Big opportunity for small companies ... as sceptical consumers search for ethical brands

Researchers from Innova Market Insights and Informa Health and Nutrition presented at the show in Frankfurt this week and made it clear consumers are losing interest in big food and drink brands and favouring small companies with ethical backgrounds.

Small brands with big hearts​

Marion Schumacher, senior conference producer for Informa, said just 33% of Americans say the supplement industry is trustworthy.

Irene Kersbergen, market analyst for Innova Market Insights, added that 40% of US and UK consumers prefer small brands because they believe they are more dedicated to their products and have a better brand story.

She went on to say that 80% of consumers are more likely to buy into brands that are honest about where their products come from.

This interest in honesty and transparency could explain why small start-ups have stolen a lot of growth from well-established mass-market brands over the last few years.

Schumacher says many large firms are now struggling to maintain growth and are having to invest in niche start-ups to remain relevant. 

“Trust is low but this opens up opportunity for those brands making an effort to communicate transparency and establish trust within their product,”​ said Schumacher.

 “Millennials have more and more information available to them and trust is becoming more important but there’s been a decline in trust in brands.”​

One brand doing this successfully is the brand ‘This Bar Saves Lives’, which is very clear about the fact that every time someone buys a bar, it buys one health package in the ‘Action Against Hunger’ project.

“This brand makes it clear from its name and it’s packaging that the consumer has a direct impact on someone else’s life and this resonates well with consumers and with millennials in particular,”​ said Schumacher.

Both companies concluded that brands should make it easy for their consumers to find out where all their ingredients have come from, how they’ve been sourced and where they’ve been processed and stored.

Technology for transparency​

Schumacher added that technological advancements are making it possible to be more transparent than ever before, especially with blockchain technology allowing companies to track their ingredients through the manufacturing process.

Some companies she picked out as already using this technology effectively are Ingredientsonline and Regen Network.

Clean label​

In-line with this trend for transparency, Schumacher pointed out that many new startups are prospering by creating a brand ethos based on clean labelling and transparency.

She provided the example of the RXBar, acquired by Kellogg for $600m, which is the fastest growing nutrition bar in the US thanks to its focus on clean labelling.

Connected to the plate​

Kersbergen added that social media is helping consumers to feel more connected to the products they’re consuming as brands are hosting competitions allowing consumers to be involved in the development of their products.

She pointed out that this connection also helps to build a more positive and transparent image of the brand.