Q&A: HowGood's CEO on how sustainability sells groceries
The company's ratings system, which is in about 400 stores nationwide, tells shoppers how "good" food products are — and helps them put their money behind their ideals.
Sustainability and corporate responsibility are increasingly vital to consumers.
According to a 2015 study from Mintel, 63% of U.S. consumers say that ethical issues are becoming more important when it comes to the brands they buy. More than half of all consumers (56%) said they will stop buying brands they deem to be unethical.
But how can consumers know which products are the most ethical and sustainable from an environmental and business sense? Food packaging can say many things about a manufacturer's sourcing, processing and ideals, but it doesn't necessarily paint the entire picture of what a product is about.
Brothers Alexander and Arthur Gillett saw this need more than a decade ago and turned it into HowGood, a company with a ratings system for grocery products. While neither of the brothers had a direct background in food, they both wanted an easy way for consumers to find out which products are truly sustainable.
HowGood's "Best," "Good" and "Great" ratings tags appear on shelves in about 400 grocery stores nationwide — and their use is growing. The company has evaluated more than 250,000 products, ranking them in various sustainability-related categories — including where and how products are sourced, how they are produced, and how the manufacturer's organization operates. Through the company's 11 years, it has received $6.2 million in funding, according to Crunchbase.
Last month, CEO and founder Alexander Gillett talked with Food Dive about the company's success, what's happening in the grocery industry, and how much of a difference sustainability and good corporate citizenship can really make.
The interview, transcribed below, has been lightly edited for continuity.
Food Dive: In general, how is everything going at the company?
Gillett: It's good. It's all about how many different stores we can interact with and work with and keep up with. You know, we've got a lot of interest, and I think the trial results are so strong. ... And at the same time, the industry is becoming more and more aware of consumer interest in this subject matter, and so it's a good fit.
Food Dive: How did you get started with HowGood and create the system that you have?
Gillett: HowGood is a very nontraditional startup story in that we've been around for … 11 years. … Originally, we started off just by starting to gather the data and looking for ways to use it to create educated purchasing decisions. We got stimulus grant funding and brought in our first 12 researchers, and … started to build out this data set and started to work with different industry experts from across the food system to do what we call mapping out the food system. And it's been a steady development since then, working with hundreds of food industry experts, 350 different data companies and [then] really building out the enormous amount of data that you need to first of all understand and then rate the different practices that go into getting the food onto the shelf at the supermarket.
"If you care about these things, but you've got a very busy life, how do you start to vote with your dollars and vote with your conscience and end up with products that are best for you and your family and the world on your plate?"
It was just a case of kind of slow and steady. … My cofounder [and brother] Arthur Gillett was living in London. ... He was there for about three years, and it became very obvious the amount of work it took when he didn't know any of the brands, to just start researching [what was in food]. It was so daunting and there was so much to do to understand all the different impacts of these different companies, different processes, even some of the same practices use different language there, right?
… If you care about these things, but you've got a very busy life, how do you start to vote with your dollars and vote with your conscience and end up with products that are best for you and your family and the world on your plate? … From there, … it was a natural progression as we started to develop and trial different ways of interacting and seeing what worked with people's daily life and their flow.
Food Dive: Had either of you been in the food business in any sort of way before HowGood?
Gillett: No, we hadn't. I mean, I had worked in a pizzeria when I was a teenager. But I don't think that counts. ... I had a minor in environmental sciences and his work — he worked with banks basically evaluating different programs and being able to compare different computer programs against each other and the cost of implementing them across all the different scales and what the return would be. Or computers versus hiring more people in a sector. … Being able to collect inputs and being able to take other people’s understanding and turn those into clear conclusions.
We've used both of those skill sets here, where Arthur is basically pulling together all the food industry experts for the last 10 years now. … Having interacted with that field for so long, his knowledge base is really impressive, but his decision making is done via that platform. So we're bringing together the people to debate the impacts of different growing practices, and then … create rules around that.
Food Dive: How difficult was it to come up with a system that takes into consideration all these different things that go into food and looks at them in kind of a more non-biased way?
Gillett: Oh, it was incredibly difficult. I mean, when we first just started pulling in together just the data, right. Understanding what we thought were all the major inputs at the time. Pulling together that data and starting to funnel it into a ratings system. … It was so easy for one thing to create a flaw in those algorithms and to create either inconsistencies or inaccurate end results. And that was a[n] … over three-year process of working through those to get to a point where the ratings had the kind of veracity and the standards that we expected of them.
