Importance Of Traceability Of Ingredients To Consumers

Part
01
of three
Part
01

Importance Of Traceability Of Ingredients To Consumers

Our analysis of the demand for transparency across millennials, Gen X, and baby boomers shows that traceability is most important to millennials, then Gen X, and lastly, baby boomers. Traceability of food ingredients helps consumers to know the food products and brands to trust.

INSIGHTS AND STATISTICS SURROUNDING THE IMPORTANCE OF TRACEABILITY OF FOOD INGREDIENTS TO CONSUMERS

  • Consumers are becoming increasingly interested in knowing how their foods are produced. Their primary concerns include the ingredients used and where they come from, whether they are organic and non-genetically modified (GMO), and if the ingredients used were sourced responsibly.
  • According to Deloitte's 2015 Consumer Food Value Equation survey, consumers' definition of safety has been adjusted to include health, wellness, and transparency, as well as "free from harmful ingredients (62%), clear and accurate labeling (51%), and fewer ingredients, processing, and nothing artificial (42%)."
  • According to another study, consumers chose locally sourced products (48%) and environmental responsibility (39%) as reasons for selecting a food retailer.
  • As such, manufacturers are amplifying their traceability technologies and capabilities to provide consumers with a better understanding of how their foods are produced, as well as to drive transparency.
  • The increasing demand for traceability is driven by consumers' increased attention towards corporate social responsibility. "Around 42% of North American consumers say they are willing to pay more for products and services from companies committed to positive social and environmental practices."
  • According to a report from Label Insight and Food Marketing Institute (FMI), consumers are more likely to exhibit loyalty to products that share more information. The report found that "shoppers increasingly demand transparency and a closer connection to their food, so much so that 75% are more likely to switch to a brand that provides more in-depth product information, beyond what is provided on the physical label."

IMPORTANCE OF TRACEABILITY BY GENERATION

  • A study by Pew Research Center revealed the level of trust that different generations exhibit. According to the study, 19% of millennials say people can be trusted, compared to 31% of Gen X and 40% of baby boomers.
  • This attitude could also be transferred to their perception of brands, thus indicating the importance of traceability of food products to improve transparency and trust for food brands across these generations. From this analysis, millennials can be assumed to be more demanding of ingredients traceability for the food that they consume, followed by Gen X and baby boomers.
  • Research shows that millennials "value companies who display allergen information, certifications and claims, explanations of ingredient usage information, and other details such as animal welfare, fair trade, and labor practices." On the other hand, Gen X and baby boomers focus more solely on information that is provided on the product such as a list of ingredients, their description, and nutritional information.
  • Millennials are more conscious of health, exercise, and quality foods than Gen X and baby boomers, and have shown that they are willing to pay more for foods from premium brands to guarantee that they are eating healthy and that the ingredients of food products are sourced ethically. This data also indicates a more pressing need for traceability of ingredients to millennials than other generations before them.

REASONS WHY TRACEABILITY IS IMPORTANT TO CONSUMERS

  • Traceability is important to consumers for numerous reasons, including the desire for more healthy, nutritious, and fresh foods.
  • Also, there is a growing affinity towards social and environmental responsibility which includes the "desire to support local and regional growers and learn about family farms as wells as food supply concerns such as food safety, the non-GMO label movement, humane animal treatment, and the interest in environmentally friendly practices."
  • Traceability also helps consumers to know which food brands to trust.

RESEARCH STRATEGY

After searching extensively for data regarding the importance of traceability across different generations from survey reports provided by Nielsen and Deloitte, among others, we were unable to find hard statistics for the same. However, we came across a report provided the levels of trust for millennials, Gen X, and baby boomers. The source also related its findings to their trust of brands. As such, we built on this information, using other research findings to establish that traceability is most important to millennials. We assumed that, since traceability promotes transparency, and transparency breeds trust, then the generation with the highest level of mistrust would be most impacted by traceability.

Most data regarding traceability was provided from surveys conducted in time frames that are older than Wonder's standard two-year timeline for sourced reports. As such, we utilized some old reports in computing our findings. However, the oldest report utilized was in 2014, and it only provided reasons why traceability is important to consumers. Apart from that, we used two reports from 2016. We assumed that each generation considered, as well as their trends would not have changed significantly within five years. Also, recent reports which we used provided similar data.
Part
02
of three
Part
02

Traceability - Consumer Familiarity With The Term

Most consumers view safety, food quality, and traceability as interlinked concepts, but they seldom use the term traceability. They use the terms "what is in my food", "is it good/bad for me" and "where does my food come from" more often than any other.

