Seal of Approval
July 1, 2007
Seal of Approval
Beverage companies use certification opportunities to stand out
The introduction of the USDA Organic seal in 2002 unleashed a flood of organic products on the market, lending credibility and legitimacy to products that previously had no regulated set of standards. The move set in motion a trend toward other “certified” products such as Fair Trade and even a renewed interest in the kosher designation.
Mintel International’s Global New Products Database reports organic beverage introductions were up 37 percent during the past year. The number of new kosher beverages shot up 154 percent, and the number of beverage introductions carrying an “ethical” claim, such as Fair Trade certified products, rose 32 percent.
The trend begs the question: Have consumers lost trust in conventional products? And why are companies relying on third-party certification and extra logos on their packages to showcase product quality or business ethics?
According to Linda Povey, vice president of strategic consulting at the Natural Marketing Institute, Harleysville, Pa., the trend is less about trust than it is about luxury. The “New Luxury” phenomenon has made high-end items available to the mass market, and NMI recently listed “Consumers are Seeking a Deeper Values Experience” as one of its Top 10 trends of 2007.
“It’s not just a question of having things,” Povey says. “We, at this point, want to feel better about what we buy … It’s kind of the next extension of consumerism.
“I’m not saying that with a jaundice eye,” she adds. “I think a lot of people have legitimate, values-driven feelings about these things — they do want a hybrid car and they do want to be energy conscious, they do want to understand the source of the food they’re eating and they want to buy local or Fair Trade. But I think it’s coming at a time when ‘quicker, better, faster’ is just not enough. A values-driven experience is the next level.”
NMI research has shown consumers are willing to pay up to 20 percent more for values-driven products. As far as beverages are concerned, the trend has included limited-batch, out-of-the mainstream offerings, and is about “being able to discover, support and align with a brand,” Povey says. “The consumer is very interested in almost a customized, personalized, made-for-me type of execution.”
According to the NMI, sales of organic products were up 19 percent in 2006, to slightly more than $15 million.
The USDA Organic seal established organics as a viable category, and recent reports suggest the retail end of the organic market might become as important as the product side of the business. A number of regional food retailers are considering certification standards similar to the ones used by organic product manufacturers to assure customers that organic products are handled and stored separately from conventional products.
Hannaford Bros. Co., a retailer based in Scarborough, Maine, partnered with Quality Assurance International, the same organization that certifies food and beverage products, to gain certification for its stores. The company operates stores in Maine, New York, Massachusetts, New Hampshire and Vermont, and is following in the footsteps of other regional retailers such as Lund Food Holdings, which has stores in the Minneapolis/St. Paul market. The distinction could make it easier for organic products to launch in mainstream retail locations. To date, most organic products have found their base in the natural foods channel and expanded from there.
Teas were the leading group of beverages to carry an organic symbol during the past year, according to Mintel, followed by juices and coffee. One of the reasons for the interest in organic tea, says Clayton Christopher, founder of Sweet Leaf Tea, Austin, Texas, is that tea undergoes very little processing between the field and the cup, meaning whatever is on the tea leaf winds up in the cup. That realization led his company to make the transition to organic.
“Tea leaves, the first time they ever get washed after they are hand-picked is when you put them in a cup of hot water,” he says. “It was like, ‘Wow, this is more important that tea be organic than any other product out there.”
The growing number of organic products have the potential to put a strain on raw materials, but Christopher says the company has not run into problems sourcing ingredients such as organic sugar and tea. A more important concern, he says, is making sure product quality is not sacrificed in the push for organic.
“We still have two flavors that aren’t organic yet,” he says. “If we have to compromise the quality of our product — the taste of it — significantly, we would not go organic.”
In many cases, the organic ingredients have resulted in a better-tasting product, Christopher says. “I feel now, especially our flagship Sweet Tea is a better-tasting product than we had before.”
But, he warns, the exploding popularity of organic has caused some companies to put more emphasis on organic than good product development, which could create a backlash against the category and the USDA Organic seal in general.
“I think that we, as the drivers of the organic economy, really need to focus intensely on flavor and taste because that’s what’s going to bring the consumer back — not price, not packaging — flavor is always going to bring the consumer back again and again.
“We’ve gone through an intense process of converting our line over to organic and we have a line now that tastes as good, if not better, than it did before. I know that every other brand out there could do that.”
Kosher products probably were the first group of foods to be certified, and while they carry a religious component that organic and Fair Trade products do not, kosher is growing outside of its traditional consumer base.
“Kosher is hot,” says Rabbi Eliyahu Safran, vice president of communications and marketing at the Orthodox Union, based in New York City. “The kosher market has been growing by leaps and bounds in the last decade, and continues to do so as companies around the world seek OU certification to enable their products to enter the ever-growing kosher marketplace.”