Food Dive: Were there any problems with people in the food industry and outside of the industry, trying to get you to get some of these things on a metric? There are a lot of things in the industry that are pretty highly charged, like GMO ingredients and clean labels. Where were the difficulties in making this something that was non-biased?
Gillett: ... Most of those arguments are around an overall evaluation of one thing and it's binary — good or bad. Right? GMO corn is different than GMO papayas. It has different environmental impacts, they have different types of pesticides. … So there's all these different factors that go into each one of these different issues, and though many people might debate whether [and] which ones outweigh each other on a purely binary level, there isn't that much debate on most of those issues. Like whether or not a pesticide is listed as a carcinogenic by government officials is not up for debate. So, the pesticide that is a carcinogenic is needed based on a GMO type of crop, and that will be calculated into the system.
And then, it's the same thing for all of the different types of aspects. We're looking at things down to the growing practices and the processing practices, and what goes into that. And so, in many cases, there is a large correlation between that and a lot of the heavier processed foods, and the products that have more synthetic ingredients and have a higher impact, as well as the ones that people are trying to avoid for health reasons — as a correlation rather than a causation. And that part … goes into our rating.
Food Dive: What is the food industry's reaction to what you do? Have there ever been any entanglements with brands that don’t like their rating, or want to dispute what the rating is?
Gillett: Yes. There have been. We get lots of different companies reaching out with different agendas. Some write us saying, "Hey, we'd like to know why we're rated this way." And we can send them a report. Others say, "Hey, how do we get rated better?" Which is, of course, our favorite because we want companies to get better. That's why we’re a positive-only rating system, because we're trying to support companies being able to make these decisions by showing that customers will buy more of their products when they do make the right decisions.
"We want companies to get better. That's why we’re a positive-only rating system, because we're trying to support companies being able to make these decisions by showing that customers will buy more of their products when they do make the right decisions."
And there's the companies that just say, "Hey, we deserve a better rating and we disagree with you." We welcome them to send us any data [to correct what they say] that is inaccurate in our system, as long as they’re willing for us to publish it. So that it becomes public knowledge, since transparency is part of our platform. And so there's a vehicle there for them to express it.
Typically though, when someone disagrees with their rating, the person [is] calling us from their PR department, and they're talking to our research department. And our researchers typically have more data on their growing practices than the PR person knows because that's not their focus. So, it's not normally really a debate. It's just kind of like, "Well this is why, and let us know if you change anything, or if you have anything that differs." And then it's hard to argue with the factual side of it.
Food Dive: How did you come up with the system with "Good," "Great," "Best"? Was it difficult to come up with? Were you ever thinking of something based on numbers or colors?
Gillett: Yeah. We tried all of those. We tried numbers. We tried red and green. We tried Good, Better, Best. We ended up with Good, Great, Best. Same idea, slightly different wording. … “Better” does not do better than “Good” in the actual impact versus “Great.” … We tried out a lot of different things to see what people were interested in and engaged with and how it would impact them. People don't want to be told not to buy the product that they've bought for the last 20 years for their family.
You can think of it on a purely emotional number. If you're reaching [for] Heinz Ketchup, and someone behind you is like, "You shouldn't buy that," the immediate response is, "Who are you to tell me not to buy that?" Whereas if you're reaching for that same bottle and someone points to the Heinz Organic Ketchup right next to it, and says, "Have you tried this? This is amazing," it's a different emotional response. And that's what we're doing. We're highlighting all of the products throughout.
Food Dive: Was it easy or difficult to get some of the retailers, some of the brands and some of the organizations that you work with to buy into this system?
Gillett: … It takes time and it takes really seeing how people are going to respond. How people in their stores, do they interact? Do they care about this? We used to get a lot of pushback that people didn't think that their customers cared about it. Now I think there's a lot more awareness of the level that customers care, and you see it when their program goes on the shelves. The large changes in customer buying behavior toward more sustainable products, which is why our trials always end up in stores implementing the program, because they see how much it means to customers.
Food Dive: Do you collect statistics on just how the ratings make a difference?
Gillett: Yeah, we do. A “Best” rated product would be about a 230% lift. Yeah, it's huge. You're not selling 230% more milk, but you're selling 230% more sustainable milk. So you're shifting from one milk to another milk. So, we're not convincing people to buy more products. We're convincing them to buy better products.
Food Dive: Is the 230% an average, or is that pretty much across the board for milk? For cereal?
