In the bustling aisles of a crowded supermarket, food products vie for attention through their carefully crafted packaging and labels, all in an effort to seal the deal with consumers. An astounding 72% of American shoppers acknowledge that product packaging significantly impacts their purchasing decisions—a fact not lost on food manufacturers. This influence extends beyond the aesthetics of the packaging; it also encompasses the information conveyed by the labels.

Louis Biscotti, the National Leader for Food & Beverage Services Group at Marcum, shares insights in Forbes regarding the 2020 update of the FDA’s nutrition facts label for packaged foods. This update presented new opportunities for companies to boost their sales. Biscotti notes, “F&B [food and beverage] companies are discovering that they can leverage these labels and other available space on their packaging to provide nutritional and other data that can drive growth. The information on the FDA label, as well as what you include on your packaging, can be vital components in increasing sales.”

Biscotti further points out that 30% of U.S. consumers surveyed exhibit a higher inclination to purchase products with sustainable attributes, and the concept of a “clean label” can be persuasive in winning over consumers. Such characteristics may include designations like USDA organic, non-GMO, free of artificial ingredients, or devoid of preservatives.

Labeling plays a crucial role in helping consumers make informed choices about food products. For instance, designations such as “USDA Organic” and “raised without antibiotics” are governed by specific standards that the product must adhere to.

However, when it comes to the term “Natural,” the situation becomes more complex. A recent report from the USDA Economic Research Service sheds light on the prevalence of the “natural” claim on food packaging. This label can be used by food suppliers relatively easily because regulatory agencies interpret it to mean that nothing artificial was added, and the product underwent minimal processing. Variations like “all natural,” “100% natural,” and “made with natural ingredients” lack precise definitions in USDA and Food Safety and Inspection Service (FSIS) regulations. While these claims must receive approval from the USDA, FSIS before being used, the primary standard is that no artificial ingredients or colors were added during processing, and the processing method did not fundamentally alter the product.

The challenge arises from consumers’ perceptions of what “natural” entails. Neither the FDA nor USDA policies address the health benefits or farm production methods that consumers may associate with natural-labeled foods. These definitions do not account for human health, the use of synthetic pesticides, genetically modified organisms, hormones, or antibiotics in crop and livestock production.

Numerous studies reveal that consumers mistakenly attribute greater benefits to products labeled as “natural” than they actually deliver. For instance:

  • A 2017 study found that respondents inaccurately believed that natural-labeled foods had 18% fewer calories across various food items.
  • A 2010 study revealed that respondents thought “all natural” meat products meant no antibiotics or hormones were used in raising the animals, and some assumed it indicated free-range animal raising.
  • A 2022 survey showed that 86% of respondents who purchased natural-labeled products in the past year did so because they believed the label implied better-than-standard animal welfare, and 78% were willing to pay more, assuming it indicated higher environmental stewardship practices.
  • Further findings from the 2022 study indicated that 59% of consumers who purchased animal welfare-certified products also bought natural-labeled foods, assuming it represented improved animal welfare standards.

Additionally, consumers often equate the attributes of USDA Organic products with those of natural-labeled products and are willing to pay a premium for them. Some are even willing to pay 20% more, on average, for products bearing natural labels.

The consequences of these misconceptions are significant. Initially, it may appear frustrating, with food manufacturers capitalizing on consumer misperceptions to inflate prices, and consumers not receiving what they expect. However, the more profound issue lies in the detriment to food producers who genuinely adhere to stricter labels, such as those related to organic practices or animal welfare. These producers end up at a competitive disadvantage in the marketplace when consumers perceive natural-labeled products as equivalent.

The authors of the report emphasize that the economic problem posed by natural labels is twofold. Consumers may pay extra for product attributes they do not actually receive, while producers of products with these attributes may experience reduced sales. Consequently, the potential health and environmental benefits that could have been realized from consumers choosing products aligned with their preferences might be lost.