its excellent emulsification and texture characteristics despite its minimal negative impact

on viscosity.”

But of course, if creating clean-label products was no big deal, texture, stability, cost, etc.,

wouldn’t be of concern; however, as industry knows all too well, that’s simply not the case.

And to make matters just a little more complicated, many of these challenges are not black

and white. For instance, according to Dana Chen, senior flavorist beverage, beverage flavors

“Consumers still like their indulgent foods, and if they can eat

the same item that was once considered ‘unhealthy’ and is now

clean, then they don’t have to give anything up; in fact, they

could benefit from the change. Additionally, it also makes an

emotional connection; for instance, when eating a clean-label

pie, the consumer may be brought back to a time when grandma

used to make the same thing using the same ingredients.”–AnnMarie Kraszewski, food scientist, Wixon


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North America, Sensient Flavors, “Our customers are the ones defining what they consider to

be a clean label. Oftentimes, they are giving us guidelines on how to formulate or reformulate a

flavor in order to fulfill their needs. It is really defined by each one of our customer’s regulatory

departments and can vary from customer to customer. If our customer wants a cloudy

beverage but clean label, it can be very challenging to meet their expectations. Restrictions

can definitely limit our pool of raw materials and creativity.”

Challenges A closer look is needed at some of the challenges facing clean-label food and beverage

manufacturers. First things first: cost. Without a doubt, cost is a universal challenge. As Chin

said, the price of maintaining the same taste, flavor, mouthfeel and shelf life is often costly.

For example, Kraszewski said using a cheese flavor can be more cost-effective than using a

cheese powder, and as Schwartz said, “the majority of plant-based/clean-label extracts have

a higher cost in use than synthetics.” So clearly, cost is an issue.

But moving away from cost, what else plagues

product formulators? “The biggest challenge is

stability,” said Michelle Kozora, technical service

manager, Cargill Texturizing Solutions. “Label-

friendly ingredients do not always have the stability

to survive the shear, acid or temperature. Some

can work in this space, but there is generally a

compromise—whether that be in texture or cost.

Another big challenge is freeze/thaw stability, which

is important in refrigerated or frozen applications. In

addition, given the more limited number of ‘label-

friendly’ options, it can be difficult to find a clean-

label alternative that delivers all the functionality of the traditional ingredients being replaced.”

For larger brands, Brian Anderson, vice president of marketing and innovation, Bunge, said,

“A central challenge with creating a clean label is scale: How can you scale up a recipe that

may have a clean label and carry artisan appeal, while maintaining consistency and reliability?

As an example, it may be relatively easy to substitute a non-GMO grain, but it could be

challenging to find a reliable supply of that non-GMO grain.”

Sensory attributes, according to Schwartz, can be negatively impacted from natural and

clean-label ingredients because they often have higher inclusion levels than synthetics.

“Depending on the application, flavor, texture, color and even shelf life can be negatively

affected when natural ingredients are used instead of their artificial counterparts,” Cornelia

said. But, flavor is a different beast than other sensory attributes. “In some cases, with a great

flavorist and flavor system, the main differences in product might only be price and use level,”

Cornelia explained. “Comparing flavors to colors, switching from an artificial color to a natural

color is much more difficult. For instance, transitioning from Red 40 to beetroot will pose many

challenges: pH is a huge constraint when using natural red, pink and purple colors; use levels

will probably be much higher, leading to flavor issues. To a more extreme level, some finished

products are going so far as to completely remove any flavors from their products. This is


“Label-friendly ingredients do not always have the stability to survive the shear, acid or temperature. Some can work in this space, but there is generally a compromise—whether that be in texture or cost.” –Michelle Kozora, technical service manager, Cargill Texturizing Solutions

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hardest with reformulations since consumers expect a certain amount of flavor impact and

consistency when regularly purchasing an item.”

According to Kraszewski, “We have to be more creative when using flavors. Sometimes, an

artificial flavor may have more depth, and using a clean-label flavor may require using multiple

flavors to achieve the same depth and dimension.”

But Avila said that while the push for clear labels has created certain formulation challenges,

“there has also been tremendous focus on improved flavor systems in recent years,” so the

taste of clean-label products is indeed improving.

