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    Navigating Regulatory Compliance: The Essential Role of Accurate Product Information in Grocery Retail

    May 16, 2024
    10 minute read
    Navigating Regulatory Compliance: The Essential Role of Accurate Product Information in Grocery Retail

    The U.S. grocery retail market remains strong, with in-store sales topping $880 billion in 2023, and e-retail revenue crossing the $920 million mark, according to Statista.

    For grocery brands to stand out in a growing market, however, they need more than great products — they must provide accurate, in-depth information about component ingredients, food origins, and nutritional value.

    With just 52% of consumers saying they trust food labels and 60% stating that information on labels doesn’t prevent fraud or guarantee traceability, better labels can be the difference between customers making a purchase or taking a pass, according to the National Library of Medicine.      

    To ensure consistency and transparency, the Food and Drug Administration (FDA) has created a set of regulatory standards that brands must follow when creating food labels and providing product content to retailers.

    Examine why accurate grocery information matters, what can happen if companies provide inaccurate data, and how brands can streamline the regulatory process.

    Why Accurate Grocery Information Matters

    Accurate food labeling is critical for complying with regulatory rules designed to combat what’s known as economically motivated adulteration (EMA), or food fraud, notes the FDA.

    This occurs when businesses leave out, remove, or substitute product ingredients to decrease production costs or increase the product’s perceived value. Estimates suggest that EMA costs the food industry more than $15 billion yearly.

    In the best-case scenario, improperly labeled products lead to consumers paying more for less. In the worst case, substitute ingredients or formula changes could lead to health issues such as allergic reactions.

    As a result, the FDA has developed in-depth labeling rules that define everything from food label size and position to nutrient declarations, serving sizes, and specific health claims. 

    Complete product data also plays a critical role in retailer relationships. With the grocery market shifting from entirely on-site to hybrid digital/physical purchasing, retailers must create omnichannel experiences that meet customers where they are, not where brands want them to be.

    Accurate product information is critical to building consistent in-store and digital marketing materials that give customers the information they need when they need it. In practice, this means developing content showcasing brand value across digital and physical shelves to provide a unified customer experience.  

    In addition, accurate food labeling impacts customer purchasing decisions and brand confidence. National Library of Medicine research finds that “food label information is the most effective tool to guide consumers in the food selection process.” 

    Consumers are looking for labels that are clean, simple, and accurate. Meet buyer expectations, and they’ll come back — fail to do so and they’ll choose other brands.

    Food Fails: Consequences of Inaccurate Information

    There are several potential consequences for brands if on-package information is inaccurate or doesn’t match the information given to retailers.

    Product Recalls

    If label details don’t match the information given to retailers, or if the labels are inaccurate, the FDA can force companies to recall any affected product and halt food production until the issue is addressed.

    For example, in 2021 the FDA discovered that a juice processing company had been mixing out-of-date, contaminated grape juice with new grape juice to avoid wastage. The company was barred from operation until new food safety processes were implemented.

    For brands, both recalls and work stoppages cost time and money. Recalled products mean refunds issued while implementing new safety processes can take weeks or months. 

    FDA Fines

    The FDA can also fine companies for compliance failures. In one case, a seafood company was fined $500,000 for mislabeling its crab products. These fines can also extend to individuals — in the same case, the company owner was fined $250,000.

    Missed Sales

    If the FDA mandates a production stoppage, grocery brands can miss out on sales opportunities. Since stock can’t be replaced, retailers will run out of inventory. They can’t leave shelves empty, meaning they’ll likely partner with another brand, resulting in lost sales. 

    Reputation Damage

    According to Salsify’s “2024 Consumer Research” report, 72% of shoppers view positive customer reviews as “extremely” important when deciding to make a purchase.

    Thanks to the speed of social media, news and reviews travel fast, meaning that if brands face a recall due to mislabelling (even if accidental), their online reputation could suffer.

    If brands are upfront about the issues and clear about what comes next, they may be able to salvage most of their reputation. If not, they may find themselves with significantly diminished market share, or entirely out of business.

    4 Ways Brands Can Streamline the Grocery Retail Regulatory Process

    The regulatory process isn’t static — as consumer expectations evolve and new products are developed, the FDA both updates existing rules and develops new regulations. To keep pace, brands need solutions capable of handling both the speed and scale of regulatory change.

    In practice, four components are critical to keep pace.

    1. Category Compliance Guides

    Label and data compliance varies across grocery items and the ingredients used in these items. For example, companies can’t use the terms “tomato paste,” “tomato puree,” and “tomato pulp” interchangeably. Instead, the correct term is based on the amount of soluble solids present. Brands can, however, use the term “tomato concentrate” as a catch-all term.

    As a result, it’s worth implementing a compliance management solution that includes compliance guides for multiple food grocery categories along with best practices from leading grocery retailers. These guides can help brands boost compliance while reducing complexity. 

    2. Artificial Intelligence (AI)-Enabled Validation

    Evolving AI tools also form a core component of effective grocery management solutions. New tools are capable of using AI-powered workflows to review product content — such as marketing copy, nutrition information, and allergen information — and evaluate this data against compliance standards and best practices. If errors or discrepancies are detected, the solution provides suggestions for compliant alternatives.

    3. Expert Auditing

    While AI offers a great starting point for grocery compliance, there’s no substitute for human expertise. As a result, brands are best served with solutions that include human-powered validations of package data. Including humans in the loop, both boosts accuracy and lets brands create an up-to-date, single source of truth.

    4. Label Visualization

    With FDA label regulations constantly evolving, it’s worth investing in solutions that can create label visualizations on demand. These visualizations help ensure that product information is visually appealing and in line with compliance regulations, in turn reducing the risk of fines or recalls.

    Food for Thought

     FDA compliance regulations are evolving to meet changing consumer demand, ensure food safety, and promote market transparency.

    For grocery brands, ongoing compliance requires both recognition and action: recognition of the potential pitfalls that come with inaccurate or misleading labels and action to implement product management solutions capable of meeting current requirements and scaling to meet the next generation of regulatory expectations. 

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    Written by: Doug Bonderud

    Doug Bonderud (he/him) is an award-winning writer with expertise in ecommerce, customer experience, and the human condition. His ability to create readable, relatable articles is second to none.

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