E UROMONITOR DIGEST

Volume II Issue No. 3 • March 2016

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The EMB of the Department of Trade and Industry (DTI) is mandated to oversee the development, promotion, and monitoring of Philippine exports. The EMB provides the exporters the enabling environment to make them globally competitive. Euromonitor Digest is a monthly online publication of the EMB, which aims to provide insightful analysis on the reports culled from Euromonitor International’s Business Intelligence Research.

EDITORIAL BOARD Dir. Senen M. Perlada Editor-in-Chief

AD Agnes Perpetua R. Legaspi Managing Editor

Victorino S. Soriano Associate Editor

Louise Kaye G. Mendoza Layout / Design Artist

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The Rise of Informed Eaters: Which Ingredients are on Consumer Watch Lists?

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old the salt! Watch the sugar! Is that gluten-free? Global consumers are growing increasingly aware – and wary – of what is in their food. Eight in ten avoid at least one ingredient or additive, including many who steer clear of multiple label villains. To better understand these “ingredient avoiders” and how food and drink manufacturers can meet their needs, Euromonitor International surveyed 16,300 global consumers about their attitudes toward 10 undesired ingredients as well as their label-reading habits, trust in claims, and tendency to consume ready meals and processed foods. This article divides ingredient avoiders into low (avoid one to three ingredients), medium (avoid four to six ingredients) and high (avoid seven or more ingredients) sub-segments, and also takes a deepdive into the segment of “clean eater” consumers who specifically avoid artificial ingredients, artificial sweeteners and genetically modified ingredients (GMOs). The resulting insights can help food and beverage manufacturers more effectively design and market products in an increasingly nutritionconscious landscape. Added sugar and artificial ingredients top consumers’ watch lists Consumers are warier of some ingredients than others. Added sugar and artificial ingredients top the watch list – four in ten look for foods free from these ingredients - with added fat, trans fat/hydrogenated oils, added salt, and artificial sweeteners, and genetically modified organisms (GMOs) not far behind. Monosodium Glutamate (MSG) falls further down the list; one in four consumers avoid the flavor enhancer, while just one in six avoid high-fructose corn syrup or gluten. Age begets awareness (and avoidance) of undesirable ingredients Not everyone hits the grocery store with a long list of “nutrition no-nos.” Most consumers shun just one or two ingredients, while few eschew more than six: high avoiders represent 14% of the population, medium avoiders 27%, and low avoiders 40%. The remaining 21% do not avoid any of the ingredients surveyed. So what separates those who eat whatever they like from those who parse labels for multiple red flags? Ingredient avoidance cuts evenly across some demographic variables. Though women are slightly more likely to avoid undesirable ingredients, the difference between genders is fairly small.

Wealth also has little impact on ingredient avoidance. Equal percentages of high, medium, low, and no-ingredient avoiders can be found across every level of income. Age is a different story. Older consumers are significantly more likely than their younger counterparts to shun multiple ingredients. For example, 49% of global respondents over 65 fall into the medium- or high-avoider category, including 20% in the latter. In comparison, only 32% of 20 to 24 year-olds are medium or high avoiders, with a mere 7% defined as high avoiders.

With age comes the onset of new health concerns and conditions, many of which necessitate a change in diet. With age comes the onset of new health concerns and conditions, many of which necessitate a change in diet. For example, those with heart disease are advised to avoid salt and diabetics must moderate their sugar intake. Age may also bring greater awareness of diet and nutrition in general. Whereas the average 20-something can enjoy junk food without seeing much of an impact on their weight, energy or overall health, those with a few more years (and pounds) under their belt are more likely to feel the effects of that extra doughnut. Given these age differences, “free from” food manufacturers should consider older consumers a strong target market. And since age-related health concerns are likely key drivers for ingredient avoidance, manufacturers should explicitly communicate how a product’s nutritional profile prevents disease or illness. For example, “made without trans fat to keep heart disease at bay” may have more impact than vague or buzzword-laden claims among those who pay the most attention to labels. Ingredient anxiety highest in USA, emerging markets “Ingredient anxiety” varies significantly by region. The USA and the emerging markets of Brazil, Russia, India, and China (BRIC) have higher percentages of medium and high avoiders than Europe or Japan. In fact, 46% of Japanese consumers do not avoid any ingredients at all, more than double the global average. Japanese and European consumers may not worry as much about what is listed on the label because they are less likely to eat foods with labels in the first place.

