How Supply Chains Could Affect Food Labels

A factory worker wears a white long-sleeve lab coat and blue gloves as they place freshly baked cookies on a tray.

An appealing label is one of the most powerful marketing tools in the food industry. Customers are not only attracted to design; they also rely on food labels to make well-informed and health-conscious purchasing decisions. After all, research from the International Food Information Council Foundation reports that a majority of consumers, 59 percent, always read the labels on foods before they buy.

And while the nutrition panel and ingredient list are often the first things a consumer scans, the same study reports that about half of consumers also consider front-of-label claims. Roughly three-quarters of consumers look for the term “natural” when making purchasing decisions, according to Consumer Reports, while 58 percent of consumers seek out “organic” labels in the grocery aisle.

And if your target market is young adults, front-of-package labeling may be even more important. That's because fewer young adults read the nutrition panel in depth. Research published in the Journal of the Academy of Nutrition and Dietetics found that only about one-third of adults age 25 to 36 read Nutrition Facts labels frequently–much less than the 59 percent average reported across all age groups. So front-of-package labeling that highlights, for example, no added sugar, could be the best way to catch the attention of younger customers.

On the other hand, improper labeling erodes trust and loses customers. It could also get you in legal hot water. Since 2009, the Food and Drug Administration has been cracking down on misleading front-of-package labels and health claims, and sending warning letters to repeat offenders.

The bottom line? Taking measures to prevent food mislabeling both builds trust with your customers and helps you avoid regulatory issues in the future.

How to Protect Your Company from Labeling Errors

Even if your company is doing everything on the level, you could still be at risk of a labeling error. Mislabeling, inaccurate claims or missing label copy can occur at any stage of the supply chain. Without the proper auditing systems in place, companies of any size are at risk of unintentionally creating misleading labels.

To ensure transparency and maintain trust with your consumers, consider taking the following measures to identify any potential mislabeling or misinformation.

  1. Review your supply chain. Mislabelling can occur at any step in the supply chain, so make sure you know yours inside and out.
  2. Who are your suppliers? Who are their suppliers? Identifying all the steps in your supply chain gives you a starting point to check for mislabeling. And creating a streamlined supply chain, made up of trusted suppliers that you've ideally worked with for years, cuts down on the risk of mislabeled supplies or ingredients making their way to you in the first place. Make sure to also keep a record of all your purchases—so if you do run into issues, you can trace the problem back to its source.
  3. Set up an auditing and surveillance system to help ensure that the supplies sent your way are labeled correctly. Identify the highest-priority supplies for auditing to focus your efforts. For example, give top priority to new, hard-to-find or expensive ingredients, products from new suppliers, or products, like seafood, that are particularly prone to mislabeling.
  4. Check the certification status behind product claims like organic, Halal and Kosher to ensure your supplies meet the appropriate standards. Verify claims about genetically modified organism (GMO) status, product origin and farming practices (like GLOBAL G.A.P.) to avoid mislabeling. If you can't find a backing certification for the claim, don't include that claim on your labels.
  5. Develop risk management strategies to identify and avoid adulterated or mislabeled supplies. Identify backup suppliers for key ingredients that you can turn to if you detect fraud or mislabeling within your supply chain. And keep track of higher-risk supplies—for example, crops that were particularly poor this year—for additional auditing.
  6. Watch for unregulated claims on packaging. Certain labels, like “natural,” can make your supplies (and your products) more attractive to consumers, but they aren’t standardized or regulated by the FDA. Understanding which types of claims are regulated and which ones aren’t helps you better audit the claims on your supplies—and create more informative and transparent labels for your consumers, too. Instead, stick to regulated claims supported by scientific research or certifications.

Whether it’s gluten-free, low sugar, organic, or another of the ever-increasing options in today’s market, all consumers care about what goes into their diets. And food companies of all varieties care about providing quality products—and fulfilling the promises they make to their customers. Make sure you’re evaluating your entire supply chain, so that they story you’re telling on the outside of your product matches the ingredients within.

The views expressed by the author are not necessarily those of Fifth Third Bank, National Association and are solely the opinions of the author. This article is for informational purposes only. It does not constitute the rendering of legal, accounting, or other professional services by Fifth Third Bank, National Association or any of their subsidiaries or affiliates, and are provided without any warranty whatsoever. Deposit and credit products provided by Fifth Third Bank, National Association.