As the natural food industry continues to grow, product developers need to anticipate—and effectively react to—changes in consumer needs and expectations, as well as any imminent restrictions or mandates on using the term. Staying ahead of these shifts will allow developers to create products consumers crave while delivering on the expectations associated with products marketed as “natural.”

What exactly does “natural” mean? While it would be great to have a clearly delineated messagefor the term, so far the regulatory agencies have yet to fully define it. While no formal definition exists, in direct response to consumers’ request for a precise definition of what constitutes the term “natural,” the FDA delivered a response in 2016. The agency considers the term “natural” to mean that nothing artificial or synthetic (including all color additives, regardless of source) has been included in or added to a food that would not normally be expected to be in that food.

The biggest questions that remain unanswered by the FDA relate to growing, processing, and production parameters, such as use of pesticides or specific food processing methods. These gray areas are left up to the manufacturers and end users to interpret and set individual standards for.

The USDA has attempted to add some clarity to the term in regard to the products it governs, i.e. meat, poultry, and eggs. The USDA stated that “natural” means that the product "does not contain any artificial flavor or flavoring, coloring ingredient, or chemical preservative…or any other artificial or synthetic ingredient," and that the product and its ingredients are not more than minimally processed. The agency also further clarified that "minimally processed" means "the product was processed in a manner that does not fundamentally alter the product."

Despite those pronouncements by the FDA and USDA, many aspects remain unclear and open to interpretation. This makes it a challenge for both consumers and manufacturers to truly understand what is considered “natural.”

On the market

The natural market is estimated at $69.2 billion, with +6% 2-year CAGR, according to research by Future Market Insights. By comparison, in spite of the looser definition and lesser restrictions, this is only around half the size of the organic market, which is expected to reach more than $176.5 billion this year, on an estimated CAGR of 12.1%. For perspective, data from SPINS places the overall food market at $996.4 billion on a CAGR of 3.4%.

One of the biggest drivers of natural foods is an increase in consumer preference for obtaining functional or health and wellness benefits from foods and beverages instead of pills and potions. Consumers are more educated about ingredients than ever before and thus are becoming avid label readers. Moreover, the desire for food and beverage products that can deliver on health and wellness is not tied to a single generation or age group. The appetite for natural foods and the health connotations associated with them spans all generations.

Building natural

The best guidance for developing natural products is to understand the standards that buyers and end-users already have set and defined. For example, Whole Foods, Trader Joe’s, Chipotle, and Panera Bread all have very clear lists of what they consider “unacceptable” ingredients not permitted in any products they make or sell.

Consumers also are guiding what “natural” means. Right or wrong, their perception of what is natural, clean label, or healthy can be varying and inconsistent. For example, consumers have tied the notion of “healthy” to the natural designation, which can be an advantage when developing food products in this category. However, for products to succeed, they must deliver something tangible to fulfill what is promised or implied by the labeling.

Natural colors and flavors are among the most common and the best defined ingredients when building a product with a “natural” designation. But they also can be the most challenging in formulation. Natural flavors and colors must be stable for the product pH, and processing methods, and they need to have a shelf life close to that of conventional products that contain artificial colors and flavors. Natural flavors and colors, and even texturants are more susceptible to change over the shelf life of a product.

Sometimes, the use of such ingredients can call for alternative processing methods or may necessitate including additional ingredients, such as flavor boosters or maskers. In some cases, turning to different packaging formats can help alleviate the issues related to ingredient or production alterations.

Fortunately, in recent years ingredient technologists have made impressive strides that reduce many of the differences between these ingredients and their conventional counterparts. Partnering with such ingredient specialists can be a great advantage for product developers and manufacturers.

Natural competitors
More organic products are hitting store shelves than ever before, and it is important to consider shifting consumer sentiment towards organic products.

So far, many consumers have demonstrated a willingness to pay the higher price point associated with organic products. Plus, as supplies of organic ingredients increase, prices decrease. Yet natural products have fewer restrictions and regulations associated with the term natural, versus the strict regulation of organic product labeling. So how is it that, as strong as the natural market is, the organic market is much larger and is growing faster?

While some consumers value the difference between conventional, natural, and organic products, many consumers see the lines as blurred and do not differentiate between "natural" and "organic" designations. Add “clean label” and non-GMO identifiers into the mix, and those lines can get blurrier. Yet they do seem to be aware of the strict regulations around organic certification.

Consumers actively seeking both natural and organic products tend to be less sensitive to price than consumers of traditional products. Product attributes that are most important to these consumers include flavor, quality, nutrition/health claims, and sustainability.

While this could get strained in the face of an economic downturn and dramatic increases in food prices, consumers still consider the equation balanced in terms of flavor and added value of natural and organic products. That calculation may favor natural products a bit more, as they often have a slightly lower price point than their organic counterparts.

If government agencies are not leading the way in defining the term “natural,” litigation could well form the cornerstones of what is and what is not allowed. Ascorbic acid, DL-malic acid, citric acid, and even per- and polyfluoroalkyl substances (PFAS) levels have been involved in lawsuits that are helping to further define what is allowable under the label “natural.”

A good example is the lawsuit against AriZona Beverages involving coloring, with the litigants targeting certain products that contain additional coloring from beta-carotene, fruit and vegetable juices, and annatto—all three readily derived from nature and not only not harmful but even beneficial to health.

Sweeteners also have come under fire, with stevia, monk fruit, and more recently, erythritol landing in the headlines. Many sweeteners have been marketed as “natural,” as they can be found in nature, but the processing methods used in their manufacture can “cancel out” that aspect. (Note that synthetic is different from artificial. Artificial is defined as “not found in nature,” an important distinction.)

From the FDA’s perspective, depending on how it is derived, a natural sweetener may be “manufactured artificially.” This is one of those aspects of “natural” that leaves much room for interpretation. Consideration of the source and processing of the ingredient can impact how these ingredients are defined. These examples just reinforce the position that the term “natural” must be considered carefully before adding it to a label.

Even with the vagueness surrounding the term “natural,” the channel is continuing to grow and evolve. Moreover, there remains great opportunity for new product growth, with the caveat that new products must speak to consumers’ desire for—and more acute knowledge of—the ingredients in them. But developers can certainly create products that deliver on flavor and quality, while still fitting the yet-to-be fixed definitions of what is considered “natural.” PF