Source: © and database rights Euromonitor International PLC 2011 All rights reserved.

Volume II Issue No. 3 • March 2016

Japanese and European consumers eat ready meals significantly less often than those in emerging markets and the USA, perhaps opting instead to prepare meals from whole foods, such as meat or produce, which do not come stamped with a list of ingredients or additives. These findings present something of a paradox. Euromonitor survey data indicate that consumers believe prepared foods save time and money, but are not particularly healthy. Yet those who eat these foods most often are also the most vigilant ingredient avoiders, perhaps out of necessity. This points to pent-up demand for ready meals and packaged foods free of one or more of these undesired ingredients. ‘Clean eaters’ specifically shun artificial ingredients The list of undesirable ingredients includes three specifically associated with adulterated, artificial, or otherwise “fake foods” such as GMOs, artificial ingredients, and artificial sweeteners. Recent years have seen increased media buzz around the potential risks of such ingredients, and survey results suggest consumers have been listening. Sixty percent of respondents avoid foods containing one or more of these ingredients, including 15% who avoid all three (deemed “clean eaters”). As with the general ingredient avoidance explored above, these “clean eaters” span income, gender, and region. Once again, age seems to be the key demographic variable: Clean eating is most common among older consumers, especially those over age 55. While the higher rates of general ingredient avoidance among older consumers can be explained, in part by age-related health concerns, this explanation may not apply to clean eating: Neither GMOs, artificial ingredients nor artificial sweeteners have been conclusively linked to heart disease, diabetes, or other age-related conditions. Instead, older consumers’ avoidance of these ingredients could simply reflect their broader interest in healthy eating or be driven by a fear of the unknown impacts of GMO ingredients. In addition, “clean eating” has become a popular buzz word for consumers seeking to lose weight and improve their health. Government regulations may shape regional interest in clean eating Interest in “clean eating” is significantly higher in some parts of the world than others. China, India, and Russia have the highest proportion of clean eaters while Japan has the lowest. Differing governmental regulations may be one explanation for the regional divide. Consumers living in heavily regulated countries may see no need to keep an eye out for certain ingredients because those ingredients are already banned. For example, many coloring agents, preservatives,

Check out our previous issue on our website: The Rise of Agnostic Shoppers

So while companies should certainly pay close attention to the latest research, media coverage and government standards, the best policy may simply be one of transparency. and growth hormones used in the USA and China are illegal in Japan, as are GMO crops. As a result, Japanese consumers have little need to actively seek foods free of GMOs or artificial ingredients. If the strictness of government regulations was the whole explanation behind differences in consumer attitudes, however, then Brazil would have a relatively high percentage of clean eaters, thanks to its reversal of a ban on GMOs several years ago, as would the USA, with some of the most relaxed regulations on artificial ingredients. In reality, Brazil has a relatively low percentage of clean eaters and consumers in the USA are no more likely to avoid these ingredients than consumers in Germany or France, where GMO regulations are quite strict. In other words, government regulations are only part of the story – and the story will only continue to evolve as new research, regulations and consumer attitudes emerge. In the meantime, foods and drinks designed to appeal towards those with an “eat clean” mind-set should fare best in China, Russia, and India. Business implications The rise of ingredient avoiders may leave food and beverage companies feeling somewhat hamstrung, but it is worth remembering that most consumers – especially those under age 55 – only worry about one or two ingredients. Still, certain demographics do have a greater share of ingredient avoiders, and brands targeting these segments may need to re-think how they formulate or communicate products’ nutritional profiles. Moreover, consumers avoid ingredients for a broad, evolving and often complex variety of reasons, ranging from individual health concerns to national regulation (or lack thereof). So while companies should certainly pay close attention to the latest research, media coverage and government standards, the best policy may simply be one of transparency. By honestly disclosing what, how much, and perhaps even why certain ingredients are included in a product (e.g. “artificial sweeteners boost flavor without adding calories”), food and beverage brands can satisfy the demand for informed eating while also satisfying consumers’ taste buds. ■