Nutrition-Label Proposal Stirs Up Small Companies

March 10th, 2014

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Category: Miscellaneous

Food Safety(Wall Street Journal) – Tate’s Bake Shop in Southampton, N.Y., will have to test and relabel products if a change in the nutrition-facts label on food items is adopted.  Small food companies are preparing to deal with the added cost of reprinting packages, figuring out new serving sizes and other headaches in the wake of the U.S. Food and Drug Administration’s proposal last week to change the standard nutrition-facts label on food items.
Unlike big companies, which have departments and lawyers dedicated to tweaks in required nutritional labeling, small food companies risk potential fines and lawsuits because they generally struggle to figure out the nutrition facts and labeling themselves.Kathleen King, founder and owner of 34-year-old Tate’s Bake Shop in Southampton, N.Y., says she has dealt with relabeling a few times—first when food-allergy warnings had to be added after a 2004 federal mandate, and again in 2006 when the FDA required trans fats to be added.The latest proposed requirements to show calorie counts in larger type and disclose added sugars would force Ms. King to ask the printing company she works with to create new printing plates. The cost? About $100 per product, or $5,000 in all for the estimated 50 different cookies, bars, brownies and other desserts, which come in different sizes, weights and flavors. “It’s hard to manage changes and inventories and get all the correct information all over again,” she says.At Rooibee Red Tea, a five-year-old Louisville, Ky., organic iced-tea business on track to sell 160,000 cases this year, co-owner  Heather Howell  says the changes, if adopted, will be costly. Due to space limitations on her tea bottles, she will have to work with designers on new artwork at an estimated cost of up to $30,000, she says. “You’re looking at millimeters to fit on a bottle. If the new nutrition label is going to be a little larger, you’ve got to make sure it fits. Everything has to look appealing to the eye.”

To be sure, many small businesses, like big ones, pay outside firms to calculate nutritional data. Some also hire consultants to ensure they are compliant with labeling requirements, while others buy software to do this for them. But others go it alone or reach out informally to mentors for help. At Rooibee Red Tea, which has just 10 employees, Ms. Howell says she intends to reach out to several Rooibee directors who have worked with bigger food companies for advice on compliance issues.

“All of these things are difficult for the average small startup to know about. It’s not common knowledge,” says  Carol Harvey,                                 owner of Palate Works, a San Francisco-area food-consulting firm. Small food entrepreneurs and artisanal brands accounted for $88 billion in sales in 2013, slightly more than 10% of all food sales at retail, according to the latest data from the Specialty Food Association, a New York-based trade group.

Ms. Harvey says she has noticed more incorrect labeling in recent years. One out of three boxes she picks up at the store typically has noncompliant nutrition data or misleading claims about health properties, she adds. position which print new packages pretty much weekly, says Cynthia Harriman, director of food and nutrition strategies at the consumer-advocacy nonprofit Whole Grains Council. “But,” she adds, “smaller mom-and-pop shops will often do all their printing a year and a half out, so it is a much bigger deal for them.”

Very small businesses that sell 100,000 units a year or less can seek an exemption. There are currently about 3,000 small businesses that have been granted the nutrition-label exception.

Some food companies big and small could face a loss of customers if the changes highlight the health drawbacks of treats like ice cream and soda by boosting calorie counts per serving in larger sizes. The added sugar disclosure could also push companies to reformulate their recipes, another challenge that is easier for large companies with more research dollars.

This worries Crista Freeman, co-owner of Phin & Phebes Ice Cream in Brooklyn, N.Y. “Right now, for example, our half-cup serving size is 230 calories, so essentially that is going to double,” according to the proposed guidelines, she says. That could affect sales for her two-employee company, which uses contract manufacturing and plans to expand distribution to nearly 30 states by the end of 2014.

As a potentially proactive measure, Ms. Freeman says her company may have to overhaul marketing tactics, moving beyond the low-cost strategy of offering promotional taste testing in stores to print-advertising campaigns that can better convey that its ice creams, including its dark-chocolate, salted-caramel flavor, use only natural ingredients.

Sugar is the main ingredient that allows Ms. Freeman to keep her products free of shelf-life extenders, and she doesn’t want to reduce it. But, she says, “we will definitely contemplate it” if the proposal is enacted and a date of compliance draws near.

Meanwhile, some brands with simple ingredients say potential label changes could give them an advantage by touting their healthful ingredients.

“If you have the attributes, you might as well flaunt it,” says  Robert Gropper, owner of My Brother Bobby’s Salsa, a 20-year-old brand whose top-seller contains only tomatoes, peppers, lemon juice and herbs.

 

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