Technology Never Tasted so Sweet (or Savory)Innova Market Insights determined much of its “Top 10 Trends List for 2016” based on

the impact of the clean-eating trend that has inspired a back-to-basics approach in product

development. Among the 10 was “Processing the Natural Way: Brands are talking more about

their production processes.” According to Innova, newer technologies such as high-pressure

pasteurization (HPP) may see even greater success if they are seen as a fresh alternative to

using preservatives.

“One of the biggest advances in terms of processing has been HPP,” Cornelia said. “It has

especially been impactful in the fresh-pressed juice segment, which has helped spur a large

rise in new product launches in a highly premium category.” Beyond HPP, she said: “New

separation and processing technologies are making natural alternatives to artificial ingredients

easier to use; a great example is stevia as a natural high-intensity sweetener. In addition, new

separation techniques and regulatory approvals have made natural blue and green colors

available that were not in the past. Even new enzymes and natural plant extracts are being

used as shelf-life extenders and mold-inhibitors to keep product safe for consumers.”

Another processing method moving into mainstream is dehydration. “Dehydration has

long been a proven method to preserve food by extracting moisture, and technologies such

as freeze-drying and vacuum drying provide further benefits to preserve nutritional value of

heat-sensitive fruits and vegetables,” Shieh said. “With the clean-label movement, food and

beverage product developers are looking at dehydrated vegetables as the natural solution,

literally. For example, celery powder is replacing nitrates/nitrites in cured meat products, and

vegetable powder blends, such as Sensient’s natural ingredient Umami Natural™ is used to

replace MSG.”

Check out INSIDER’s image gallery on

Innova Market Insights’ “Top Ten Trends List for 2016” from the firm’s webinar in November.

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Along the same line, recently the BENEO-Technology Center

conducted technical trials on the use of clean-label rice starch

in poultry. The results showed BENEO’s rice starch Remyline AX

DR is a waxy rice starch that allows chicken-meat processors to

improve yield while providing a clean and non-GMO ingredient for

their finished product label. The small granule size of rice starch

allows equal distribution into the chicken meat during injection.

Remyline AX DR has a low-starting gel point, keeping moisture

and brine within the chicken meat during cooking. Rice starch also

has a neutral taste and color, not affecting sensory properties of

cooked chicken meat. “Test trials have also shown that rice starch

is extremely stable and will preserve the color of the end product

for months,” Peters said.

Angelina De Castro, senior marketing manager, wholesome,

Ingredion Inc., said the company’s newest solution, NOVATION

ENDURA® 0100 starch, was designed for “applications that

undergo severe processing conditions (e.g., ultra-high temperature

[UHT] process and downstream homogenization), along with

the clean taste, visual appeal and the simple label declaration

consumers expect. It’s fit for savory and dairy applications that

need stability over extended shelf life under ambient or cold-

temperature storage conditions.”

As Anderson pointed out, sustainability is an issue, especially

when it comes to the growing demand for non-GMO products.

“We’ve seen a lot of growth in the demand for corn and ancient

grains and, as an agribusiness, are always thinking about what

we need to grow now so we’re ready for what our customers will

need next,” he said. “One ingredient we’re excited about is algae:

It’s incredibly nutritious and can be grown quite sustainably. Algae

oil has a lot of potential because it’s high in omega-9s and offers

oxidative stability, and can also be grown sustainably at the scales

needed for large food providers.”

When it comes to flavor, sweetness, saltiness, savory notes

and more all come into play. For example, Ingredion offers

ENLITEN® Reb A stevia sweetener to use in reduced-sugar,

naturally sweetened products for not only a clean label, but also

caloric attractiveness.

“Flavor modifiers for salt reduction, sweetness enhancement

or masking are being refined and expanded,” said Lesley

Nicholson, project manager, WILD Flavors & Specialty

Ingredients. “Technologies, such as natural steam pasteurization

to kill pathogens in nuts, preserve a clean label while assuring

food safety.”

Rice starch Remyline AX DR (from

BENEO) is a waxy rice starch that allows chicken-meat processors to

improve yield while providing a clean and non-GMO ingredient for their finished

product label.

Algae oil has a lot of potential because it’s high in omega-9s and offers

oxidative stability, and can also be grown sustainably at the scales needed for

large food providers.

Stevia sweetener can be used in reduced-sugar, naturally sweetened

products for not only a clean label, but also caloric attractiveness.

