From organic and natural to fair trade: foods produced with ethical considerations in mind, such as fair trade products, are on a fast growth track

When consumers think of natural food, their focus may extend beyond organic origin and preparation. Although organic foods continue to be a strong and growing market, the natural food category now contains products that incorporate ethical and sustainability factors, such as equitable trade practices, genetic modification and humane treatment of animals.

Baby Boomers, the largest food spending demographic, are driving the natural products category through their preference for fresh, natural and organic ingredients, as well as their desire for flavors that are exotic, sophisticated and bold. In a recent Packaged Facts report called “Baby Boomers and the U.S. Food and Beverage Industry,” Baby Boomers were found to spend more on household groceries and food than members of Generations X and Y, and seniors. More specifically, Boomers aged 45-54 spend $123 weekly on food, in comparison to $102 for 25- to 34-year-olds and $75 for 65- to 74-year-olds.

And because many Boomers head households, the trend to “eat well” is being passed on to future generations. According to Don Montuori, publisher of Packaged Facts, “[Boomers] are a driving force behind the success of functional and fortified foods–as well as organics–and they prefer gourmet foods of convenience that meet the demands of their elegant yet hectic lifestyles.”

Natural Functional Foods

As the number of new low-carb product introductions has slowed, other health and wellness trends have found a foothold in the packaged foods market. Omega-3-containing products may be taking the lead. A significant number of food products with this fatty acid, including bread, milk, pasta, eggs and yogurt that contain docosahexaenoic acid (DHA) and eicosapentaenoic acid (EPA), have been launched. Mintel International’s Global New Products Database (GNPD) reports 280 new product introductions containing omega-3 in the U.S. market by the end of 2005, compared with 162 in 2004. One example is Odwalla soymilk which, company we representatives claim, is the first soymilk in the U.S. to contain DHA. The product is sold in half-gallon containers and comes in plain, vanilla and chocolate. It provides consumers with 20% of the recommended daily value (160mg) of fatty acid.

Interest in antioxidants is increasing. Although the types and sources of antioxidants are numerous, a few recent examples stand out. Acai, a Brazilian fruit, is a hot new ingredient and flavor being formulated in prepared foods and beverages. Use of other antioxidant fruits, such as pomegranate, mangosteen, goji berries, blueberries and black currants is expected to increase as part of this trend.

Manufacturers also are promoting the antioxidants found in dark chocolate, as evidenced by the marketing of the Mars Cocoa-Via chocolate bar, which is now being sold in retail stores as well as on the Internet. The company is researching chocolate’s potential antioxidant and cardiovascular benefits as well as the antioxidant effects of other cocoa products, like hot chocolate.

Whole grains exemplify true health benefits behind some natural products in that FDA guidelines define whole grains as consisting of the entire grain seed. The grain seed is also called the kernel and its components–the bran, germ and endosperm–must be in roughly the same proportions as the original (natural) grain. The USDA’s new MyPyramid touts whole grains as an excellent source of fiber and consumers are expected to become more aware of their benefits. At the end of 2005, barley products were allowed to carry the health claim of reducing the risk of cardiovascular disease.

Product formulators of healthy foods face a challenge in gaining the trust of consumers. According to ACNielsen, the main reason consumers did not buy functional foods more often is because they did not believe the health benefits being promoted. Food manufacturers cannot afford to allow this distrust to linger. According to Mintel International, the U.S. functional food and beverage market reached close to $20.4 billion in 2004. Thus, there are opportunities for marketers who position reasonably priced foods that have credible health benefits. As more products are enhanced to include health benefits, the line between functional and conventional foods will blur. Consequently, consumers will begin buying functional foods without being aware of their healthful benefits.

Natural and Exotic Flavors

According to Packaged Facts, nutritionally rich “superfoods” will become hot this year because consumers are looking for exotic and magical flavors that address medical concerns. The use of spices as nutritional ingredients will rise and, according to a new report entitled “Food Flavors and Ingredients Outlook 2006,” the exotic flavors of Middle Eastern, North African and Eastern Mediterranean cuisines will take center stage. This contrasts with the Asian, Spanish and Latin flavors of fruity/heat combinations featured in 2005.

Organic Ingredients

Large multinational corporations are aware of the opportunities that exist in the natural foods niche and have begun buying out organic businesses. One recent example was Cadbury’s acquisition of Green & Blacks. The $15 billion organic food industry is barely able to meet consumer demand for organics, and for this reason the newly emerging giants in the organic industry–Kraft, Dole, Dean Foods/ Horizon, Whole Foods Market, Wild Oats, Aurora, Smucker mid General Mills–have sought to modify current organic standards.

Some have called this an attack on the purity of the organic movement, one that is fueled by market demands and not by the kind of ideals that created the organic movement in the first place. Specifically, the changes would allow USDA National Organic Program appointees to approve hundreds of synthetic substances and processing aids for use in organic products. Additionally, it would create a process that bypasses the normal input of the National Organic Standards Board (NOSB), and allow substances onto the “National List” of approved ingredients that are not universally approved. Whatever the ultimate fate of organic regulations, it is clear that this market has much room for growth.

Ethics and Fair Trade

The burgeoning natural and organic market is confronting ethical concerns as well as health issues. According to Ruth Rosselson from ethicalconsumer.org, a website that aims to inform and empower consumers on ethical purchasing decisions, consumers are keen to shop according to ethical standards but lack the information needed to make informed choices.

One key ethical demand involves fair trade practices, and this concern has resulted in greater organization among food industry professionals. The Fair Trade Federation is an association of fair trade wholesalers, retailers and producers created to promote fair wages and good employment opportunities to artisans and farmers worldwide.

The effect of this interest in fair trade practices is becoming evident. In the U.K., fair trade sales are growing by more than 40% per year, and fair trade products are one of the fastest-growing segments of the natural products market.

