By Dagan Xavier, Co-Founder & Senior Vice President of Data at Label Insight
On May 20, 2016, the FDA announced a new, improved Nutrition Facts label for packaged foods in order to make it easier for consumers to make more informed food and beverage choices. The revised Nutrition Facts label will retain its iconic look but includes larger type size to emphasize “calories,” “servings per container” and “serving size” and will reflect updated information about nutrition science.
During FDA Commissioner Scott Gottlieb’s keynote address at the National Food Policy Conference, he reinforced the Agency’s commitment to greater transparency in the food industry. Gottlieb recognized consumers’ desire for labels with fewer ingredients that are easier to understand and noted the importance of using simpler names for certain ingredients (for example, “vitamin B12” for “cyanocobalamin”) to help people better understand what is in their food.
The FDA believes that changes to labeling, like adopting the new label format, will provide consumers with the information they need to make informed decisions about their nutrition and will provide a step forward in improving Americans’ health. Gottlieb shared that research and facts will remain at the core of the FDA’s strategy: “Clear science-based information is a central pillar to the work we do today at FDA, and it’s also a driving factor to better consumer choices.”
Earlier this month, the FDA issued a final rule to extend the compliance dates for updating Nutrition Facts and Supplement Facts labels from July 26, 2018, to January 1, 2020, for manufacturers with $10 million or more in annual food sales. Manufacturers with less than $10 million in annual food sales will receive an extra year to comply – until January 1, 2021.
CPG Brands Aren’t Waiting; Rising Adoption of Nutrition Facts Labels
Making the transition to comply with the FDA’s guidance for the new Nutrition Facts label includes some complex changes, like recalculating serving sizes, switching to a standardized size for the package, taking into account new measurements, such as the amount of added sugars and including dietary fibers.
But savvy manufacturers have already released products with the new Nutrition Facts label well before the initial deadline. Since the announcement of new label in Q3 2016, there has been consistent growth in the adoption of the new Nutrition Facts panel. According to Label Insight’s database, in Q4 2016, 795 products adopted the Nutrition Facts label. Since then, the amount of products implementing the new label has grown exponentially to more than 30,000 products — over 3,000 percent — as of April 2018.
Why More Label Conversion is Taking Place in Certain Grocery Aisles
The Nutrition Facts label is one of the first places most consumers turn to when looking for information about the food and beverages they purchase. The new label is reflective of scientific research that has evolved during the last 27 years, therefore changing how the FDA — and the industry at large — views a “healthy diet.” Serving sizes have been recalculated to represent how much average consumers eat. Now, labels for items like bottled juice will reflect the entire package as a serving size, not break it up into several servings, to avoid consumer confusion.
One of the most notable changes to the Nutritional Facts label is the addition of “added sugars” in grams and as a percentage of recommended Daily Value. According to Label Insight data, at the end of April 2018 more than 30,000 products listed the amount of added sugars within the Nutrition Facts. Surprisingly, Label Insight’s database revealed that items in the “Snacks, Cookies & Candy” aisle had the largest number of products sporting the new label (17 percent of new label conversions). Manufacturers might be doing reformulations to reduce their added sugars amounts, or perhaps brands with lower amounts of sugar are using the data as a differentiator.
Products in the dairy aisle had the second highest label conversion rate (approximately 10 percent of new label conversions). This could be attributed to the concept of shelf life. Products in the dairy category with a smaller or shorter shelf life may be more conducive to package changes or package updates.
Private label brands have quickly adopted the new product labels to increase transparency with their customers. Label Insight took a sample from the total number of products with the new label to analyze the break down between Private Labels and Name Brands that have made the conversion to the new Nutrition Facts Panel. While there was a lower percentage of Private Label brands that made the conversion to the new label, Private Label brands have switched a higher number of individual products over to the new label than Name Brands. More than 80 percent of products with the new Nutrition Facts Panel were Private Label. Private label brands have clearly taken advantage of product packaging to address consumer questions at the product level.
The Future of Product Transparency
Brands adopting the updated Nutrition Facts Panel prior to the mandatory compliance date are taking a key step in providing shoppers with the information they’re looking for. Research shows that transparency builds trust; Label Insight’s 2016 Transparency ROI study revealed that 94 percent of respondents are likely to be more loyal to a brand that offers complete transparency. And 39 percent would switch to a new brand if offered full product transparency.
Not only will this move help secure customer trust and loyalty, but it could also present a competitive opportunity for the right brand. For example, a brand making ‘healthier’ ice cream or yogurt can show that they only use a small amount of added sugar in the product packaging compared to other brands that include a considerably larger amount of sugar. Shoppers who are following a low-sugar diet might choose that brand instead and therefore become a loyal fan. Ultimately, brands that adopt the updated Nutrition Facts panel are demonstrating a commitment to transparency and demonstrating that commitment to consumers.