WHY HAS TRACEABILITY BECOME IMPORTANT?

  • The International Food Information Council (IFIC) Foundation says that consumers crave a deeper understanding of the origins of their food.
  • "Americans have a growing appetite for more information about their food, and technology is enabling eaters like never before," said Joseph Clayton, C.E.O. of the IFIC Foundation. "It's also driving transparency across the food supply chain."
  • Safety is one concern of consumers. The safety of the current food supply has not changed, but the ability to detect contamination in food and determine its source has improved dramatically. Hence, an increase in reported outbreaks and recalls has increased the concern for traceability.
  • Climate change concerns are also driving the need for traceability. Food research organizations have recently released studies that say "food systems are responsible for 25% of global greenhouse gas emissions, 70% of freshwater withdrawals, and 60%–70% of biodiversity loss." While consumers are concerned, they don't understand the actions needed to reduce this environmental impact, and therefore don't know how to select food items except to "buy local."
  • Consumers want to know where their food originated; that it is accurately labeled (approximately 33% of seafood in the U.S. is mislabeled); and that it meets health and nutrition goals (is the food antibiotic-free?).

WHAT DOES THIS MEAN TO SHOPPERS?

  • Ingredients and More: Consumers believe that a complete easy-to-read, plain English list of ingredients and nutritional ingredients means the manufacturer is being transparent. About one-third of customers also want information on allergens, how products are produced, and how ingredients are sourced.
  • Beyond Package Information: A large majority of shoppers want additional information above and beyond what is mandated. Most know to look for it on websites or apps.
  • Smartphones: More than 75% of shoppers surveyed said they would use a smartphone to find more information before they bought a product. More than a third said it was very likely.
  • Sustainability: When asked if it was important that the food they purchase is produced sustainably, 60% said yes, which is an increase of 50% in one year.
  • Artificial Ingredients: 70% of consumers would give up a familiar favorite product and replace it with one that did not contain artificial ingredients.

WHO USES THE TERM TRACEABILITY?

DO CONSUMERS UNDERSTAND THE TERM?

  • But how to find out if consumers know the term? When designing a research survey, one of the first tasks for professional research organizations is to ensure the survey uses language with which the consumer is familiar.
  • Therefore, one of the best methods to determine a consumer's familiarity with a term is to look through recent surveys and see which terms the experts in research use when communicating with consumers on this topic.

TERMS CONSUMERS UNDERSTAND AND USE

LEK CONSULTANTS
  • In 2018, L.E.K. Consultants completed a consumer food and beverage survey of nearly 1,600 consumers. The results showed that consumers want health claims made by their products' packaging to be more nuanced and convey specific attributes.
  • When asked what they were looking for, 62% said they wanted to recognize the ingredients listed on the package, 55% want to know where the food is coming from and 48% wanted to understand how the food is produced.
SULLIVAN HIGDON
  • In a survey conducted by Sullivan Higdon & Sink Advertising and Marketing, 69% of consumers reported "that they think it's important to know how their food was produced."
  • 67% want "more information on meat packaging".
  • 60% want to know if "the animal was given growth hormones."
  • 42% want to know "what medicine the animal was given during its lifetime."
  • 34% want to know "what the animal's living conditions were like."
  • 34% want to know "where the animal was raised."
FOOD MARKETING INSTITUTE
  • A survey by the Food Marketing Institute reported consumers perceptions of words describing food.
  • Organic is a term consumers say they completely understand or know (44%) while 56% don't fully understand what it means if food is organic.
  • Consumers are even less likely to what is meant when a product is described as natural (37 %) or healthy (36%).
  • Consumers (18%) are least likely to understand what is meant that a product has a clean label. In fact, 51% of shoppers say that they do not understand what is meant by clean label.
GLOBAL FOOD TRACEABILITY CENTER
  • Another survey by the Global Food Traceability Center provided the following definition to transparency "providing detailed information, such as for what is in food items, and how it is made."
  • The term traceability was not mentioned in the survey, despite the name of the organization.


Part
03
of three
Part
03

Traceability Of Ingredients To Consumers - Reasons We Need It

The reasons why traceability is needed for food ingredients is because it makes food safer, it enables food manufacturers to track the location of food products, it helps customers validate claims, it helps fight against food fraud, and it reduces production costs. These reasons are discussed in more detail below.