Savory or Sweet


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Chin said “Most of the artificial flavors, including sweeteners, have a goal of trying to present

the original natural flavor at a lower cost, suitable for modern processing; it is a balance

between cost and benefit.”

Flavor, however, has an advantage. “Consumers who seek clean-label foods tend to be

adventurous in trying new ingredients and flavors,” Anderson said. “When people invest in

artisan foods or premium, crafted ingredients, they often expect to taste more of the flavor of

the raw ingredients. Our expeller-pressed oils, for example, tend to retain more of that sun-

drenched flavor, and, in some applications, that’s part of the benefit; quinoa, likewise, has an

earthy flavor that, in formulation, can add depth to the flavor profile. The clean-label trend, as

it pertains to oils and milled ingredients, aligns well with consumers’ desires for more nuanced

and complex flavors.”

Fruits, vegetables and other natural sources are creating a variety of texture solutions,

making a clean label that much easier to obtain. “Some ingredients that are helping

in the clean-label space are hydrocolloids, pectins, lecithin and physically

modified starches,” Kozora said. “Hydrocolloids come from natural

sources, like seaweed, and can be good options for providing

stable textures. Pectin also comes from natural sources, like

citrus peel, and can provide texture and gelation. Lecithin,

which can come from sources like soybeans, can be a

potential replacement for monoglycerides and DATEM

(diacetyl tartaric acid ester). Physically modified starches,

which can come from corn and other sources, can be a

good option for replacing modified starches.”

De Castro said Ingredion’s pulse ingredient portfolio tackles

not only texture, but protein enhancement and other sensory

attributes. It includes protein concentrates and high-protein flours

Texture Solutions

Hydrocolloids come from natural sources, like seaweed, and can be good options for providing

stable textures.

Pectin also comes from natural

sources, like citrus peel, and can provide texture

and gelation.

Lecithin, which can come from sources

like soybeans, can be a potential replacement for

monoglycerides and DATEM (diacetyl tartaric acid ester).



from chickpea, faba bean, lentil and pea that offer functional benefits including emulsification,

texture, water holding and adhesion. They can be added to enhance the flavor, texture and

nutritional value of pasta, gluten-free bakery, batters and breadings, bars, breakfast cereals

and meat alternatives.

“Inulin-type fructans occur naturally in many plants and vegetables, and chicory root is a

particularly rich source of these fructans,” Peters explained. “BENEO uses a gentle hot-water

extraction process to manufacture inulin from chicory root. Many other well-known fiber

ingredients are manufactured using a chemical process (acid, heat and enzymatic processes

catalyzing condensation of glucose) to synthesize the ingredient from glucose syrup. Being

naturally derived, chicory root fiber inulin and oligofructose help to replace unwanted synthetic

ingredients and therefore are not associated with food additives.”

The important thing to remember when

formulating clean-label products is these

solutions are not often a 1:1 exchange. “For

example, when you’re swapping caloric

sugars for a high-potency sweetener such as

TASTEVA® Stevia Sweetener, you may also

need to add in a fiber, like PromOat® Beta

Glucan, to build back body and mouthfeel,”

Wicklund explained. “The addition of fiber may

ultimately add to the length of your ingredient

list, but it provides the opportunity to maintain

texture and add health benefit claims that

contribute to the overall consumer appeal of

the product.”

Grazaitis seconded this notion:

“Reformulating clean-label food and

beverage products is a huge challenge for scientists,” he said. “The ingredients being

used were sourced, processed or modified for specific functionalities in a finished food

product. This makes a 1:1 replacement challenging to a clean-label formulation. Usually

a blend of ingredients can be pieced together to replace the functionality of the modified

ingredient successfully.”

Cornelia pointed out that each ingredient, especially artificial ingredients, not only plays

a functional role, “but they play it well, whether it is improving structure, adding color or

providing a nutrient. Hence, the reason companies utilize them over their natural alternatives.

For instance, you cannot completely replace sodium benzoate with a natural preservative and

receive the same degree of effectiveness.”

As standards and expectations evolve into “always-on” clean label, scientists will continue

tapping their resources for new ways to satisfy sensory attributes, stability, cost and more in

this new era of food and beverage products.

