November 2012

Australia to adopt star-based food labels system

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This blog has often reported on various issues that consumers and organizations have brought up about food labels. For example, in this past election, California residents voted down a proposition that would require that genetically modified foods sold in the state to be labeled as such. While that may have been a striking moment in the food labeling market, it's certainly not the end.

According to Lateline, the Public Health Association of Australia is adopting a policy where a food product will be given a custom label based on its nutritional value to consumers. While many countries have implemented a stop-light system for this – with green meaning healthiest and red meaning unhealthy – Australia is choosing a star system.

The more stars a product has on its food label, the healthier it is for consumers.

"The message will be very, very simple and straightforward. If you like, a five-star system it's very good for you," Michael Moore, from the Public Health Association of Australia, told the source. "Something that only has half a star, well sure, you'll eat it occasionally, but it's not a food you would choose for its nutritional value."

For local grocers or retailers that produce their own brand of food products, adopting food label practices such as this, or the previously reported on stop-light system, can help separate the business from competitors. In addition, it may also increase customer loyalty as consumers could use the company's rating system as a benchmark for healthy diet choices.

By investing in a Primera LX900 color label printer, companies can create high-quality labels needed to ensure consumers are attracted to the product from across the aisle.

ConAgra purchases Ralcorp to become largest private-label food manufacturer

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ConAgra Foods, one of the largest food producers in the United States, just acquired Ralcorp Holdings for $4.95 billion, making it the largest private-label food manufacturer in the United States.

According to the Wall Street Journal, consumption of private-label food reached a peak in February 2011 at 29 percent of the market, but has slipped down to 28 percent since then. In addition, store-brand food labels have increased since 2008, rising from 18 percent to 22 percent.

This may be because store-brand producers such as Whole Foods, Trader Joe's and Costco are becoming more "sophisticated" with their ingredients as well as taking in a larger profit on store-brand products than private-labels. Furthermore, the source stated that by developing store-brand labels, companies are able to develop customer loyalty and differentiate themselves from competitors more easily.

"The national brands are not going to roll over," Harry Balzer, chief food industry analyst for research firm NPD Group, told the Journal. "They are responding with their move to everyday low pricing."

Which is why ConAgra's purchase of Ralcorp is critical as it quadruples the size of the private label food industry and makes the company the second-largest packaged-food company behind Kraft.

Regardless of the how ConAgra's acquirement of Ralcorp may affect the industry, store-brand products will continue to be profitable for retailers and grocers. This is especially true if companies can use custom labels as a way to market themselves toward the local economy better than major brands. By investing in a Primera LX900 color label printer, companies will be able to produce the high-quality labels needed to do so.