Transparency: The Must-Have Ingredient for Food Companies

Transparency: It’s obviously important, but for companies recognizing the need to make it a part of their brand, the best way to proceed is—ironically—not that clear. Customers want transparency, and manufacturers want to deliver it. But figuring out how to make processes transparent, how to build consumer trust, and how to make sure your customers retain their confidence in your organization in an atmosphere of polarized discussion is a complicated set of decisions to make.

“Transparency is no longer a ‘nice to have’ quality for food companies—it really is mandatory in the eyes of the consumer,” explains Katy Jones, chief marketing Officer for FoodlogiQ. “Building a culture of transparency focused on safety and quality is critical for food companies.”

Putting it in even starker terms, Prof. Ravi Jadeja, food safety specialist at Oklahoma State University’s Robert M. Kerr Food & Agricultural Products Center, frames transparency as a consumer right.

“Consumers are entitled to accurate information about their food,” he says. “They should be empowered with as much information as possible related to food safety, quality, origin, and sustainability, so that they can take informed decisions related to their food.”

As well, adopting transparency creates new customers while making old customers happy, notes Reid Paquin, industry solutions director, food and beverage, at GE Digital. “The data shows that product transparency impacts purchasing decisions,” he says, “and those brands that take advantage can increase their market share. Companies that believe food transparency is not a top consumer priority are putting themselves at risk.”

The Challenge of Change

Companies who are arriving late to the transparency game have perfectly good reasons for being behind: When an aspect of manufacturing that has never previously been a priority suddenly comes to the fore, the shift in focus demands an enormous investment in change.

Charlie Arnot, CEO of the Center for Food Integrity (CFI), is happy to see manufacturers turning toward transparency, but he notes that sending out the internal memo announcing the decision to become more transparent is only the first of a long series of actions, each increasing in complexity.

Arnot explains, “The procurement department gets that memo and they say, ‘We’re going to start sharing a lot more information about where we get this product. But do we know how those vendors get their products? How far back do we have to go?’ Someone in corporate social responsibility will say, ‘This is a great move and we applaud it, but have we established what we’re going to talk about and what our values are?’ The first thing you have to focus on is getting internal alignment and making sure you’ve got buy-in from the entire organization. Then put together a process that allows you to say, ‘Here are our values. Here’s our commitment to transparency. Here’s the information we’re going to be willing to share.’”

Jones agrees, noting that transparency is ultimately about communication, and it needs to reflect supplier onboarding and effective internal communication in order to work properly when made plain to consumers.

“Open and transparent communication with your suppliers is a must for addressing these issues,” she notes. “After all, you can’t offer consumers the information they crave about your product and processes if you aren’t getting that information from your suppliers and brokers. And you cannot expect a supplier to fulfill your requirements around safety and brand promise if you aren’t open about your expectations. It’s a two-way relationship that can make a huge difference in your business.”

Yet even gathering the information that the company will now make transparent can be a challenge, because if transparency has never previously been a goal, the information may well be stored in a manner that will be laborious to bring into the light.

“A lot of companies still use manual or paper-based processes,” Paquin says, “especially when it comes to traceability. These systems are simply not accurate enough and cannot provide the visibility that is needed to provide the transparency consumers want. Traditionally, the ROI to replace these systems with automation has not been the strongest. Manufacturers would make investments for other initiatives, say a system to improve productivity first.”

Traceability

For some in the industry, the linear “one up and one back” approach to supply chain transparency has sufficed thus far, says Jones, but that’s unfortunately outdated in the present climate. Knowing only the information one step back and one step forward in the supply chain is no longer enough.

“To give consumers the transparency they want,” Jones underlines, “it is imperative that a company implement whole chain traceability, rather than relying solely on the movement of product within its own four walls.”

Adopting that level of transparency will cost capital, but Jones stresses companies need to understand that it’s also an investment that pays a healthy dividend.

“Transparency in food marketing can be driven by the data that is assembled when implementing a traceability program,” Jones explains. “Traceability provides visibility into the data about your products and how they move across your supply chain. Imagine being able to tweet with real-time data about the food you produce. It can be an incredible marketing advantage in the food industry. Traceability can enhance compliance with federal and state food-safety regulations, and significantly reduce the time it takes to resolve a food recall or withdrawal, which helps tremendously with establishing and maintaining consumer trust.”

A study Paquin conducted within the last few years recently showed that 45 percent of respondents had a formal traceability solution in place, he explains, but it also revealed that having a system in place alone was not enough to guarantee market share. Track and trace technology, with a two-way information flow from trace-back to trace-forward, made a deciding difference.

“From a practicality standpoint, traceability is really about what you can track within your system,” Paquin says. “Leaders in the industry were more likely than their peers to be able to track and trace their products from any stage in the value chain. This includes details on suppliers used, operators who worked on the product (or an ingredient that was mixed into the product), equipment used in the manufacturing process, distribution, and even any customer complaints. Without an integrated system, a manufacturer will not be able to provide the transparency that consumers demand today.

Jones, too, cautions against doing transparency by halves, or by trying to claim transparency without actually putting in the work it demands.

“Where food companies go wrong is when they attempt to market ‘farm-to-fork’ in an inauthentic way,” she says. “Consumers are getting smarter about these marketing programs and want more data-driven marketing. They want real-time information backed by real data.”

