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Clean-Label Supply Chain Considerations

Article-Clean-Label Supply Chain Considerations

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<p>Food and beverage manufacturers, product developers and suppliers must focus on the implications of certain clean-label decisions on supply chain and develop best practices for product development.</p>

As the clean-label movement becomes less of trend and more of a standard within the food and beverage industry, brand owners, product developers and suppliers have to reevaluate their product formulations and accommodate this new consumer demand. The process of creating a clean-label product, or transitioning an existing product to a cleaner label, is rarely (if ever) a mere swap out of ingredients.

Clean-label requirements have forced companies to radically improve their game and become more prepared earlier on in the product development process than ever before. Over the past few years, in my role as the senior vice president of operations of Imbibe, I have been involved in the commercialization of hundreds of products that had to adhere in some way to a clean-label guideline. Through each project, our team became more sophisticated and adept at accommodating the clean-label requirements.

The definition of clean label differs across the board. For some, it means a shorter list of ingredients that don’t sound like chemical names that consumers don’t recognize. For others, clean label translates into brand transparency, sustainable ingredients and the ability to make a plethora of the “free-from" claims. While the entire dialogue on this topic is extremely interesting, let’s focus on the implications of certain clean-label decisions on supply chain and some best practices for product development.

Developing Best Practices

From the onset, before product development begins, it is critical to have a thorough understanding of what "clean label" will mean in this context. Of course, this type of communication is always important; but, since there is no official definition of “clean label," it’s essential to get specific. What does the list of blacklisted ingredients look like? Some of the most common offenders include high fructose corn syrup (HFCS), preservatives, FD&C colors and artificial sweeteners. It’s critical to know what is not allowed in the product before the formulation process starts, so the project team doesn’t spend time and resources developing a product that doesn’t meet the ingredient requirements. Once that understanding is in place, it is possible to start sourcing “permitted" ingredients that meet the technical and cost requirements of the project.

Another important component related to getting the project off to a good start is being transparent (no pun intended) and managing expectations. We worked with a large retail chain on swapping out artificial colors for natural, but then the client was not happy with the lack of color intensity of the product at the end of shelf life. Natural colors are more sensitive to fading due to heat and light, so it’s important that everyone understands how certain ingredient modifications will impact the product. There are certainly methods to protect the color of the beverage, such as designing packaging with a UV barrier. The key is to have these types of conversations early on so they can be addressed accordingly.

The last major consideration that I will discuss here is the certifications the brand owner wants on their beverage—organic, kosher, non-GMO, halal, etc. Once again, this also should be established before product formulation begins. There are usually fewer options of manufacturers for ingredients that meet the requirements of these certifications. About two years ago, Imbibe developed a line of non-GMO craft sodas for a large QSR chain. The caramel color and pectin were not available in the United States and had to be sourced from France, which added four to six weeks of lead time. This obviously affected the timing of the product launch and needed to be factored into the order replenishment timeline. The Operations Team should be involved in the project as early as possible to account for any unforeseen delays in product commercialization.

The good news is that our industry has made a lot of progress in the last few years on making clean label more accessible and cost-effective. Many suppliers recently began offering non-GMO ingredients when before they wouldn’t. In addition to the greater variety of available “clean" ingredients, suppliers are also much more responsive and supportive to the heavy documentation that is required. The definition of clean label will continue to evolve and present new obstacles for suppliers and product developers.

Looking to get in on the clean label trend? Understanding consumer demands, formulation considerations and supply chain considerations is critical. Join us for the Delivering on the Clean Label Expectation All-Day Summit on Wednesday, Oct. 5, at SupplySide West 2016.

Will Lennon brings a unique blend of supply chain, finance and strategic planning to the Imbibe team. For the last five years, he has served as senior vice president of operations and finance, leveraging his deep experience in supply chain management to lead the company’s efforts in sourcing, logistics, production and finance. Under his leadership, the company has developed a cutting-edge approach to ingredient sourcing, as well as strong partnerships with suppliers and co-packers—all while maintaining rigorous and meticulous compliance controls. Lennon holds an MBA from Harvard University and a bachelor’s degree from Brandeis University.

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