“The addition of fiber may ultimately

add to the length of your ingredient

list, but it provides the opportunity

to maintain texture and add health

benefit claims that contribute to

the overall consumer appeal of

the product.”–Rachel Wicklund, team leader, dairy applications, Tate & Lyle



Animal Nutrition Company Launches Clean Label Co-Op

Although collaborative efforts to promote clean label in

consumer packaged goods (CPGs) for human consumption have been

lacking, one company has taken the lead in animal nutrition. Clear Conscience

Pet®, a family-owned purveyor of holistic pet nutrition products, created a new

clean-label distributor model for “elite artisan manufacturers and natural niche retailers.”

In 2014, Clear Conscience co-founder Anthony Bennie established a CleanLabel™

trademark and branding campaign for Clear Conscience products. In mid-2015, he launched

the CleanLabel™ Pet Co-Op (CLPC)—a market disruptor intended to turn the traditional pet

distribution model upside down.

Anthony said the new direction was motivated by too many products calling themselves

“all natural,” and thus, diluting the category. “In the first 10 years of the natural pet movement,

retailer recommendation and consumer education drove conversions to higher quality foods

and treats. But now, with almost every pet treat and food being called ‘natural,’ retailers

are overwhelmed by this brand proliferation and have a tough time making meaningful

recommendations and distinctions among products,” he noted.

Instead of brand proliferation, CLPC will focus on curation. “We are assembling a small

group of painstakingly researched and vetted brands and products,” Anthony stated. He and

Clear Conscience Pet co-founder Amanda Malone Bennie partnered with veteran natural pet

food distributor Pam Johnson of retail distributor Nature’s Rules in Madison, North Carolina, to

launch CLPC.

The new organization is positioning itself as the most strictly curated wholesale pet distribution

platform in industry history. “It was a huge decision to license and share our CleanLabel

trademark and philosophy, and we will be as fanatical in evaluating companies for inclusion

in the CleanLabel Co-Op as we are in sourcing and making our own pioneering CleanLabel

line,” Anthony stated. “Every company we accept into the Co-Op will be required to offer

products that are not only made with ingredients that are 100-percent pure, pronounceable

and purposeful, they must also make the commitment that their products are clearly labeled.

Our industry needs to respect the basic principle that consumers have a right to know and

understand what they are feeding their animal companions without excess marketing hype or

outright deception.”

The CLPC team stated it is not building a “virtual” distributorship that is simply an online

catalog of hundreds of brands; rather, it will be a true physical distribution and logistics company.

Various levels of retailer memberships will provide rewards and rebates depending on purchase

frequency and loyalty, and active involvement with product evaluation and feedback will

be encouraged.

Some companies already committed to CLPC include Carna4, a maker of handcrafted pet

foods, and Welly Tails, a manufacturer of pharmaceutical-quality supplements and homemade

pet food mixes.

The co-op officially launches in the first quarter of 2016.



IN THIS ISSUE

INSIDER's Take

Clean-Label Foods and Beverages p.5 Brand Marketing p.28 Table of Contents p.2

Clean-Label Supplements

Consumers not only demand transparency from foods and beverages, but they want it from supplement companies, too.

Consumers have their own idea as to what constitutes natural based on how something is spelled or how it sounds.

Sports nutrition and children’s health supplements are likely seeing the most clean-label action.

Clean-Label Supplements by Alissa Marrapodi

As the clean-label trend is sweeping over the food and beverage

industry, supplement labels are also getting a clean and transparent revamp.

This is a big deal, as almost 18 percent of American adults surveyed

by the Centers for Disease Control and Prevention (CDC) in 2012 used

some form of non-vitamin, non-mineral dietary supplement, with fish oil,

glucosamine and chondroitin the most popular. To further drive the clean-

label supplements trend home, according to the Nutrition Business Journal,

“Sales of supplements derived from herbs and botanicals reached an

unprecedented high in 2014 marking a continuous 10-year growth.”

But perhaps Jeff Avila, vice president of marketing, Novel Ingredients,

explained it best when he described the “rapid blurring of the lines between

food and supplements. Consumers now seek holistic wellness through food,

supplements and personal care. This isn’t just a rehash of holistic health

or general wellness—what we’re anticipating, and the shift that Novel is

evolving to target, is the concept of food as medicine.”

