Consumer demand for product transparency has skyrocketed during the past few years, driven largely by interest in better-for-you ingredients and a fear of artificial additives. But as food and beverage manufacturers scramble to add more label claims to their product packaging, it has resulted in one unexpected problem: Shopper confusion.
According to data from Label Insight, 67% of consumers find it challenging to understand if a product meets their needs just by looking at a package. Nearly half claim they aren’t informed after reading a product label.
Some industry groups argue there isn’t enough space on packaging to list all the brand attributes that are important for today’s consumers, such as ingredient sourcing and animal welfare. Others claim on-package labels can be misleading because they lack necessary context and nuance.
These challenges have prompted a growing number of trade groups, manufacturers and consumer advocates to tout electronic disclosure using QR codes, smart phone image recognition or online search as the future of product labeling.
"If all of the potential information that consumers wanted was on the label, [it] would be very, very cluttered," Greg Jaffe, director of biotechnology at the Center for Science in the Public Interest, told Food Dive. "One of the advantages of electronic disclosure is it allows a lot of different [types of] information to be disclosed."
The Grocery Manufacturers Association’s SmartLabel Initiative is perhaps the best-known example of this disclosure strategy. Since the program launched almost two years ago, 37 companies, 433 brands and 14,670 products have adopted its technology to give consumers a more complete look at what’s inside some of the items found on grocery store shelves.
The case for digital disclosure
Patrick Moorhead, chief marketing officer of Label Insight, a product data company, believes SmartLabel is successful because it caters to an established, fast-growing consumer purchasing behavior.
“Seventy-four percent of consumers that we surveyed told us they turned to technology, whether it’s their phone or their tablet or their PC, to go online to try to research information about a product that’s not clear to them from the packaging itself,” he told Food Dive. “SmartLabel is a bulls-eye for meeting that need.”
Not everyone agrees. Some vocal consumer groups and public health advocates argue SmartLabel, and it’s use of QR codes as a disclosure method, discriminates against shoppers who don’t have smartphones to scan items during their grocery trips.
"We see QR codes as a supplement but not a replacement for on-package labeling. ... It's critical that information remain on the package," Rebecca Spector, West Coast director for the Center for Food Safety, told Food Dive in an email. "About half of the population of low-income people, [and] people that live in rural areas, actually have access to smartphones."
Others argue a lack of Wi-Fi in most supermarkets poses another obstacle.
Moorhead pushed against this, arguing that Wi-Fi is not a critical precursor to QR code engagement.
“The lack of Wi-Fi presence in most grocery retail chains today isn’t stopping consumers from pulling out their phones in every aisle and typing in product names, ingredients and other information to answer fundamental questions."
Patrick Moorhead
Chief Marketing Officer, Label Insight
“I think the QR code debate around SmartLabel is a bit of a red herring,” he said. “The lack of Wi-Fi presence in most grocery retail chains today isn’t stopping consumers from pulling out their phones in every aisle and typing in product names, ingredients and other information to answer fundamental questions like ‘Does this product contain harmful ingredients that will trigger my son’s allergy? Do I agree with the ethical and sustainability practices of this company?' ”
Moorhead concedes the reason QR codes have yet to reach a tipping point with consumers is because many people don’t know how to use them.
Consumer confusion over QR codes
A mandated study released by the U.S. Department of Agriculture in August confirms this, finding that many shoppers weren’t aware QR codes on food packages could contain information useful to their needs. Consumers also were confused about which scanner app to use, and complained that some had unclear instructions.
Roger Lowe, senior vice president of communication at GMA, told Food Dive he was not surprised by the study’s findings.
“People don’t know that you can scan a QR code to get detailed food information because, until recently, you couldn’t,” he said. “Many people see [QR codes] as marketing tools, because that’s what they’ve been. … Consumers [aren’t going to] intuitively know to do that.”
Lowe said he takes heart in the report’s conclusion suggesting that with education, consumers will be able to utilize their smartphones to engage with QR code technology to learn more about products.
Lowe said once SmartLabel implementation reaches "critical mass" in the marketplace, broader marketing and promotion of the program will begin, which will further bolster consumer familiarity with QR codes. GMA expects that threshold to be reached in 2018.
“As we move more and more toward a digital world, consumers are likely to go find their information online, and SmartLabel is a great way for consumers to read about and understand the transparency of a specific product."