According to the OU, kosher products represent $150 billion worth of sales annually. In addition to their traditional Jewish audience, the OUsays kosher products are popular with other religions that have dietary restrictions as well as vegetarians and consumers with health concerns.
Like organic products, coffee and tea lead the list of products carrying kosher certification, followed by drink mixes and juices, reports Mintel. The growth in the organic market actually has led to a number of companies that feature both organic and kosher certification.
The OU reported in its spring issue of Behind the Union Symbol, “The organic companies’ rigorous adherence to government regulations, which includes a National List of Allowed and Prohibited Substances and meticulous record-keeping, makes kosher supervision a natural addition.”
With organic products, maintaining a paper trail to ensure all ingredients are certified is one of the most important steps for a beverage company. For kosher products, the challenges lie in manufacturing. Plant equipment must be “kosherized,” usually through the use of a supervised clean-in-place system, before kosher products can be run.
Another group of products on the rise, thanks to the interest in organics, is “ethical products” such as Fair Trade certified or Rainforest Alliance. Coffee is the leading group of products to carry an “ethical” claim, followed by tea and ready-to-drink tea, according to Mintel. Fair Trade products are not required to be organic, but Mintel reports that 85 percent of Fair Trade certified coffees also carry organic certification.
Fair Trade products in the United States are certified by Transfair USA. Anthony Marek, spokesman for the group, describes Fair Trade as a “global farmers market.”
“Just as we’ve seen the rise in local farmers markets, I think the reason [Fair Trade has] grown is that we, as human beings, are very relationship-driven animals,” he says. “We can meet and talk to the people that grow our food.
“In a global economy where a lot of the products are not grown locally — like coffee, cocoa and tea — we’re able then through our third-party, independent certification system and the transparency that’s involved in that, certify those growers and make sure there’s economic empowerment, social justice and sustainability, and bring those products directly to the American consumer.”
The Natural Marketing Institute’s Povey says Fair Trade carries the same type of luxury positioning as organic products. “It also has that luxury, exclusivity component to it — ‘There’s a real story of real people doing something that’s meaningful to me and I’m willing to pay a premium for that,’” she says.
“There’s been this fusion between values and consumerism,” she says. “We don’t just go to charities … we also want, on a daily basis, to show that we’re being proactive — ‘prosumers’ is a word I like to use — with our dollars.”
Tenants of Fair Trade include fair prices, labor conditions, direct trade, transparent organizations, community development and environmental sustainability that prohibits many chemicals and genetically modified organisms.
Companies such as Starbucks display Fair Trade symbols on their products, and Whole Foods recently partnered with the organization on the Whole Trade Guarantee, a buying program for products from developing countries.
Tea company Numi Organic Tea soon will feature certification through a new set of standards announced this spring, which are intended to guarantee socially responsible business practices. The Fair Labor Practices and Community Benefits standards were created by Scientific Certification Systems, Quality Assurance International, the International Labor Rights Fund and NSF International.
Requirements for certification address such issues as employment practices, wages, collective bargaining, vacation and sick leave, child labor, occupational health and safety and community standards. The group filed its certification standards with the American National Standards Institute (ANSI).
Unlike Fair Trade, the Fair Labor Practices and Community Benefits program will require products to be organic for certification. It also allows any grower or supplier to become certified.
“The benefit for manufacturers is that you’re working from the ground up,” says Reem Rahim, vice president of marketing at Numi. “For example, if you choose to purchase organic goods, you’re going to go and make sure that that farm is organically certified. If not, you can create the initiative with the farm to say, ‘We’re only going to purchase from you if you transition to being an organic farm.’ Then you send certifiers to certify against it.
“The same would apply within the Fair Labor standard. You would say, ‘I really only want to work with you if you apply these standards.’ So you’re not limited in terms of who you’re working with.”
Rahim says the new program allows companies to have a direct impact on the supplier. “Rather than giving the money to a third party, you can give it directly back to the farm,” she says.
And the newly developed standard also is unique in that it can be used for ingredients purchased from U.S. growers as well as international growers, and can be applied to non-food items such as packaging. Numi, for example, will use the standards for its bamboo growers in addition to ingredients.
Rahim says the new program would not preclude existing certification. Her own company, for example, plans to maintain Fair Trade status on many products in addition to the new certification.
But she says the most important element of the program is that it creates one national standard in the way the USDA Organic program established a single set of rules for organics.
“The main thing is that it’s ANSI approved,” Rahim says. “It’s a national, consensus-based standard that can apply to any agricultural product, both local and imported.”