The Nit and Grit Trends aren’t always as big as they seem, however. Often they are

blown out of proportion and seen as sweeping (Didn’t I already use that

term?) when they’re really scaling on a fractional level. So the question

is: How popular are clean-label supplements? To some degree, that’s

hard to answer. But here’s what we do know: In a 2014 Gallup survey of

the U.S. market for vitamins and other dietary supplements, 43 percent

of survey respondents said they use supplements with clean labels, up

from 36 percent in 2012. One-quarter (23 percent) of users opted for

supplements that were labeled natural/naturally sourced, 19 percent no

artificial colors/flavors, 15 percent organic, 12 percent preservative-free, 8

percent gluten-free, 6 percent non-dairy/vegetarian/made from whole foods

and 5 percent yeast- or soy-free.

“Consumers [who are] knowledgeable about their expectations for clean

labels (minimal processing, no artificial ingredients, no GMOs [genetically

modified organisms] and no chemical-sounding names) may be a minority

Almost

18% of American adults surveyed by the Centers for Disease

Control and Prevention (CDC) in 2012 used some form of non-vitamin, non-mineral dietary supplement, with

fish oil, glucosamine and chondroitin the

most popular.

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of supplement consumers, but they are focused on their intent to find products meeting

those expectations,” said Mel Mann, director, flavor innovation, Wixon. “According to a 2013

Hartman Group survey, 60 percent look for ingredients they recognize, 56 percent for real,

simple ingredients and 50 percent for the absence of artificial ingredients. Beyond the United

States, other developed and developing regions, such as the Middle East and North Africa,

are seeing increased demand for supplements in general.”

Avila said that, similar to food, this trend doesn’t stop with what’s on the label. “It extends

to consumers’ demand for transparency, strict origin and source requirements, and greater

control throughout the supply chain.”


60% look for ingredients they recognize

56% look for real, simple

ingredients

50% look for the absence of artificial

ingredients

U.S. Market for Vitamins and Other Dietary Supplements

43% 36%

2012 2014

Respondents who said they use supplements with

clean labels

Supplements that were labeled natural/naturally sourced

No artificial colors/flavors

Non-dairy/vegetarian/made from whole foods

Yeast- or soy-free

Gluten-free

Organic

Preservative-free

THE USERS THAT OPTED FOR:

23%

19%

15%

12%

8%

6%

5%

Source: 2013 Hartman Group survey

Source: 2014 Gallup survey of the U.S. market for vitamins and other dietary supplements


So, what ingredients are on consumers’ hotlist? “Depending on

how individual consumers define ‘clean’ for their personal lifestyle,

some or all of the following are being avoided: anything labeled

or perceived to be artificial, processed, not sustainable, derived

from or using GMOs, etc.” Mann said. “These ingredients can

be the actives in a supplement or excipients. For the latter, fewer

is better, as a ‘cleaner’ product is perceived as not needing any

non-active ingredients.”

Rikka Cornelia, product manager, BI Nutraceuticals, said, “The

majority of vitamins and minerals in dietary supplements are

synthetically manufactured. With the clean-label trend, consumers

are increasingly seeking ingredients that inherently contain these

nutrients, like acerola powder with naturally occurring vitamin C

instead of straight ascorbic acid.” She also mentioned that non-

GMO and plant-based tablets and gel caps are trending.

What’s interesting is the results of consumer research

commissioned by BENEO. “In terms of product designation, 62

percent of respondents prefer chicory root fiber as the most natural

soluble fiber,” explained Jon Peters, president, BENEO Inc. “In

contrast, only 3 percent of consumers perceive soluble polydextrose

as natural fibers. This is one of the reasons why fiber gummy chews,

as well as other fiber supplements that contain chicory root fiber, are

increasing in popularity.”

Clearly, consumers have their own idea as what constitutes natural

based on how something is spelled or how it sounds.

Category Specific? As clean label impacts the supplement industry more, this revamp

will have no bounds. But as of now, it’s trending more heavily in two

categories: children’s health and sports nutrition.

“Historically, whole-food supplement customers were the most interested in clean

label,” Avila surmised. “But it’s now fair to say that expectations for clean-label

ingredients are increasing across almost every category, including categories like

sports nutrition that we traditionally didn’t think of as highly concerned about

clean label. Frankly, this makes sense: As the demographic for sports and

fitness nutrition products has changed significantly over the last 20 years, so

have their requirements.”

