Product formulation: keeping it natural

Consumers across the world are sending a message to manufacturers that they want natural ingredients and colours in their food and drink choices and they’re willing to pay a premium for it.

A recent report on ingredient trends by Nielsen found that 61% of consumers globally try to avoid artificial colours in their food, rising to 65% in the Asia-Pacific region. In Europe, the number of new food and beverage products with natural colourants grew by 5.6% in 2015, compared to a decline of 5.2% for artificial colours.

We find out why this trend is expected to continue, as consumers demand products formulated with natural ingredients, and ask how manufacturers are keeping pace with customer preferences.

Back to basics

Across the globe, consumers are aspiring to better health and healthier eating. The top desirable attributes in the food industry are products that are fresh, natural, and minimally processed.

A Nielsen study in 2015 found that foods with all natural ingredients and those without genetically modified organisms (GMO) are considered very important to almost half (43%) of global respondents. In addition, approximately four in ten of those surveyed said the absence of artificial colours (42%) and flavours (41%) are very important.

As the health and wellbeing trend continues, consumers are searching for healthy, simple foods with no added flavours or colours. Artificial ingredients are increasingly being viewed with scepticism, while many consumers are avoiding foods with long lists of ingredients, intent on removing the bad and adding the good.

Director of strategic health and wellness insights at Nielsen Andrew Mandzy says: “Informed and savvy consumers are demanding more from the foods they eat, and some are prioritising ingredients over brands.

“To many consumers, simple is beautiful, and foods with a short list of recognisable ingredients resonate strongly. Savvy manufacturers are responding to this trend by modifying product portfolios by simplifying food ingredient lists and creating natural and organic alternatives to existing offerings.”

Avoiding artificial

Food and beverage manufacturers are responding to this new consumer trend to prioritise ingredients over brands, as they can no longer rely on customer loyalty. As the clean label, clean food trend continues, more manufacturers are replacing chemical-based artificial colours and flavours with natural alternatives.

In February 2015, Nestlé USA committed to getting rid of artificial colours from all of its chocolate products. The company was the first major US sweet manufacturer to commit to removing artificial flavours and colours from its chocolate products, which are now identified by a ‘No Artificial Flavors or Colors’ claim on-pack.

A Nestlé USA spokesperson said: “We never compromise on taste.

“When making these changes to more than 75 recipes, maintaining the great taste and appearance consumers expect from the chocolate brands they know and love is our #1 priority.”

Nestlé has also made similar changes in the UK, as the shift towards simpler ingredients continues to gain momentum.

The natural premium

In an attempt to explore the strength of consumer demand for natural colours in the dairy industry, developer of natural, beta-carotene derived products Lycored carried out an online poll of 506 US consumers last year. The poll of health-conscious mothers who had bought flavoured milk drinks for their children aged four to 14 years old within the last three months examined their responses to the visual appearance of flavoured milks coloured red naturally, versus artificially.

The results found a powerful preference for natural over artificial colours and revealed that consumers are willing to pay significantly more for naturally coloured products. When asked ‘Would you be willing to pay more for a product with natural flavourings and colours?’, almost nine in ten of the survey respondents (88%) said they would.

Furthermore, when the respondents were told that the average flavoured milk beverage in the US costs $1.50, and asked how much they would be willing to spend on a product if it was made with natural colours and flavours, on average the response was up to $2.20, which is up to 47% more.

Reasons given for the preference over more natural looking products included a ‘feel-good factor’ from buying their children a product that looked like something they would make at home, with the naturally coloured milk samples associated with smoothies or other home-made drinks. Other feedback indicated that consumers are turning away from non-natural colours that are too vibrant. Essentially, natural looking products were associated with healthy ingredients, while artificial-looking products were associated with unhealthy ingredients.

The Lycored report concludes: “Given that artificial colours can easily be replaced with natural options without sacrificing the resilience necessary in dairy manufacture, the opportunities for producers of flavoured milks and other dairy products are clear. A switch to natural will resonate with shoppers, give products a fresher and more positive brand positioning, and enable higher pricing.”

Consumer health

This demand for natural ingredients and colours is prevalent across all food and beverage groups. For the majority of consumers, the term ‘natural’ equates with ‘healthier’, and as obesity rates around the world continue to accelerate, consumers are increasingly attempting to take charge of their health. Nielsen’s Global Health & Wellness Survey found that 88% of consumers are willing to pay more for foods with healthy attributes.

This consumer’s desire to become healthier is a growth driver for manufacturers who better align their offerings to consumer needs and desires for healthier food and beverages. This also includes natural ingredients and the absence of artificial colourants, flavourings, and additives.

Executive vice-president of global professional services at Nielson Susan Dunn explains:“There is a tremendous opportunity for food manufacturers and retailers to lead a healthy movement by providing the products and services that consumers want and need.

“While diet fads come and go over time, innovative, back-to-basics foods that taste good, are easy to prepare and provide healthful benefits will have staying power.”

The demand for clean, simple food is driving sales across the food industry. Companies must continue to make the shift towards natural flavours and colours, or lose out to brands known for less processed, healthier, and more authentic food.