Andrew Mandzy
Director of strategic health and wellness Insights, Nielsen
Still, QR code confusion hasn’t kept consumers from engaging with SmartLabel. According to GMA, brands with live QR codes only capture 20-30% of SmartLabel visits through this digital gateway, while 70-80% of the visits come from online search to reach the SmartLabel webiste.
This behavior is consistent with broader consumer trends, according to Andrew Mandzy, director of strategic health and wellness insights at Nielsen. He said 68% of consumers went online to find health-related information in 2016, up from 48% two years earlier.
“As we move more and more toward a digital world, consumers are likely to go find their information online, and SmartLabel is a great way for consumers to read about and understand the transparency of a specific product,” he said.
SmartLabel as a tool for storytelling
SmartLabel also offers benefits for brands beyond increased consumer trust, though this dynamic holds more power in the food and beverage space than ever before.
“Voluntarily derived, implicit information is hard to find," Moorhead said. “It’s not available, and if it is can you trust the source? Can you trust (a non-governmental organization) that might have a political agenda in providing that information? Can you trust a blogger who has taken it upon themselves to explain the characters of a particular ingredient?”
SmartLabel provides brands with a landing page that houses “required” and “voluntary” product attributes, all of which are bound by the same accuracy requirements as printed labels. This information is subject to oversight by federal agencies with authority over labeling, marketing and advertising of consumer products, most notably the U.S. Food and Drug Administration, Federal Trade Commission and the USDA.
Moorhead said the real power of SmartLabel lies in voluntarily disclosed product attributes, which are housed under the “Other Information” tab on a brand’s SmartLabel landing page.
“It’s a mistake to create a SmartLabel page that simply replicates the information from physical packaging,” he said. “Best-in-class SmartLabel execution is going to meet the consumer's need for information … [about] product attributes like sustainability, animal welfare, ingredient origins or methods of production and other ‘high-order’ attributes.”
This detailed disclosure could help increase sales for a brand by differentiating the product from other category competitors. According to Label Insight, almost 40% of consumers surveyed said they would switch from their preferred brand to ones that provided more complete and accurate information. The report also found 73% would pay more for these products.
Mandzy noted this kind of electronic disclosure can also lead to free, consumer-driven advertising.
“Consumers are also sharing [product] information and influencing other people around them to purchase products,” he said. “The brands that can be at those touch points with consumers, give them the right information and find the right influencers, will really prosper in an environment where transparency and what’s in the product matters a lot more.”
GMO compliance
With SmartLabel, food and beverage brands can prepare for GMO labeling requirements passed by Congress and signed into law in July 2016. The USDA has until 2018 to figure out the details, but law requires brands to disclose GMO information either through text on a package, a symbol on a package, or through a digital link such as SmartLabel.
Moorhead believes SmartLabel can be a “future-proofing” method for brands, and encourages manufacturers to adopt SmartLabel now, rather than wait until details of the law are crystallized.
“When it comes to an ingredient that came from a genetically engineered crop or animal... in order to provide accurate, neutral and not misleading information it often takes more than just a couple of words."
Greg Jaffe
Director of biotechnology, CSPI
Jaffe also said digital disclosure method can help consumers understand how much of a product is genetically modified.
“When it comes to an ingredient that came from a genetically engineered crop or animal, I think that in order to provide accurate, neutral and not misleading information,it often takes more than just a couple of words,” he told Food Dive. “It’s important that information be provided with more detail than just saying whether a product contains a genetically engineered ingredient or not.”
But critics of the program argue this disclosure method actually conceal GMO indicators from consumers.
“Americans deserve nothing less than clear on-package labeling, the way food has always been labeled,” Kimbrell said in a press release. “Allowing companies to hide genetically engineered ingredients behind a website or QR code is discriminatory and unworkable.”
In July, Campbell Soup CEO Denise Morrison told investors the company will leave GMA at the end of 2017, stating that the move was "not a financial decision" but rather one driven by the company's "purpose and ... principles." It's speculated that one reason Campbell pulled out was over differences regarding GMO disclosure.
Lowe said it will take time for consumers to adjust to QR codes as a means of disclosure for both GMO ingredients and other product attributes. He predicts the initiative will become as ubiquitous as smartphones and Uber.
“Do you think everyone understood the vast potential that smartphones had when they were first launched? Of course not. This is the pattern — there’s a vast technology, and then consumers take time to understand it and then they adapt to it," he said. "This is the modern label of the future.”