“Parents supplementing their children’s diets demand the same ‘cleanliness’

from supplements as they do from any food,” Mann explained. “Demands put

upon food for children (carrying forward from expectations about baby food) are being

translated to children supplements. Designing supplements for children expands the issues

around which ingredients to use, how much actives per dosage, what non-active ingredients to

use, etc., bringing an even greater awareness of supply chain, quality control (QC) and safety.


In terms of product designation,

62% of respondents prefer

chicory root fiber as the most natural

soluble fiber.

In contrast, only

3%of consumers perceive

soluble polydextrose as natural fibers.

Source: BENEO


“Sport-performance products continue recovery from earlier problems with too

many chemical-sounding ingredients, dubious efficacy and, in some cases, unsafe

products,” he continued. “This category is seeing a trend toward whole-food

supplementation under the theory that essential micronutrients from whole food or

whole-food extracts have greater efficacy than ‘purified’ ingredients. Additionally,

the target consumers in this category have expanded beyond the hard-core

athletes to include people striving for a more ‘fit’ or healthy lifestyle through weight

management, strength building, endurance and recovery improvement, etc.”

Which brings us to our next point: efficacy.

The Clean-Label Supplement Challenge Among several challenges, efficacy is perhaps the most important.

“For whole-food supplements, it is usually difficult to reach an

efficacious amount of the desired nutrient,” Cornelia said. “Clearly

a synthetically manufactured vitamin C will contain a much higher

level than an acerola powder with maximum 6-percent naturally

occurring vitamin C.”

For non-GMO supplements, Cornelia said the lack of

regulations from FDA creates a challenge. “Although there is the

Non-GMO Project verified seal, [the topic] is still controversial and

will continue to be so until FDA sets standards.”

In fact, in November, FDA issued final guidance on voluntarily labeling

whether foods derive from genetically engineered (GE) plants. It encouraged

industry to avoid statements such as “GMO free,” “GE free” and “non-GMO.”

“FDA encourages food manufacturers to ensure that labeling terminology concerning the

use of modern biotechnology in the production of a food or its ingredients be accurate and

consistent and that the integrity and meaning of scientific terminology be preserved to help

ensure clear communication in food labeling,” the agency stated in the guidance. “Thus, FDA

encourages manufacturers to use labeling claims that state that a plant-derived food product


“Although there is the Non-GMO Project verified seal, the topic is still controversial and will continue to be so until FDA sets standards.”–Rikka Cornelia, product manager, BI Nutraceuticals



or its ingredients, as appropriate, was not developed using

bioengineering, genetic engineering, or modern biotechnology.”

Mann said the absence of an industry-wide definition of

clean that clearly states what it means to the manufacturer

in terms consumers can understand and act upon creates a

challenge. “Depending on the specific product and consumers,

this may result in narrow segmentation in the market, limiting

broader sales, or it could result in more consumers drawn to a

manufacturer being transparent in recognition of concerns by

their customers.”

The lack of an industry-wide definitions leads to Mann’s other

struggle: “A supply chain that can stand up to scrutiny regarding

the source of raw materials, quality, consistency, safety, etc.,

and then actually making a supplement that consistently and

safely delivers the expected benefit using a minimum of non-

active ingredients and processing.”

Avila, too, said “the biggest challenges are reliability, especially

in sourcing and testing, and upholding certification standards

to ensure that ingredients meet ‘clean’ requirements and still

satisfy consumers in terms of performance and cost.”

Challenges such as these require something different from

acerola powder versus ascorbic acid, as it calls on the integrity

of the industry.

Lastly, however, is price. “Artificial ingredients not only play

their functional role well but they do so cheaper than their

natural counterparts,” Cornelia said.

“Many clean-label ingredients are more costly than their

non-clean counterparts,” said Meghan Wahlin, business

development manager–sports nutrition, Glanbia Nutritionals.

“However, consumers are willing to pay more for clean-label food supplements—on average,

[products launched] with a clean-label claim achieve a 26-percent price premium compared to

non-clean label items, according to Innova Market Insights.”

These are good challenges to have in that they prove the conversation has started and the

industry is working toward the same goal: to create high-quality, efficacious, safe products

with a consumer-approved label.

“FDA encourages

manufacturers to use

labeling claims that state

that a plant-derived food

product or its ingredients,

as appropriate, was

not developed using

bioengineering, genetic

engineering, or modern

biotechnology.”–FDA


IN THIS ISSUE

INSIDER's Take

Clean Label Supplements p.22 Takeaways p.31 Table of Contents p.2

Consumers, especially Millennials, are increasingly demanding transparency from their health and nutrition products.

