The Intangible Appeal of “Natural”: Growing Consumer Interest in an Unregulated Product Label

In recent years, brands and retailers have been scrambling to meet growing consumer desires for “green” product features, such as organic, recyclable, fair trade, and sustainably produced. Driving these desires is an increased awareness of ingredients in various products, accompanied by firm opinions about what ingredients or characteristics may or may not harm an individual consumer or their family. Alongside this growing awareness are concerns about climate change and an interest in helping the environment. In short, consumers want to “go green” both for personal benefits, as well as broader benefits to the world around them.

In 2015 and 2016, “all natural” topped the list of green product features that resonate best with consumers. More than any other green feature, consumers are undeniably drawn to natural products, particularly when shopping for food or beverages. To further explore this interest in natural, Euromonitor uses the results of its Global Consumer Trends survey and addresses the following questions:

  • Where is interest in “natural” highest?
  • Why do consumers seek out “natural” products when the label is often unregulated?
  • Will consumers pay more if a product is labeled as “natural”?
  • Where is consumer interest in natural products headed?

Where is interest in “natural” highest?

  • Natural product features seem to appeal to consumers in a way that more specific green labels such as eco-friendly and organic do not. Fifty-five percent of respondents look for natural features when buying products in at least one category, compared with 41% who look for eco-friendly features and 39% who look for organic.
  • Interest is most widespread among internet-connected consumers in emerging markets like Turkey, India, China, and Colombia. There, well over two-thirds of respondents look for natural features in at least one product category.
  • Natural” labels are especially important to consumers when they are deciding what food to buy. This interest has remained steady (and high) over the past five years; nearly half of global respondents indicated an interest in natural foods in 2013, 2015, and 2016.

Why do consumers seek out “natural” products when the label is often unregulated?

  • In most markets and for most product categories worldwide, “natural” is an unregulated label, which means that brands are able to advertise products as natural, regardless of specific ingredients or other characteristics. Even with such high interest in natural products and ingredients, the majority of consumers are aware that the term is not tied to a measurable definition; only 26% of survey respondents believe that natural is a regulated label.
  • However, consensus that the label is unregulated does not mean that consumers lack trust in natural features or ingredients. Instead, we see quite the opposite: in 2016, over half of survey respondents indicated that “natural” labels were trustworthy.
  • Indeed, trust in natural labels has been on the rise for several years, even as consumer awareness that the term is regulated has also grown. So why the paradox? What draws consumers to natural products and features, even when they know the term may be cause for suspicion?
  • When asked to define the term, over half of survey respondents agree that a natural product is chemical free and does not contain artificial additives, including those in the minority who do not trust the label. Although they know the term itself is unregulated, consumers may see a “natural” label as standing in for other positive product attributes, such as being plant-based, unprocessed, or not containing artificial additives. In other words, a “natural” label may be the closest thing to reassurance for a consumer who is afraid of putting harmful ingredients in, on, or near themselves or their family.
  • Agreement and enforcement of a “natural” definition may be on the horizon. Already, the Center for Science in the Public Interest has filed a number of class action suits against companies for misleading consumers with natural claims where artificial ingredients are present. Regulatory bodies, such as The Danish Council on Ethics and the FDA, are also beginning to approach the issue, though it could be some time before agreement is reached (see Euromonitor’s Ethical Labels system for more details).

Definition of Natural, by Trust in the Label

definitions-of-natural-products

Source: Euromonitor Global Consumer Trends survey 2016

Note: Showing percent of respondents selecting feature in response to question “To me, a ‘natural’ product is one that is:”. Respondents able to select multiple responses. Fifty-five percent of respondents fit into the “trust natural labels” category. Ten percent of respondents fit into the “do not trust natural labels” category.

Will consumers pay more if a product is labeled as “natural”?

  • Although many consumers seek out products with natural ingredients and features, enthusiasm wanes when they are faced with the prospect of paying more in exchange for natural. For example, within the fresh food category, where natural matters the most, nearly half of survey respondents report interest in natural features, while only one-third are willing to pay more for these features.
  • Still, more consumers are willing to pay extra for natural products than those with other green features. Thirty-nine percent of respondents are willing to pay more for natural in at least one product category, compared with 29% who will pay more for organic and 20% who will pay more for non-GMO. The gap between those interested in a feature and those willing to pay more for it is roughly the same across green product features, somewhere between 10 and 15 percentage points, as illustrated in the chart below.
  • Willingness to pay more for natural follows the same patterns as general interest in these product features and ingredients, without any unexpected stinginess or overspending among consumers in each country. Just as interest in natural product features is most widespread among internet-connected consumers in emerging markets, willingness to pay more for natural is also highest among these consumers. Turkish and Indian consumers are at the top; two-thirds of respondents in these markets are willing to pay more for natural.

Comparison of Interest in and Willingness to Pay More for Product Features

interest-willingness-pay-more-natural-features

Source: Euromonitor Global Consumer Trends survey 2016

Note: Showing percent of respondents interested in and/or willing to pay more for listed green feature in at least one product category.

Where is consumer interest in natural products headed?

  • Current interest in natural product features is most widespread in older consumer groups. While interest in other green product features, such as eco-friendly and organic, remains relatively stable across age groups, interest in natural increases with age. The percent of respondents interested in natural features in at least product category jumps from 47% of 15-19 year olds to 62% of those 65 and older. This gap between the preferences of younger and older consumers is starkest in food categories.
  • While general interest in natural product features is lower among young consumers, beliefs about natural products do not vary drastically by age. Consumers in all age groups seem to roughly agree on the definition of natural and on how trustworthy the label is. In addition, younger consumers tend to be more likely to think that natural products are better for the environment and healthier than non-natural products.
  • Can we reconcile perceptions of natural products among young consumers with their relative lack of interest in products with natural features? It does not appear that these younger generations are swapping interest in natural features with another green ingredient or characteristic and the growth in overall interest in natural within this segment outperforms that of other age groups. In 2013, 33% of 15 to 19 year olds looked for foods that were all natural, jumping to 43% in 2016.
  • Perhaps interest in natural will grow in this segment as young consumers age and become more aware of the products they buy for themselves and for their family. Indeed, parenthood can be a strong driver of interest in natural; 42% of parents look for “all natural” children’s products and 51% look for natural fresh foods, compared with 43% of non-parents.
  • Whatever direction consumer interest in natural features takes in future years, in the short-term brands and retailers should recognise the powerful effect this label has on global consumers and position their products and marketing campaigns accordingly.

Interest in Product Features, by Age

interest-product-features-age

Source: Euromonitor Global Consumer Trends survey 2016

Note: Showing percent of respondents within each age group with interest in indicated feature in at least one product category.