Nielsen: Label transparency can boost sales

NEW YORK — A new report from Nielsen is highlighting the big role that easy-to-understand labels can play in driving product sales. The report shows that consumers want clarity from their product labels about what they contain, and that products with specific product claims are seeing dollar growth.

According to insights from Nielsen strategic partner Label Insight, 39% of consumers in the United States say they would switch from their current brand to one that provides clearer, more accurate product information, and 68% are willing to pay more for foods and beverages that don’t have ingredients they perceive as bad for them. For 53% of consumers, the exclusion of undesirable ingredients is more important than including beneficial ingredients.

This interest is taking place across categories. While food and beverage categories tend to be the ones most commonly associated with label transparency demand, sales of organic vitamins and supplements have grown 25% over last year, and sales of personal care products free of artificial fragrances that also tout a natural claim have increased 6% since last year, the report says.

Among food and beverage products, packages that say “free of additives and artificial ingredients” see an 8% dollar growth, with “all natural” claims spurring 7.8% dollar growth and products without artificial colors see nearly 6% dollar growth. However, Nielsen data has found that only 7% of products free of artificial colors advertise that fact.

“So the insight here for manufacturers and retailers is clear: Identify explicit consumer needs and then make sure their product labels appropriately publicize desirable attributes,” the report says. “That’s because today’s consumers are just as concerned about ingredients and formulations as they are about being able to understand those formulations when they’re printed on a package.”

So-called “clean-label” products — those that are free of artificial ingredients and items on the Nielsen and Label Insight undesirable ingredients list — and products without artificial colors and sweeteners have each seen 1.2% sales growth compared to a year ago, as conventional products see a 0.3% decline.

And Nielsen notes that small companies are making the most of the space opening up with the clean-label revolution. Among companies that market food and beverages that are at least free of artificial ingredients, the smallest companies are seeing 9% sales growth — outpacing the largest companies’ 5% sales growth. The largest companies also are seeing a 1.7% decline in sales for conventional products where the smallest companies are seeing 2.6% growth.

These sales gains aren’t limited to healthy food. In fact, the category that has seen the most dollar growth among clean-label products is salty snacks, followed by candy and new age beverage.

“Contrary to what you might expect, the salty snack, frozen food, cookie and candy categories are seeing marked growth with clean label products,” the report says. “Clean label ice cream, for example, drove an incremental $106 million to the ice cream category in the last year, growing dollar sales by 26.5%. This purchase behavior confirms the notion that consumers will gravitate toward products with ingredients they trust and can easily understand, even when they’re seeking an indulgence.”

Nielsen also notes that the importance of health claims varies by generation, with millennials and Generation X indexing highest in the importance of such claims as organic, GMO-free and hormone-free, as well as income level, with consumers making less than $20,000 a year noting that these are of low importance to them. The consumers making between $20,000 and $100,000 are the ones that index highest in terms of the importance of these claims.