Large manufacturers are taking notice of these trends and taking action. Some of the largest multinationals have begun using fair trade as a selling point to highlight their company philosophy. Nestle, Unilever and Groupe Danone are founding members of the Sustainable Agriculture Initiative Platform, a 19-member food industry group that supports development and efficiency of sustainable agricultural practices.

The growth of the fair trade market offers companies a method of differentiation that may put them on the fast track for growth in market share. Fair trade emerged from niche market status when Nestle became the first of the four major coffee roasters to offer a fair trade product line.

In the future, however, ethical sourcing may move beyond being niche, value-added markets that sustain fair trade products to become a necessary way of doing business. Efforts at producing food products according to fair trade standards involve functions ranging from marketing to purchasing and R&D and a company’s image may be at risk if it only offers one fair trade product line while maintaining old sourcing practices on other products.

The demand for fair trade is so large that some companies are now setting their own general practice guidelines for ethical and sustainable sourcing. One example is a program called CONVERT, by Frontier Natural Products Co-op, a processor and marketer of herbs, spices, aromatherapy and personal care products for consumers. Their sourcing partners must meet rigorous standards in the areas of worker safety and fair treatment, sustainable production, environment, community, and food safety and quality. Producers also are organizing sustainable and equitable programs on their own, such as the non-profit called Man and the Environment (MATE), located in Madagascar, that has two commercial sister companies, Label CBD and Aroma Forest (all organic). These two entities partner to bring products to market that meet certain ethical and sustainable standards.

Ethical Sourcing Issues

Food companies soon may have little choice but to address ethical sourcing issues just as the clothing industry was forced to address its labor practices following consumer backlash over alleged sweatshop production methods. The fair trade movement may be the first sign of this. Fair trade chocolate and coffee is being offered to consumers concerned about child labor practices reportedly occurring on cocoa and coffee farms in the Ivory Coast of Africa.

In the ethical sourcing area, consumers also have shown interest in the use of foods free of genetic modification (GMO-free) and the humane treatment of animals, particularly in free-range living environments. One potential roadblock to growth of free-range birds, however, is the spread of avian flu. Global health agencies are monitoring migration of this disease among birds in the wild out of fear the virus will jump to domesticated flocks. However, some U.S. farmers of free-range chickens note their agricultural practices are quite different than what exists in third world countries where bird-to-human virus transmission has taken place. Additionally, careful monitoring will avert potentially risky situations.

In the end, although consumers are focused on natural and organic ingredients as well as exotic flavors tied to their own nutritional health, they also will be searching for products that address sustainable planetary health and fair trade. As increasingly informed consumers shop for such foods, the products will move from niche status to the mainstream food market.

A Natural Red

Red coloring is found in most every food application. “And, when it comes to red color, it is hard to find a more versatile colorant than carmine. Although limited by a non-kusher status [carmine and cochineal extract are derived from cochineal beetles], its superior qualities (hue, stability, and clarity) make carmine one of the industry’s top choices,” says Thanyaporn Siriwoharn, PhD, product development manager with a supplier of natural colorings and antioxidants.

However, Siriwoharn says that may be about to change. “FDA is proposing to require a declaration of cochineal extract and carmine on the label of all food and cosmetic products.” (See www.cfsan.fda.gov/~lrd/fr060130.html.) Comments may be submitted to the FDA by May 1, 2006.

The proposed rule is a response to reports of severe allergic reactions to these colorants and to a citizen petition submitted by the Center for Science in the Public Interest (CSPI), says Siriwoharn. “If this proposed rule passes, it will potentially open up the market for both anthocyanin-based and lycopene-based color,” she adds.

Numerous ingredients (ranging from pure additives to foods themselves) can contribute reddish hues to foods. Examples include juices and extracts (e.g., cherry, strawberry, red cabbage, beet, grape skin), paprika-derived oleoresins and powders, tomato-derived ingredients (e.g., lycopene) and a plethora of commercial additives developed to provide formulators with consistent colorings stabilized to prevent oxidation.

Regulations governing natural coloring are complex. The FDA does not consider an ingredient “natural” unless it is derived from the characterizing food. Thus, beet extract would not be considered natural if used to color strawberry yogurt. (See CFR, Title 21, part 73.) And just because a “colorful” ingredient is healthful and is FDA approved for animal use does not mean it can be used in foods (e.g., ostaxonthin and cantbexanthin). Additionally, even GRAS food ingredients must be approved by the FDA to appear on its Color Additives Exempt from Certification list. (1)

–Claudia D. O’Donnell, Chief Editor

(1) www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfcfr/CFRSearch.cfm?CFRPart=73

On the Web: ORGANIC AND ETHICAL SOURCING

* www.organicconsumers.org–Organic Consumers Association

* www.fairtradefederation.org–Fair Trade Federation

* www.ethicalconsumer.org–The Ethical Consumer

* www.transfairusa.org–TransFair USA

Kerry Hughes, MSc, is executive director of EthnoPharm, Mill Valley, Calif., which specializes in sustainable and equitable partnership strategy and product development; kerry@ethnopharm.com.

COPYRIGHT 2006 Business News Publishing Co.
COPYRIGHT 2006 Gale Group

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  1. There is a range of products that came from Madagascar currently on display at the fourth largest department store in the UK. Actually, there is nothing wrong with the products themselves as they were manufactured to the highest possible standard by a small and old cottage factory that provides a means of subsistence to 250 extremely poor families in Antananarivo.We have all heard about buyers squeezing suppliers on price but what follows must be the jewel on the crown. The products were ordered and taken possession of last year by a London-based buyer, who even claims to hold a fairtrade license, and todate the factory has not been paid a single penny despite the fact that this buyer is being begged on a daily basis.

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