In a move designed to meet consumer demand while pushing the food manufacturing industry, Panera Bread Co. announced last week the removal of artificial ingredients from its $150 million Panera at Home packaged-foods line by the end of this year.
And now, large packaged foods companies must follow suit or be prepared for consumer fallout. This is good news for ingredient manufacturers who have natural preservative solutions.
"A lot of food companies are facing the same thing," Michael DeAngelis, nutrition director at Porter Novelli, told Food Dive, in regard to the removal of artificial ingredients. "It is a line brands are navigating between giving the consumers what they want and making sure it [food] will still be safe on the shelves." He said ingredient manufacturers should seize on the opportunity to tell the story of how their products can help make a more natural profile for brands and products.
DeAngelis said ingredient manufacturers can advise food companies
- on limitations that might exist with natural additives in order to avoid food safety issues
- on innovations may be required when natural ingredients replace artificial ingredients, such as refrigeration considerations and packaging changes that may be needed.
Ingredient manufacturers can also assist food companies as they respond to market opportunities and meet consumers' quests for natural, organic and better for you ingredients.
In Mintel's recent Prepared Foods-U.S. report, it found "considerable opportunity for brands offering products made from natural ingredients and highlighting specific health benefits." Seventy-six percent of 18-34 year olds said they would eat more prepared foods if they were less processed.
Team effort
In May 2015, Panera issued a "no-no list" outlining the removal of artificial colors, flavors, sweeteners and preservatives from its restaurant menu. The company consulted with food scientists and other experts to develop the list, where more than 150 ingredients will be impacted. What's more, Panera's culinary team spent more than a year working with suppliers to "un-engineer" its food menu, which required ongoing tinkering with recipes and testing them out, according to a statement. The partners were working to find natural ingredient replacements for colors in pastries and artificial preservatives in soups, for example. Panera's refrigerated soups comprise 35% of market share in that category.
Efforts by Panera and other companies such as General Mills, Kraft, and Nestle, create opportunities for companies that manufacture natural additives. These companies count on suppliers to ensure they are on the same page in regard to removing artificial ingredients and replacing them with natural ones, R.J. Hottovy, senior restaurant analyst, Morningstar, told Food Dive. He said that although it can be more costly, it is something "you have to do in this day and age with consumers demanding these types of products."
Panera is making an "all-inclusive change" to its products,CEO Ron Shaich said. "We think in the supermarkets, it's even worse. I'll name names: Kraft, Campbell's, Nestle, General Mills — they've all done some form of it, but they'll do the flavor but not the colors, some lines but not other lines."
DeAngelis added most consumers, "at least what I am seeing, are concerned about preservatives that are put into food products." These consumers are more than likely going to pay the extra cost for the natural ingredients.
The pressure is on
Hottovy said Panera has been at the forefront of the early groups that have moved toward naturally raised, organic and better for you food products. "The success they have had the last three or four quarters shows this is something consumers are looking for," Hottovy said. "We expect more competitors to follow suit."
"I think we are also trying to challenge the world a little bit," Panera's CEO, Ron Shaich told Business Insider, in regard to "cleaning up" the restaurant menu and at home line. Shaich said he hopes the company's initiatives put the pressure on fellow food companies to be as "comprehensive as we are, nobody has taken on as many categories as we have."