What Consumers Think And Know

A significant challenge manufacturers face, says Arnot, is becoming the source consumers turn to for information about their food. In a climate of alarm over “fake news,” debates over the merits and harms of GMOs, and other deeply debated topics, Arnot notes that “People trust information from their peers before they trust information from experts. If that’s the case, how do we begin to engage with those peers in a more effective way? It’s very challenging.”

Having surveyed widely on the subject, Arnot reports that over the past seven years, the number of consumers who believe they have all the information they need to make decisions about their food has been steadily increasing. The problem is that the information that makes consumers feel informed may not be true.

“People feel empowered by the ability to access information,” Arnot says. “The challenge for the food industry is that it might not be accurate information, and it might not be coming from the food system. That’s one of the places where as a food system we need to figure out where we can improve. We have to be in the places consumers go to find information.”

Arnot singles out Campbell’s and Hershey for their recent successes in making information available through SmartLabels and QR codes (a system also endorsed by Jones, whose FoodLogiQ sells software that generates such codes). This is effective in giving consumers one-stop information.

Also recently launched is the SmartLabel Sponsored by Mondelēz International app that makes in-store access to detailed product information on Mondelēz’s snacks possible from smartphones. More than 1,100 products across its U.S. snack product portfolio—biscuits crackers, cookies, chocolate, gum, and candy—are searchable through the new app as well as online at www.smartlabel.org.

For more complex information, however, consumers will likely contact the manufacturer. At that point, Arnot underlines, it is integral for companies to be ready to respond as quickly as possible.

“If someone decides they’re interested enough to send an inquiry to the Contact-Us button on your website, the expectation is that they’re going to get a response within eight hours,” he says. “If you don’t make that happen, then you begin to be perceived as less responsive, and that equates to less transparent. We know consumers are looking for ‘The information that’s relevant to me, when I want it, from the source that it want it from, at the time that I want it.’ That’s part of what creates the challenge for companies today.”

Arnot also encourages developing company websites that are simple, clear, and user-friendly. The CFI advises manufacturers to strive for websites that will not challenge consumers, leading them to become frustrated and give up. When the CFI has had third-parties evaluate company websites, he stresses, invariably, manufacturers believe they are far more transparent than they actually are.

“Companies would say, ‘It’s there! You really just have to know exactly where to find it! You just have to go six clicks in on this particular tab and stand on your left foot on Friday, and it’s there!’” Arnot laughs. “Really, the three-click rule applies, where anything should be available to you within about three clicks. That makes sure you’ve got your website organized in such a way so that people who are interested in your ingredients, where your products come from, your sources, your people, impact on the environment, can find whatever they’re looking for quickly and with a minimum of obstacles.”

Trust

Arnot reflects that during the battle over genetically modified organisms, the idea of “GMOs” became a shorthand for consumers to express distrust in industrialized food systems. For that reason, he and the CFI want to see manufacturers cultivating trust among their customers: If companies can encourage consumers to trust them, that means consumers will be more likely to get information from them directly, rather than going through blogs and social media discussion groups where the information shared may be less accurate and more shaped by ideology. However, in order to promote trust among consumers, manufacturers need to build practices consumers can have faith in.

“The primary driver of trust is the perception of shared values—that’s three to five times more important in building trust than providing factual information,” Arnot explains. “It’s about helping people understand: What are the values of your organization? What do you stand for? What do you believe in? Are those values consumers can align with? And how do you actually demonstrate those values in your organization? Above all, consumers want to know most about a company’s practices. Because the practices are what you do every day, they really are your values in action. They want to know what you do, why you do it, and your values. That level of transparency gives consumers a greater sense of confidence they can trust.”

For Jones, an important component of building consumer trust is showing transparency as a part of all levels of an organization.

“It’s critical to build a consensus for transparency from the top down,” she says. “For example, an executive can be transparent when addressing recall issues with the public on social media or the company blog.”

Trust can also be built with support from outside your company, reminds Prof. Jadeja, who noted that products bearing third-party verification seals are perceived as higher-quality products, particularly by consumers in European countries.

“There are several Global Food Safety Initiative-benchmarked food-safety and quality schemes that allow food processors to use their logos on food packaging (for example, SQF Quality Shield) if processors meet the stringent food safety and quality requirement established by the schemes,” says Prof. Jadeja.

The two areas that consumers value third-party verification most highly, says Arnot, are in the attestations of the treatment of animals and in food safety. “There’s a higher value of third-party verification there than any of the other areas we tested. When it comes to food safety and animal care, that’s where consumers really look for third-party verification and use that as a barometer of whether this is a company they can trust. Once again, you can’t do transparency without trust.”

Trusting Consumers

The last part of the trust equation, Arnot says, is to trust customers to understand your business and its intentions. Shifting to a more transparent way of functioning is a long process with a steep learning curve. But, he says, if you’re frank with your client base about what you’re doing and why, they will understand. Let them know that what you’re undertaking will be ongoing and as a result you may not get it right every time, but regardless of whether you make mistakes, you’re nonetheless genuinely committed to the task of transparency—and let your customers know that you’re willing to talk with them directly about it if they have any questions.

“People will give you the benefit of the doubt if you help them understand that it’s a process, it’s not something where you turn a switch and today you’re transparent even if yesterday you weren’t,” he says. “You have to get buy-in from the organization, you have to establish your values, talk about what you’re going to communicate, and then make sure your consumers understand that you’re on a journey with them, and if they’d like more information, they should let you know.”

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Staniforth is a Montreal-based freelance journalist. Reach him at [email protected]