IT MAKES FOOD SAFER

FOOD MANUFACTURERS CAN TRACK LOCATION OF FOOD PRODUCTS

HELPS CUSTOMERS VALIDATE CLAIMS

  • Description:
    • Food manufacturers target a growing demographic of customers with claims such as "non-GMO", "organic", and "natural". Traceability helps customers validate these claims.
  • Why it's important:
    • Americans are increasingly looking at foods that are branded as 'organic' or 'natural'. 29% of shoppers in 2018 said they looked for foods that were labeled 'organic', which is an increase from 25% in 2017. 66% of Canadians spend money on organic items weekly. Of the Canadian people that do buy organic, 76% spend their money on fruits and vegetables and 28% spend their money on poultry. This increase shows the growing importance of these labels.
    • Traceability is important in this case because it helps customers validate the claims that the ingredients that their food is made from are organic or natural. This helps build trust in the brand. Around half of Canadians trust labels such as "Local" and "Organic" on their food.
    • It also helps customers who avoid certain products to have peace of mind. For instance, a customer who has celiac disease can rest assured that the ingredients used to make the bread they are buying are gluten-free with a traceable history.

HELPS FIGHT AGAINST FOOD FRAUD

  • Description:
    • A lot of food ingredients come from global commodities which can be difficult to trace because they are usually handled in bulk. Sometimes food compounds or food ingredients are mixed with something else that is not wanted or anticipated. Traceability helps against food fraud scandals.
  • Why it's important:

IT REDUCES PRODUCTION COSTS

  • Description:
  • Why it's important:
    • Increased traceability will lower the risk of product recalls, which can increase production costs.
    • It decreases error rates and increases product selection accuracy, which reduces time spent on inventory management and in turn reduces costs.
    • Traceability reduces shrinkage and maximizes the number of ingredients that can be used to make the final product. Shrinkage is defined as the amount of food available compared to the amount of food that can be used. If shrinkage is not handled, the manufacturer will have to buy more ingredients, which increases costs.

BLOCKCHAIN AND TRACEABILITY

  • Blockchain is a distributed ledger that contains records of transactions that are continuously verified by each node on the chain. This technology nullifies the need for a middleman or a trusted third-party for processing, as processing and verifications are done by each node on the chain. This has worked well so far for currency, and now it's being implemented in agriculture.
  • Blockchain gives individuals and manufacturers the ability to trace the life cycle of food products from the point of origin via intermediaries and to the consumer. With blockchain, consumers can just scan a QR code on the food and they'll be able to instantly see the journey of the food in question.
    • One example of this can be seen with beverage in Canada. A group of Canadian companies recently released Bock Chain, a beer that is based on transparency and where its background can be traced. It provides consumers transparency in how the beverage was made, including how the barley was reaped. It shows a timelapse of the barley growing on the farm.
    • This initiative is expected to spur more similar food traceability projects in Canada.
  • As global supply chains grow, people are getting more concerned about the safety of the food they eat. With blockchain, food regulators and inspectors can pinpoint the source of contamination quickly and efficiently. This beats the old way of doing things because finding the source of contamination quickly will prevent any outbreaks from happening.
  • Blockchain enables greater fraud detection, which in turn increases brand credibility with the consumer.
  • It helps manufacturers know that the compounds and food they are getting from suppliers are actually what they say they are. It gets rid of the need for manually vetting each supplier and having expensive third-party testing.

RESEARCH STRATEGY

To find why traceability for food ingredients is important, we first looked for a pre-compiled list of these reasons. However, most of the pre-compiled lists we were finding were based on the importance of traceability for food on a whole, and not specifically ingredients. Realizing this, we used some points that we found that we believed could apply for food ingredients, such as food safety, and looked specifically for the importance that traceability plays in food ingredients. We found numerous articles from trusted sources such as Food Insight, Food Business, and Food Safety Magazine. We knew we could trust our sources because they were heavily involved in the food industry either through the products or services that they sell or through their influence in the field. It was found that many of these articles spoke in B2B terms, meaning traceability among food ingredients seemed to be more of a concern among food processors and manufacturers compare to the consumer. With this in mind, we were able to find three more benefits for traceability apart from the ones we found about food safety and consumers' ability to validate claims. Articles specifically about ingredients mentioned these two benefits, so even though they were derived from sources that spoke about benefits for food on a whole, these points also apply to ingredients.

In our search, we decided to use one source from 2015. We decided to use it because it contained a lot of information about the benefits of traceability, and had a lot of information in one place that was spoken in pieces in other sources. Many of the points raised in that source are corroborated by the newer sources we used in this request. Also, it's Food Safety Magazine, which is an expert source in this field. Also, many of the points discussed were derived from American sites, however, the push for food traceability is a global drive, and many of the reasons for this applies to Canada too.
Sources
Sources

From Part 03