Consumer Demand Pushes Manufacturers and Retailers to Change Food Ingredients, According to a New Report from L.E.K. Consulting

BOSTON, MA (Feb. 3, 2020) – As consumers are becoming increasingly aware of the effects of processed, unnatural foods and artificial ingredients, they’re turning their attention and wallets to clean-label food products containing natural ingredients and no synthetic chemicals. And manufacturers and retailers have taken note, reformulating recipes with new and cleaner food ingredients, according to a new report from L.E.K. Consulting.

Campbell’s has removed all artificial flavors and colors from its products and Kellogg’s recently dropped artificial colors and flavors from its entire product line. Even restaurants have joined in, as the fast-casual chain Panera has eliminated all artificial colors, sweeteners, flavors and preservatives from its foods.

“The fast-growing and evolving clean food landscape presents outsize opportunity for food ingredient manufacturers, investors and retailers. As interest has dramatically picked up in recent years and shows no sign of slowing down, major players must capitalize on the clean-label mega-trend to stay ahead,” says Rob Wilson, Managing Director at L.E.K. and coauthor of How the Clean-Label Mega-Trend Is Changing the Food Ingredients Landscape.

According to L.EK. research, more than 60% of consumers prefer products described as having “no artificial ingredients” and “no preservatives” and as being “all natural.”

New technology and food science are providing innovative solutions to growing consumer interest in clean label products. According to L.E.K., some of the key ingredients dominating the clean label food market:

  • Hydrocolloids: Hydrocolloids, consisting of gums and pectin, are increasingly being used to provide texture and particle suspension while helping products maintain a clean label, creating steady growth in the global hydrocolloids market. While gums have been on the market for quite some time, “clean” gums, such as gellan, acacia and guar are becoming popular thickening and stabilizing agents, often taking the place of carrageenan, which has come under fire following studies indicating it causes cancer in non-food-grade form.
  • Natural mold inhibitors: The shift to clean label ingredients has made extending the shelf life of bakery products a challenge for CPG companies. For example, calcium propionate, a chemical mold inhibitor, does a great job at preserving freshness in bakery products, but manufacturers have had difficulty finding a natural alternative. Some formulators have found a solution by replacing artificial mold inhibitors with naturally fermenting alternatives like sorbic acid, which match the functionality and neutral flavor profile of calcium propionate.
  • Stevia: To truly excel in the marketplace, sugar alternatives must deliver on flavor, natural purity and cost. While there are a number of all-natural sweeteners on the market, stevia, derived from the stevia plant, is one that meets all three key criteria. It’s gaining in popularity due to its affordability, improving flavor profile, lack of health or safety concerns and variety of food applications. What’s more, advancements in stevia technology could lead to explosive growth.
  • Food enzymes: Enzymes manage every biochemical reaction in the human body. And thanks to food science, enzymes play a vital role in a variety of foods, improving texture, visual appeal, shelf life and healthiness. The food enzyme market is expected to grow at around 7-8% per year, fueled not only by cleaner eating but also by demand for premium and healthy foods, such as gluten-free bread, and the increased use of enzymes in food processing.
  • Fruit and vegetable pieces and powders: Processed fruits and vegetable pieces and powders give food and beverages the taste and feel of fruits and vegetables, while providing sweetness and color. They come in myriad forms, fortify products with vitamins, minerals and antioxidants, and contribute to a health and wellness lifestyle. And regulatory changes, particularly in the U.S., are expected to add to growth as fruits will have to take the place of other ingredients when manufacturers are required to identify added sugars in their labeling.

“For food ingredient companies, the key to success – and, ultimately, survival – is being aware of the latest clean label developments,” says Peter Walter, Managing Director at L.E.K. and report coauthor. “And for investors, deals are abundant. Those in private equity with a tight grasp on where to position themselves to play in the ingredients space will stand to profit the most.”

About L.E.K. Consulting
L.E.K. Consulting is a global management consulting firm that uses deep industry expertise and rigorous analysis to help business leaders achieve practical results with real impact. We are uncompromising in our approach to helping clients consistently make better decisions, deliver improved business performance and create greater shareholder returns. The firm advises and supports global companies that are leaders in their industries — including the largest private and public-sector organizations, private equity firms, and emerging entrepreneurial businesses. Founded in 1983, L.E.K. employs more than 1,400 professionals across the Americas, Asia-Pacific and Europe. For more information, go to