While clean label has no legal definition, it’s understood to mean simple ingredient lists with no artificial components.

Clean label offers opportunity to smaller brands that want to compete with larger companies.

What’s in a (Clean) Label? by Sunita Kumar

Brand Marketing

As we venture into the new year, it’s no surprise that clean labeling will be one of the

key discussion topics that will continue well into 2016 and beyond.

Across the board, consumers are demanding more transparency in all products they put on

or in their bodies, including food, beverages, supplements and cosmetics. No group is driving

this more than Millennials, who expect key questions to be answered by the brands they buy

and the companies they work for.

While this can be an area difficult to navigate, this trend also provides a wealth of

opportunity for existing and new players to differentiate themselves in an increasingly saturated

and competitive market, while gaining a brand loyalty foothold with a new generation of food,

and health and beauty aid (HBA) consumers.

Let’s start from the beginning.

What Does Clean Labeling Mean? In the United States, clean label is a gray area. The

more generic terms, such as natural, have no real

definition, but they are more regulated in other global

markets, such as the European Union.

Beyond regulations, clean labeling for brands in

2016 in the United States means simplifying ingredient

lists; being specific with claims; reducing artificial

ingredients used in coloring, flavoring, sweeteners

and processing; and being more transparent about

sourcing practices.

The less ambiguous and more specific labels such

as “artisan,” “local” and “all natural” no longer cut it.

Think of this as the new “green” movement from a few

years ago, which changed the industry for the better,

and is here to stay.

What Does This Mean for Brands? No matter what happens on the regulatory

front, consumers have made up their minds about

genetically modified organisms (GMOs). Whether or

No group is driving the clean label

trend more than Millennials, who

expect key questions to be answered

by the brands they buy and the

companies they work for.


not scientists agree, and whether or not consumers are eating

kale chips or ice cream, their expectation is they have the right

to know what is in their food.

Clean labeling—which goes far beyond GMO-free—was

revolutionized by key 2015 announcements: Whole Foods

Market becoming GMO-free by 2018; the announcement

of a Department of Agriculture certification program for

GMO-free labeling; and quick serve restaurants (QSRs)

such as Chipotle and Panera announcing GMO-free all

speak to rising consumer expectations.

Consumers are “regulating” the market with their wallets,

choosing what they perceive to be minimally processed foods

over claims that have more generic labels or ones that go no

further than basic FDA requirements.

In the absence of consistency with food labeling regulations,

consumers are seeking to define for themselves what

is “clean.”

Products that can speak to non-GMO, hormone-free, gluten-

free, wheat-free and dairy-free are no longer relegated to one

particular area of the store, consumer demographic pockets or

limited distribution. And consumers who may not be interested

in the price point that organics demand are still looking for

some other key specifics when they label shop.

Beyond what’s in the product itself, the trend of clean

labeling affects the positioning and brand perception of a

product. Products aiming to fill that role in the eyes of the

consumer will also be smart about packaging design, marketing materials, retail displays,

opportunities to convey “simplicity,” and communicating their story to showcase supply

chain transparency.

Products that target Millennials or more sophisticated e-commerce channels should

leverage video and mobile technology to communicate their stories.

What About Supplements?Given the depth of dialogue and news in 2015 around this area, supplements obviously

deserve their own discussion. Recent news and increased litigation in the public eye have only

accelerated consumer suspicion of a category already met with scrutiny.

The increase in e-commerce-focused and private-label supplements is driving a “race to the

bottom,” threatening to stagnate what could otherwise be positive growth in key areas such

as botanicals and probiotics.

The state of the supplement industry discussion that began in 2015 will obviously continue

well into 2016. How this plays out remains to be seen and will be a huge influence on how

clean labeling affects this segment of the industry.

Brand Marketing

Whether or not scientists

agree, and whether or not

consumers are eating kale

chips or ice cream, their

expectation is they have

the right to know what is

in their food.


Key Takeaways1 Companies that can communicate fewer ingredients on their packaging will win. This

provides opportunities and product development considerations for brands that are

nascent or just entering the market. Established players that can convey the perception

of minimal processing and clean label to consumers without expensive reformation or

repackaging will also benefit. Less is more.

