Hershey demonstrates SmartLabel's sweet spot
Chocolate company helped develop transparency initiative
With a smartphone or computer handy, chocolate lovers may be learning a lot more about their favorite indulgence and one of its main U.S. producers.
Over the past year, Hershey has been a visible early adopter of the Grocery Manufacturer Association’s transparency initiative, SmartLabel. This is a smartphone-scannable QR code that manufacturers print on product packaging, which connects with a corresponding product information database. Together, the system lets companies provide consumers with more information about the products they buy.
But less is known about Hershey’s role in not just SmartLabel’s early implementation, but also in its very existence. Hershey has come forward as a leader among manufacturers working toward this transparency initiative alongside GMA.
As SmartLabel emerges as a potential way for manufacturers to comply with pending mandatory GMO labeling legislation, Hershey can demonstrate what to expect from SmartLabel if others choose to adopt it.
Hershey as a SmartLabel "catalyst" and "development arm"
Hershey, in addition to being the first company to implement SmartLabel on its products, also played a lesser-known role in the creation of the original SmartLabel prototype. Deb Arcoleo, director of product transparency at Hershey, told Food Dive that Hershey began conducting consumer research in early 2014 to gain a better understanding of
How consumers defined transparency
What sources they used to access food, beverage and household product information
What they liked and didn’t like about those information sources
What they liked and didn’t like about UPC scanning apps already available
“We used all that consumer learning to develop three different conceptual designs of what a mobile prototype would look like for a transparency tool,” said Arcoleo. “We exposed those three concepts to consumers, used their feedback, their likes and dislikes about all three, to generate a second version of that prototype.”
Hershey then shared its prototype with GMA, which had been having its own internal discussions around a mobile tool for industry transparency.
“It dovetailed quite nicely,” said Arcoleo. “So we shared everything that we had learned and our prototype with GMA, and the consumer information transparency initiative was born as a GMA-FMI (Food Marketing Institute) collaborative team back in July of 2014.”
By October 2014, GMA had engaged a larger group of manufacturers interested in the technology, and in August 2015, the GMA and FMI boards approved the SmartLabel prototype, which GMA formally announced in December.
“Hershey really served as the development arm, if you will, of that prototype,” said Arcoleo. “… (We were) a catalyst and very strong leader in getting this whole thing done.”
SmartLabel’s sweetened holiday debut
In November, Hershey became the first brand to begin shipping out products with SmartLabel on the packaging. SmartLabel appeared on Hershey’s Holiday Kisses, which were also debuting without artificial flavors.
The reformulation aligned with the company’s announcement in February 2015 that it would make many of its products with simpler and more natural ingredients, along with increased transparency and sustainable ingredient sourcing. Debuting with SmartLabel on the packaging meant Hershey could fulfill two of those commitments at once — natural ingredients and increased transparency — while taking advantage of already having to make packaging changes for the new ingredients list.
“Adding the QR codes to packaging already undergoing a change is the most cost-effective way to do it,” said Arcoleo.
Hershey demonstrates early SmartLabel adoption
Since the Holiday Kisses launch, Hershey has included SmartLabel on about 300 products, all of which the company has listed on SmartLabel.org, the website hub for product information for SmartLabel. As of mid-July, those 300 Hershey products had generated about 47,000 QR code scans from about 26,000 unique users, Arcoleo said.
Hershey hasn’t received much direct consumer feedback in terms of phone calls or emails, but what they have heard has been positive, she said.
“It’s really crickets almost in terms of direct contact and feedback from consumers, but quite a lot of usage, which is encouraging,” said Arcoleo.
Hershey hasn’t done anything yet to begin engaging consumers with the new SmartLabel or prompting them to use it.
“GMA has a whole plan for a campaign to do that once there’s more scale in the market,” said Arcoleo. “We, Hershey, aren't going to be doing any advertising or communications on our own. We'll be using the GMA SmartLabel playbook, and, as appropriate, working that into our brand communications in other ways. Consumer education is going to be one of the planks.”
With SmartLabel included on few products and no marketing yet to promote its usage, Hershey’s SmartLabel implementation hasn’t produced data to suggest it has noticeably affected sales either way.
“I have a very strong hypothesis that it's not moving the needle on sales at all,” Arcoleo said. “It wasn't really intended to be a sales booster. It was intended to deliver transparency information to people so they could know what's in the product and how it's made.”
Hershey plans to add SmartLabel to another 600 items this year, and the balance of the company’s portfolio by the end of 2017.
How GMO labeling legislation fits into Hershey’s plan
Earlier this month, Congress passed a mandatory national GMO labeling standard that is currently awaiting approval from the president. From there, the USDA will have two years to iron out specifics of the law, such as language requirements, the size and placement of the QR code and a symbol that manufacturers can use on packaging.
Hershey intends to continue with SmartLabel regardless of the USDA’s final decisions, but will adapt its language, placement and information to comply with those regulations.
“Since we've already invested heavily in SmartLabel, we have no intention of backing away from that,” Arcoleo said. “Whether you spend the money to print a symbol or a QR code on your package, it's the same spend. Why wouldn't you just use the QR code that links you directly to a website that now is this infinitely scalable platform for information, versus just delivering the required GMO labeling language?”
While SmartLabel has since been positioned as a solution to GMO labeling, Arcoleo stresses that SmartLabel goes far beyond that one particular use.
“Yes, it does have that GMO attribute as part of it, but that really wasn't the motivation or the genesis for the program,” said Arcoleo. “It's gotten tied a little tightly to it. It's important to keep in mind that (SmartLabel is) a window into a huge range of information about a product and the brand and company that brought it to you. When you think about how to leverage it in that way, it becomes a really powerful thing — way beyond telling people whether or not the ingredients were genetically modified.”
SmartLabel adoption is starting to pick up across the industry. Several other companies already list their product information on the website, regardless of whether those products have the SmartLabel QR code on their packaging. They include Bumble Bee, Campbell, General Mills and Unilever.
GMA expects that by the end of 2017, about 34,000 items will have SmartLabel on their packaging, and about 60,000 in 2018, Jim Flannery, senior executive vice president of operations and industry affairs at GMA and a leader of the SmartLabel project, told Food Dive.
“Although we were one of the very strong leaders of this, it's not ours anymore,” said Arcoleo. “We've kind of given away our baby, and it's really GMA's to drive along with all of us that are continuing to be really passionate about having this take off."