I have a bunch of Google alerts set to pick up blog postings about peanut butter. And what I've learned is that people are really confused by the labeling and ingredients in peanut butter products, and they especially confused about the difference between "natural" and "organic" peanut butter. Justifiably so, because it is confusing. Here is my explanation. It is long.
In the beginning, there was peanut butter. It was all the basically the same, consisting of ground peanuts, and, almost always, salt. The liability of this peanut butter, then as now, was that the oil in the peanut butter and the solid components would separate over time with the oil coming to the top. This is because peanut oil is liquid at room temperature.
In the 1920's and '30's, the separation problem was solved by adding hydrogenated vegetable oil to the peanut butter. This had the effect of making the oil solid at room temperature (think Crisco). Added in small amounts (as little as 1% by weight) by skilled manufacturers, the hydrogenated oil was enough to prevent separation.
As time passed, manufacturers figured out that hydrogenated oil was cheaper than peanuts. As was, I believe, sugar. So these ingredients began to be added to the product in higher and higher amounts.
In response, the Food and Drug Administration passed a rule (21 CFR 164.150) that provided a "standard of identity" for peanut butter. This provides that to be labeled "peanut butter" a product must be 90% peanuts. Anything with less than that must be called "peanut spread" (21 CFR 102.23).
Under the general requirement that foods use ordinary and customary descriptors on their labels, peanut butter labeled as "natural" or "old-fashioned" contained only peanuts and (usually) salt.
So, for the last 30 years or so, the world consisted of two kinds of peanut butter: homogenized peanut butter and "natural" or "old-fashioned" peanut butter. This was pretty simple, and I think everybody knew the game.
Coming forward to today, first add USDA organic standards. These rules has nothing to do with the prior regime created by the FDA. Either homogenized or old-fashioned peanut butter can be organic, so long as the ingredients meet organic standards, and they are made in a facility that meets organic standards. The result is that not all organic peanut butter is "natural" by the ordinary, traditional nomenclature, nor are all natural peanut butters organic.
It gets worse.
Recently, the food marketers have gotten aggressive with labeling again, and I believe this is leading to additional customer confusion, based on what I'm seeing on the blogs. (I'm not going to name names here because I didn't create this blog to attack competitors.)
Some companies have begun describing as "natural" peanut butter products that contain both palm oil as a stabilizer, and sugar. Others have created products that contain 90% peanuts and a variety of other ingredients -- including things such as flour and chocolate topping -- which are being sold as "peanut butter spread." Yet the most prominent word on the label is "natural," which again, some bloggers, wrongly in my view, are describing and reviewing as a natural peanut butter.
On top of that, there are all of the various peanut butter and flavor combinations on the market -- pb and honey, pb and chocolate, etc. etc. There are a number of peanut butter products that have enhancements that are marketed towards health and nutrition oriented consumers -- pb with Omega 3's, pb with flax, pb with sunflowers, etc. And there are reduced-fat products on the market. Depending on the ingredients, these may also carry the "natural" or "organic" labels.
I have a love/hate relationship with marketing firms. I often love the people who work at marketing firms. I love the cool offices at marketing firms (though I don't like paying for them). And I even sometimes love their ideas. But there are lots of things I hate. Several blog posts worth, I suspect.
The thing I hate most is being asked "What is your budget for this project?" Or, worse yet, "What is your marketing budget overall?"
I always answer the same way: "My budget is unlimited. If you can generate (and measure) positive ROI on this project and any future projects there is literally no limit to what I will spend. As long as your ideas keep making me money, the budget just keeps growing."
I have never been asked: "What is your ROI goal for this marketing project, and how will you measure the ROI?"
To me, this is the difference between being asked "How much of your money can we spend?" and being asked "How can we be sure the money you spend with us will produce an acceptable ROI?" The first question is about how much money the marketing firm will make. Now, here is something that might a be surprise to some marketers: The second question is as well, since that positive ROI is going to be the source of the cash to pay for your future work.
The controversy over the Smart Choices program has me thinking about consumers' growing interest knowing more about their food and the people involved in producing and selling it. This has created an exploding number of rating systems and certifications from the grand-daddy of them all, kosher certification, through labor certifications, organic certifications, fair trade certifications, environmental certifications, animal welfare certifications, and so on. This all on top of the variety of local, state, and federal regulatory schemes with which businesses are supposed to comply.
Today I learned about two interesting programs which attempt to go beyond the welter of fairly narrow "single issue," if you will, certifications to attempt more comprehensive looks at corporate behavior. The Good Guide works from the level of individual consumer products, but beyond narrow issues of health and nutrition it purports to evaluate manufacturers on a wide variety of social and environmental factors. The B Corporation works from the corporate level, and has what I would call a governance focus.
This is a fascinating area of development, and it will be interesting to see if any of these efforts gains sufficient traction to be a meaningful force for change -- approaching the mind share of the "Good Housekeeping Seal." (I wonder if that is meaningful anymore? I remember hearing it as a child, but not recently.)
My own guess is that none of these efforts will penetrate the fog of constant consumer marketing and provide enough consumer market muscle to be worth much, thoough I think a few of the "single-issue" certifications will gain traction with consumers passionate about those issues. The rest, especially the broader ones, will fade out, with the possible exception of the "local" movement. More on that later...
The New York Times reports this morning that the FDA will step up enforcement of what it considers to be misleading health claims on the front labels of packaged foods.
Interest in foods designated as natural, organic, healthy, humane, fair trade has grown among consumers. Certifying organizations and marketing programs have grown correspondingly to help manufacturers and marketers position foods in those categories, but consumer understanding of the various designations and their true significance has not kept pace. We saw this in the Peanut Company of America recall, when consumers expressed shock upon learning that organic and kosher certifications were not focused on microbiological safety issues. The industry knew that, but not consumers.
There is certainly a role for regulatory agencies in policing the claims of food manufacturers, but nothing beats an educated consumer on these matters. The difficulty is that few manufacturers or agencies provide much transparency on their certifications, inspections, standards and rules.
Several years ago I read about a study involving what people say they will pay for pens. I haven't been able to find the reference, but the basic setup was that people were presented with a typical cheap pen and, say, a $50 pen. They were asked which they would buy. Almost nobody would pay $50. But when presented with a cheap pen, a $50 pen, and a $100 pen, lots more people people picked the $50 pen.
I figured I'd test this out in my catalog, and asked my staff to create a $250 gift basket, which at the time was more than twice as expensive as any in our book. This was immediately placed on the "Jeff's Idiotic Ideas" list by my employees.
I couldn't see any effect on the less expensive baskets, but it sold well. So then I said, well, let's try a $500 basket. Again, no obvious effect on lower-priced baskets, but it sold well too.
I've been told that there is no way we could pack and ship a $1000 basket.
So we haven't added to the growing store of knowledge about behavioral economics, but I have learned to test assumptions about price points and what the market will bear.