Consumers willing to pay 75% more for known ingredients: Survey
The survey, run conjointly by PR group Ingredient Communications and Surveygoo, found that up to 44% of respondents would be willing to pay 75% more for a product containing ingredients they knew and trusted.
Taking responses from 1300 people throughout Europe, the US and Asia across all age groups, the study showed up to 73% of people would accept higher retail prices for the knowledge of consistency and quality in an ingredient.
52% said they would pay 10% extra or more, whilst close to a fifth (18%) of overall respondents would pay 75% extra or more.
Branding specific ingredients is rare but has on occasion been successful. Results from other markets, of which the ‘Intel Inside’ brand is a ubiquitous part of a plethora of parent brands, shows the potential of this strategy.
Richard Clarke, director of Ingredients communication, told FoodNavigator: “The intel processors are essentially just ingredients for the home computer market… If it works for selling laptops, then why not food and drink?
"Co-branding can develop consumer trust and provide a clear signpost for differentiation, which can be converted into higher spend, loyalty and repeat purchases.”
But not food ingredient brand has achieved that level of success.
One of the most successful ingredients ever to be co-branded was NutraSweet, a branded aspartame that was used in a host of well-known products such as Diet coke.
The NutraSweet logo, once ubiquitous, is now rarely seen on any branded product.
The NutraSweet company spent large amounts of money advertising the ingredient and its brand, up around €50m annually in the mid-1980s.
Whilst this built the profile of the product substantially, NutraSweet’s patent ran out in 1987 and the ingredient could no longer be branded in the same way and links to health issues, although largely discredited, damaged it further.
That level of spending is unacceptable to most ingredient producers, though the success of NutraSweet and the continued consumer demand for such ingredients is evident.
Co-branding can work?
Many companies are reluctant to take branded ingredients into their products for fear it will constrain the freedom to experiment and compete with cheaper alternatives.
Clarke said the food industry faces a difficult task in using the Intel Inside method effectively, but not an impossible one.
“I think it is important to increase your profile within the food and beverage industry before starting so that people recognise you - principally through B2B public relations - in order that manufacturers are willing to try it.”
He gave two stories highlighting the making of success and failure in this area.
“Solae – a soy protein brand developed by Dupont and Bunge in 2003, attempting to create an Intel Inside for soy – didn’t work out. Although it was a nice brand it wasn’t particularly unique and the benefit wasn’t clear enough to consumers. They spent €5.75m on advertising in 2004 but the ingredient failed to bring the needed returns.”
“On the other hand, LGG [recently acquired by Chr Hansen from Valio] is seen on many different brands today and has been a major success.
"The key to this was being known as the world’s most well-documented probiotic bacteria, researched in depth across all age groups, and as a result has been proven a uniquely and consistently high quality ingredient”.