November 16, 2020
In the past few years, the demand for clean label products has grown exponentially as health-conscious consumers are seeking out more natural and simple ingredients. According to Lascom, clean label products make up 33% of the food and beverage market and continue to expand as more clean label options enter the market space. A trend report by Allied Market Research predicts the clean label market to reach $64.1 billion by 2026, growing at a CAGR of 6.8%. So what exactly constitutes a clean label product and what factors are driving this growth?
What is a Clean Label?
Defining a clean label product remains difficult without a singular definition. With this, consumers may define a clean label product as a good containing simple, natural, and easily identifiable ingredients. Many clean label products offer substitutes for commonly used artificial and synthetically produced products. For example, clean label products may substitute synthetic dyes for plant extracts or juice concentrates. Artificial flavor enhancers are also commonly switched out for yeast extract, and artificial preservatives are often left out altogether.
Key Drivers of Growth
The growing demand for clean label products spawns from increased consumer health awareness, a rise in disposable income, an improvement in living standards, and the promotion of healthy living trends, as stated by Allied Research. When looking at the appeal of clean labels across generations, Millenials and Baby Boomers are driving the growth of clean label products. A study conducted by C+R Research found that Millennials and Baby Boomers are most vigilant when it comes to product labels. On the other hand, Gen Xers show the least amount of concern with product ingredients. Of those who participated in this study, 69% said that reading labels impacts their shopping habits.
Disadvantages of Clean Label Products
Despite the health benefits of clean labels, the issues facing these products may deter companies from adjusting their ingredients, and consumers from purchasing such items. For one, these products often have a shorter shelf life due to a lack of preservatives and artificial substances. Though natural ingredients provide more health benefits, these products may require non-traditional storage methods such as refrigerating or freezing and are easily perishable. With this, storage costs may increase for manufacturers while also preventing consumers from purchasing items that will last for days instead of months.
In addition to the shorter shelf life of clean label products, some companies may struggle to reformulate items to maintain the same consistency and flavors. For food and beauty products, these elements may be deciding factors for consumers and can help or hurt sales depending on the changes made to the existing product. Due to the lack of a legal definition for ‘clean label,’ many of these products are open to interpretation by consumers, leading to litigation risks from misleading claims. Many users mistake clean label products for being healthier when, in fact, this is not always the case.
Finally, clean label products may cost more than traditional items, appealing more to those with disposable incomes. This price hike results from a higher cost of ingredients and production. Despite this, 75% of consumers will pay extra for clean label ingredients, according to Ingredient Communications. With this, clean label products are here to stay, promoting ingredient transparency and simplicity.