Kerry Group and Danone in vanguard responding to ‘clean label’ global movement, says broker

Ireland’s Kerry Group and France’s Danone are “in the vanguard” of sating global consumer demands for natural foods but they face huge challenges, according to a major report by Davy.

Kerry Group and Danone in vanguard responding to ‘clean label’ global movement, says broker

By Eamon Quinn

Ireland’s Kerry Group and France’s Danone are “in the vanguard” of sating global consumer demands for natural foods but they face huge challenges, according to a major report by Davy.

The broker says many food firms may struggle to respond to the “clean label” consumer movement that demands natural ingredients. Kerry has acknowledged by its 2015 purchase of food flavouring firm Red Arrow and, through its acquisition last month, of Fleischmann’s Vinegar Company in the US, of the importance of the movement, Davy says.

According to the report by analysts Katy Hutchinson and Liz Coen, Red Arrow’s smoking and grilling technology meet global consumer demands “to clean up product label”, while Danone “is at the forefront of this movement”.

The report, however, finds food firms cannot easily respond to the challenges as “the practicalities of reformulating food products are complex”, while consumers in different parts of the world respond to different food label messages. And while many consumers may be willing to pay more, “in reality price realisation is a major challenge for food manufacturers”.

On Kerry, Davy says it has replaced the common food flavouring disodium inosinate with chicken fat, stock, and spices, because “its chemical sounding name renders it undesirable by consumers”. It has also replaced modified corn starch and tapioca starch, which are used to boost texture, with potato starch and carrageenan, the broker says.

“These ingredients are likely to be perceived as more favourable — ie of more natural origin and less processed — than previous ingredients. Carrageenan, used as a thickening or emulsifying agent in food products, also has additional preservative properties.” Davy said Danone’s introduction of its Greek yoghurt range is “an interesting example of clean labelling in action”.

“Clean label products are leading the pathway to growth — products containing claims such as ‘nothing artificial’, ‘free of additives and artificial ingredients’ and ‘all natural’ have grown in dollar terms by 3.6%, 8% and 7.8% respectively,” the report says. “Brand owners are identifying consumer needs and showing these clearly on product labels, using clean labelling as a marketing lever,” according to the analysts.

“Demographics also have a part to play — according to Nielsen, millennial consumers rank claims of ‘organic’ on food products higher in importance than any other age group, viewing it as more important than hormone-free or GMO-free foods. In contrast, older generations do not rank any of the three claims as highly important. Smart marketing campaigns, including a strong social media presence, clear communication with customers, and transparent product labels are imperative for winning in this category.”

more courts articles

Man (25) in court charged with murdering his father and attempted murder of mother Man (25) in court charged with murdering his father and attempted murder of mother
Man appears in court charged with false imprisonment of woman in van Man appears in court charged with false imprisonment of woman in van
Man in court over alleged false imprisonment of woman Man in court over alleged false imprisonment of woman

More in this section

FILE PHOTO The Competition and Consumer Protection Commission has cleared the purchase of Goodbody Stockbrokers by AIB END Goodbody Stockbrokers fined over €1.2m by Central Bank over rules breaches
Nottingham City Centre Stock Irish staff at the Body Shop wait for wages as retailer shuts stores in the Republic
Ryanair comments on Norwegian Ryanair boss O'Leary's spat with Transport Minister over Dublin Airport escalates
IE logo
Devices


UNLIMITED ACCESS TO THE IRISH EXAMINER FOR TEAMS AND ORGANISATIONS
FIND OUT MORE

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
ie logo
Puzzles Logo

Play digital puzzles like crosswords, sudoku and a variety of word games including the popular Word Wheel

Lunchtime News
Newsletter

Keep up with the stories of the day with our lunchtime news wrap.

Sign up
Cookie Policy Privacy Policy Brand Safety FAQ Help Contact Us Terms and Conditions

© Examiner Echo Group Limited