Gillett: Oh no. That's average. I mean in baby food, it can go up to 1,000%. And in certain specialty sections, it can be much, much lower. Lower than 100.
Food Dive: What kind of feedback do you get in general from retailers and from consumers?
Gillett: From the program itself, it's maybe 99.5% positive. … The people who write you are the people who really engaged with it. ... We get a lot of those messages saying, "Hey, how do I get this into my local store?" We get a lot of brands who say, "Hey, can I put this on packaging?" Or, "Hey, I want to understand how all my products do."
"We're not convincing people to buy more products. We're convincing them to buy better products."
So, we get a lot about outreach like that. And grocers … once they see the numbers in their own stores, then they're interested. They want to see their shoppers responding to it. And so, we set up free trials and we'll rate their products in a few of their stores and let them see how interested people are in this.
Food Dive: How has the app changed how things work with the company? Do more people use the ratings when they don't have them in their stores?
Gillett: Well, it asks a lot for people to use the app. We get a lot of downloads and use of the app from people kind of scanning products in their home. Typically, when someone goes to a grocery store, maybe they have their kids with them. Maybe they have a meeting they need to go to. They tend not to be leisurely exploring the grocery store. So people ... [are] not going to need them that much in stores.
The main thing that the app does is when people are exploring the HowGood program, it allows them to have real transparency. So, if there are any products that they're like, "Oh. Why does this product get that rating?" It allows them to kind of dive into it.
Food Dive: Have there been more downloads of the app? Are you running under the radar now and planning on making a big splash at any point in time?
Gillett: It's not a major focus for us. The average scanner takes 30 seconds to scan one milk. The average person is picking between five milks, and they on average spend 15 seconds picking between them without an app. But now you're saying, “Hey, take two-and-a-half minutes to scan those five milks.” … If you look at the history of technology and what has worked and created mass consumer adoption, it [is items that] makes things simpler. You can't quadruple the amount of time someone's going to spend at shelf and expect wide usage and impact. We want it there as a tool for transparency and for anyone who wants to understand the rating. It's not that it's flying under the radar. It's that we don't see it as a tool for creating change.
Food Dive: How is it making a difference in the industry as a whole? With manufacturers and also retailers?
Gillett: We've had manufacturers who see that lift in their sales come up to us at booths literally with tears in their eyes saying that they had no way to differentiate themselves and their standards. And they were having a really hard time making it. And all of a sudden, they got this massive boost in sales, and what that meant for them and how grateful they are. So, we see that. The 230%, when you look at the scale of adoption that we're aiming for across the country with grocers, that shifts our entire food system toward more sustainable products.
"We believe we can have this impact that positively affects the people who are eating the food as well as the people who are making it."
It reduces pesticides. It reduces animal cruelty. It reduces the use of antibiotics. It increases the average ways that farmers are “getting it.” The breadth of impact that it has, or the potential to have, is really massive, and it's why everyone who's at this company is here. It's because we believe we can have this impact that positively affects the people who are eating the food as well as the people who are making it. And so, I think as we scale, it's really exciting.
Food Dive: How about retailers? Do they say that it makes a difference in the traffic that they get and shopper loyalty because it's there?
Gillett: Without question. We hear that a lot and … definitely, that's part of the numbers that we see, is that it creates more people. A lot of people who care about this stuff — but don't have time to research everything — might go to a store that's branded as only carrying those products. And this allows people to say, "Oh, my local grocery store has a lot of these products as well."
Food Dive: Do those people usually use the rankings when they’re in the store, or do people come to stores with the rankings to see what's there, then shop for preferred products in whatever store they go to?
Gillett: Most people interact with it when it's in store. It's definitely the predominant use, but it's still a process. … It's about three months to ramp up to full usage of the program. It takes customers a while to have the time to research it, to engage with it, to do that, which I think makes sense.
Food Dive: What are the company's future plans that you can talk about?
Gillett: … Right now, we're really focused on expanding to the right grocery partners and building this out. And we have a long list of companies that want to do trials. And so, just setting those up and organizing those, and then ideally launching and getting this information in front of as many people as possible.
Food Dive: Are there any other companies like yours that are in consumers’ faces right now with the whole transparency aspect?
Gillett: There's no one who's putting it on shelf. There's no one competing in the direct space that we're working.
Food Dive: How often do you update the algorithm?
Gillett: We call it a living document because it can always be updated. So, there's new practices coming out. There's new studies coming out. There's changes in the way that a substance is being classified. All of those different things. There's no one set of rules that get you there. So, it's a living document, and it will continue to change.
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