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Ingredients Matter Most

Ingredients Matter Most

Author: Steven Barr


When The Economist shared that 25 percent of US millennials are vegan or vegetarian, it underscored a resounding truth in consumer markets: ingredients matter. Perhaps even more salient is a soon-to-be consumer markets fundamental: people align how and what they consume with their values. 

This quest for buying and consuming products in line with values is not a fad, it is a generational shift, driven by but not limited to Millennial and Gen Z consumers. Companies of all sizes are considering what this shift means for their products and how they do business. Plant-based diets are influencing food companies’ innovation strategy and investments. The cosmetic and beauty industry is focused on beauty with a conscious, meaning cruelty-free, chemical-free products and more sustainable packaging. Across CPG categories, more shelf space is being dedicated to dye-free, natural products. What else can retailers, brands and consumers expect?

New entrants and innovators welcome

With ingredients topping the list of things that matter most to consumers, innovators that lead with transparency, sustainability and traceability can enjoy an open playing field. This democratization of the shelf — both in stores and online — is made possible by the modern consumer who serves as their own authority on what is best. This consumer doesn’t need a big brand telling them about what constitutes quality or meets their needs. Consumers now create their own filter, do their own research and hand pick authorities or influencers to follow. Now, shoppers are less likely to buy the deodorant their parents used to buy or select which brand has the most shelf space at eye level. They are reading labels and expecting to understand them, or scanning QR codes to see first-hand where the ingredients came from. It's a new, critical kind of shopping mindset, and something successful brands know will take listening, insights and innovation to deliver against.

Big brands still have a strong hand to play

It’s true: consumers may not blindly follow big brands anymore. Yet, that doesn’t mean brand equity is dead. Rather, when big brands develop products that align with consumer values and recognize distinct and important generational shifts, they are nearly unbeatable. Walk into any big-box retailer to see more “free” and “simple” detergents, cleaning products, pet foods, nutrition bars — anything really. Procter & Gamble has had a high growth year with a plant-based, sustainability-focused strategy. After the initial success of its Pampers Pure line that launched last year (more to read here), a case study in the power of big brands tapping into today’s consumer preferences, the company has already launched Pure feminine products. These products may have a premium price, but today’s consumer is willing to pay for goods that stack up to their belief system. And while these goods may cost a little more, they often cost less than smaller brands with similar offerings due to big operations’ economies of scale. There is still a lot of power in a brand — it just has to produce products with the right ingredients and be transparent about it. 

How serious is consumers’ emphasis on ingredients?

Tyson Foods, one of the world’s largest meat producers, just launched a plant-based line under the Raised & Rooted brand. A meat company is making vegan and vegetarian products. Could there be a bigger shift in strategy? This is not a move Tyson Foods would have considered a few decades ago. But there has been a very real change in consumer preferences as more people consider what consuming meat means for their bodies and the planet. Tyson anticipates the brand to be a $1B business annually, and will be a serious competitor for other plant-based protein upstarts like Impossible Burger, which has been extremely successful in the foodservice category and can now be found in Michelin restaurants and White Castle alike. 

The market and consumer demands surrounding transparency and ingredients will continue to evolve, particularly when met with forces such as mobile and other technologies. When pure and simple products become table stakes, does the consumer deepen their expectations?  If yes, what does that look like? Is it more visibility at their fingertips? Is it heightened expectations for tangential product touchpoints like labor practices? That kind of scrutiny may be far in the future, but it is certain big brands and new entrants will need to keep listening and innovating to thrive.

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