The record of food safety in the U.S. is very high. The combination of FSMA regulations and diligent professionals implementing industry best practices mean that food contamination outbreaks are rare. And yet they still happen, and due to the interconnected nature of the food supply chain the impact can be high.
In response, FDA announced its New Era of Food safety and is putting pressure on the food industry to improve safety in the food supply chain. And in a few weeks the food industry will be meeting at the GFSI Conference in Seattle.
For CPG brand owners food safety is key to their business and we can expect they will have a high focus on this. But what about grocery retailers and their private brands? They have all the same legal and brand exposure as CPG companies but they don’t directly control the ingredients and processing of their private brand products. What steps can they take today to make food safety simple?
In this blog series, we’ll explore this question and propose a way forward based on our experience working with the world’s leading private brand owners and our Oracle Retail Brand Compliance solution.
Over the past five years, the dollar volume of private label within the mass retail channel has grown more than 41%, from $43.1 billion in 2013 to $60.8 billion in 2018, far outpacing national brands’ 7.4% growth in the same period.
The evidence is clear – consumers like and increasingly prefer private brands. Research by Daymon, a private brands solution provider, shows 53% of consumers shop at a store specifically for its private brand. Perhaps of even greater importance, 74% of shoppers claim that these retailers offer unique products that they can’t get anywhere else.
So how can grocery retailers maintain their private brand success, while ensuring food safety? We’ve identified three priorities.
According to FMI, transparency is valued by consumers. Almost all consumers (93%) say it’s important for brands to provide detailed information about ingredients. In addition, most consumers would switch to a brand that provides more information, beyond what is on the label.
Consumers increasingly want to eat healthy food made from natural ingredients and free from additives. Brands can profit from this by designing products that meet these goals, capturing extra market share. In some cases however the need is more serious. For example, peanut allergies in children in the U.S. increased 21% between 2010 and 2017, and over 170 foods—including common ingredients like milk, eggs, soy, nuts and wheat—are known allergens, forcing consumers to be more thoughtful in their consumption for their own health and safety. Accurate labeling is clearly more critical now than ever before.
Consumers, rightly, have a high expectation that the food they purchase is safe to eat. The vast majority of the time this is true and yet in just over a year we’ve experienced two major outbreaks of E. coli infections tied to consumption of romaine lettuce. The first of these, which made people sick in multiple U.S. states and Canadian provinces, essentially emptied all store shelves of romaine lettuce right before Thanksgiving. Just over a year later we had a similar outbreak which the FDA has only just declared to be over.
Unfortunately these events are just the tip of the iceberg. According to the CDC, food contamination sickened 48 million people, hospitalized 128,000 and caused 3,000 deaths. Put in these terms, there is still progress to be made in food safety. As we’ll see in part 2 of this series, the responsibility for food safety falls on the shoulders of brand owners - the grocery retailers in the case of private brands.
Safe food starts with the ingredients and the workers that harvest them. According to Fair Trade USA consumers are 79% more likely to purchase a product with an ethical seal. Already consumers attribute 23% of their grocery spending to Fair Trade products, leading brands to report double-digit sales increases. It’s clear that consumers care about issues like sustainable farming, ethical working practices and fair payments for farmers and workers.
Consumers also care about excess packaging and are increasingly looking for alternatives to traditional approaches that end up in land-fill. Spearheading change is the Sustainable Packaging Coalition which is bringing together businesses, educational institutions, and government agencies to collectively strengthen and advance the business case for more sustainable packaging. But there are many challenges to be overcome. Not only are sustainable packaging options typically more expensive but they often don’t do the job as well as plastic alternatives, leading to food contamination and spoilage concerns.
Despite this Walmart recently revealed its plans to reduce plastic waste by improving the sustainability of its private brand product packaging, with a mission to achieve 100% recyclable, reusable or industrially compostable packaging by 2025. The company said aims to label 100% of food and consumable private brand packaging with a How2Recycle label by 2022, which is designed to clearly communicate recycling instructions to the public. The initiative is expected to impact more than 30,000 SKUs.
Watch for part 2 of this series, where we’ll look at private brand food safety and sustainability from the grocery retailers’ point of view – the upside and the challenges.