2 Those with marketing or digital content about their story, origins or detailed information

around ingredient sourcing will appear more “real” and successfully meet increased

consumer expectations on supply chain visibility.

3 Brands that can do both of the above (and of course have all their other product ducks

in a row) will win the clean-label war with consumers as label regulations continue to

play out.

4 Supplements need to clean house. With players such as Walmart, Target and GNC

under scrutiny, the industry will suffer if it doesn’t review its sourcing practices.

This is an exciting time for smaller or “mission-driven” companies to leapfrog larger, more

established players with greater marketing dollars, more brand recognition and increased

distribution in the marketplace. This is a win-win for companies that are passionate about

elevating healthy product and pushing out “fake natural” players.

Larger companies looking to compete while maintaining profitability must look to reformulate

existing chemical-laden products without losing consistency and taste, acquire newer players

to stay flexible and relevant, or both.

The trend of more health-conscious consumer segments appearing has driven retail

procurement buyers to seek higher quality products. The clean-label trend will only accelerate

this trend.

2016 will be an exciting time full of challenges, evolution and movement for supplements

and health-focused consumer products. Clean labeling, if taken advantage of, represents

another opportunity to drive that growth.

Sunita Kumar is a multi-prong entrepreneur and the founder of Nourish Nutrition Inc. After spending more than

a decade at leading consumer brands and agencies launching products and campaigns for companies such as

L’Oreal, American Express, Intuit, Visa, Amazon and Sprout Organic Foods, Kumar now brings her expertise as a

scientist and marketer, along with her background in product formulation, supply chain and health-focused retail,

to companies looking for guidance on trends, ingredient formulation and advice how to optimize their retail story

to drive business growth.

Brand Marketing

The state of the supplement industry discussion that began

in 2015 will obviously continue well into 2016. How this plays

out remains to be seen and will be a huge influence on how

clean labeling affects this segment of the industry.


IN THIS ISSUE Brand Marketing p.28 Contacts p.32 Table of Contents p.2

Takeaways

Takeaways for Your BusinessCall it clean or clear label, the more ubiquitous clean label becomes, the more

it moves out of the trend spot and into the hotspot of expectation. While clean label

doesn’t have a legal—or even an industry agreed-upon—definition, it’s used to describe

products that use transparent and natural ingredients, and don’t use artificial, processed or

allergen ingredients.

“Clean—or clear label as we have decided to call it—has moved past being a trend,” said

Lu Ann Williams, director of innovation at Innova Market Insights, according to Institute of

Food Technologists (IFT) 15 News. “It is the new rule. Companies will have to do what they

can to clean up labels or be as transparent as they can going forward.”

What’s interesting about clean label, from a consumer

standpoint, is it is less driven by nutritional claims and

panels, and more by ingredient transparency and reputation.

The key, however, to this market is perspective—your

customers’, consumers’, market research firms’,

etc., perspective.

Consumers are “regulating” the market with their wallets,

choosing what they perceive to be minimally processed

foods over claims that have more generic labels or ones that

go no further than basic FDA requirements.

In the United States, clean label is a gray area. The more

generic terms, such as “natural,” have no real definition, but

they are more regulated in other global markets such as the European Union.

Beyond regulations, clean labeling for brands in 2016 in the United States means simplifying

ingredient lists; being specific with claims; reducing artificial ingredients used in coloring,

flavoring, sweeteners and processing; and being more transparent about sourcing practices.

No matter what happens on the regulatory front, consumers have made up their minds

about genetically modified organisms (GMOs). Whether or not scientists agree, and whether

or not consumers are eating kale chips or ice cream, their expectation is they have the right to

know what is in their food.

As the clean-label trend is sweeping over the food and beverage industry, supplement labels

are also getting a clean and transparent revamp. This is a big deal, as almost 18 percent of

American adults, surveyed by the Centers for Disease Control and Prevention (CDC) in 2012,

use some form of non-vitamin, non-mineral dietary supplement, with fish oil, glucosamine and

chondroitin the most popular.

But perhaps Jeff Avila, vice president of marketing, Novel Ingredients, explained it best when

he described the “rapid blurring of the lines between food and supplements. Consumers now

seek holistic wellness through food, supplements and personal care.”

From a consumer standpoint, clean label is less driven by nutritional claims and panels, and more by ingredient transparency and reputation.


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