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Rewriting the value formula for our food system

Rewriting the value formula for our food system
Amid an awakening of consumers and business to the larger impact of their shopping decisions, the natural products industry is helping rewriting the value formula for consumer products.

As I look forward to the new year, I do so with hopeful and optimistic anticipation that our industry can continue to positively impact the food system. Many argue that our food system has been trapped in a race to the bottom; I agree and believe there is some simple math that is to blame.

Traditionally, the formula for value in the consumer product world has been:

Value = Quality / Cost

‘Quality’ is, for many, a pretty shallow assessment of taste and experience, and ‘Cost’ is the price to consumers. When you follow the logic of this math, one can easily see the risk of getting trapped in the downward spiral of price competition. When you compete on price and when quality is narrowly defined, you can end up incrementally downgrading quality in pursuit of lower price and higher profit. Unfortunately, both consumers and manufacturers have been trapped in this vicious cycle for decades.

In the rapidly growing natural products industry, value (and values) plays an increasingly important role in how businesses and consumers prioritize and make decisions. The good news is that business and consumer are awakening to an awareness of the impact our decisions have on our health and the world around us. With this awakening, we are rewriting the value formula. I’d argue that the formula is evolving to something more complex and balanced:

Value = (Quality + Values) / (Cost + Impact)

Here ‘Values’ incorporates higher-order benefits like health, sustainability, responsibility and trust, and ‘Impact’ reflects the true cost of a product, including the social and environmental impact.

At New Hope, we see these changes both influencing and reflected in the macro forces and trends shaping the industry, and we see it directly in data collected from consumers.

In a recent survey we saw a meaningful difference between how "core natural products consumers" and "mass market consumers" decide whether or not to try a new functional product. On average, core natural consumers rated quality and clean label values as more important than price in making their decision.


Core Natural Products Consumers


Mass Market Consumers
Ranked Most Important Ranked Most Important
1. Premium ingredients 1. Price
2. Simple ingredient list 2. Being on sale
3. Price 3. Simple ingredient list
4. Being on sale 6. Premium ingredients

Similarly, core natural products consumers placed higher importance on the values-oriented product attributes than on experiential attributes.

Core natural products consumers
Mass market consumers
Ranked most important Ranked most important
1. Taste 1. Taste
2. Organic 2. Texture
3. Minimally processed 3. Smell
4. Non-GMO 5. Minimally processed
5. Natural 6. Natural
6. Texture 7. Organic
7. Smell 9. Non-GMO


All of this is very exciting. As this industry continues to grow, we can only hope that we increasingly find ways to influence -- directly and indirectly -- the mass market consumer and larger food system surrounding all of us.

I look forward to our continued growth and influence in 2015 and the role we are having in helping to improve our food system, health and social/environmental responsibility. Happy New Year!

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