US: Food companies up transparency efforts
From niche players to large enterprises such as Campbell Soup and Wal-Mart Stores, US companies are rushing to meet consumers’ increasing demand to know more about what’s in their food, where it came from, and how it was produced.
Hershey'’s new “smart labels” are putting more nutrition information on packages and eventually could showcase where it buys its ingredients. Kellogg and General Mills now feature on their websites, names and profiles of farmers who grow wheat and oats for their cereals.
Wal-Mart’s Sam’s Club unit recently began putting codes on produce packages that smartphone-wielding shoppers can scan to learn where, how and by whom the food was grown.
Driving the efforts are consumers’ heightened concerns about health and the environmental and social impact of food production, as well as regulatory and safety worries.
For large companies, it is a bid to fend off further competitive incursions from upstart brands that are winning shoppers with less-processed, simpler fare. The top 10 branded food-manufacturing companies collectively shed 4.3 percentage points of market share in the past five years, largely to small and midsize rivals, according to Rabobank analyst, Nicholas Fereday.
Smaller companies benefit from nimbleness. The Real Co, based in Valley Cottage, NY, began selling rice in the US about two years ago, with the name on the package of the Pakistani farm that produced it. The rice, from the Al-Farid farming cooperative in Punjab province, now sells in about 800 grocery stores, including Wegmans Food Markets.
Its CEO, Belal El-Banna, has expanded to offer raw cane sugar from a farm in Costa Rica and pink salt from an area in the Himalayas. Real is working on a calorie-free sweetener using ground stevia leaves, rather than extract, from Paraguay.
“With the Internet, so much information is available now. But people still don’t know where their food comes from,” and smaller players such as Real can address that information gap, he said.
Large companies are trying, too. Campbell recently launched the website,, to cultivate a homegrown image by detailing, for instance, that SpaghettiOs canned pasta is made with tomatoes mainly from California family farms and cheese that is mostly from Wisconsin.
“Consumers are measuring everything, and they are very empowered” to seek out information, said Campbell CEO Denise Morrison.
But it is a challenge for the largest companies, with complex supply chains, to balance the detail shoppers want with what the companies can deliver.
Deb Arcoleo, who leads Hershey’s transparency effort, said it might eventually use its new smart-label barcode-scanning technology to share information about the countries that grow its cocoa beans. But Hershey mixes beans from different places for its chocolate, so it can’t say a certain bag of Kisses was made with cocoa from a certain farm, Arcoleo said, adding it is unclear whether consumers want such detail anyway.
Consumers “have the right to know” where their food comes from, but it isn’t always possible or necessary to present particulars, she said.
Transparency initiatives are getting a boost from the 2011 Food Safety Modernization Act, rules on which are just being completed, because it puts more responsibility on retailers to ensure products are safe.
Software from companies such as three-year-old ReposiTrack Inc. can now log inspection and other reports at every step of a supply chain and ensure compliance with safety protocols.
“The food industry historically was based on trust. And now it is trust but verify,” said Randy Fields, chief executive of ReposiTrack......