Label clustering: what not to do
Label clustering is an effective solution to deliver supply chain efficiencies for multi-national businesses. It leads to a reduction in artwork and labelling costs, as well as providing increased stock flexibility. However, there are many potential pitfalls that can expose your business to unnecessary risk if not managed correctly.
Here, Mariko Kubo, Head of Food & Beverage Regulatory, highlights a few of the most common misconceptions we encounter when delivering label clustering strategies for our clients, and how to avoid them:
1. Don’t assume countries in the same trading bloc share the same rules
It would be reasonable to expect consistent labelling requirements within trading blocs such as the Association of Southeast Asian Nations (ASEAN), South America’s Mercosur countries and the Pacific Alliance. At a headline level, there are similarities, but drilling into the detail reveals significant discrepancies.
Take the ASEAN countries of Singapore and Malaysia. Both permit labelling in English, but other fundamental requirements are quite different. In Malaysia, a product using benzoic acid as a preservative must state it ‘contains permitted preservative’. In Singapore, it must be declared by name on the list of ingredients. When combining labels for these markets, a compromise is needed. The most straightforward option would be to include both the statement and the ingredient listing, but it’s important to ascertain whether this would be permissible in each of the markets. Furthermore, it may not be commercially desirable to name a specific additive in a market that does not require it.
2. Don’t forget to consider images and slogans as well as formal labelling
Product categories where formulation requirements vary between countries are highly challenging, especially when it impacts product name or classification. In many cases, product-specific compositional and labelling requirements (vertical legislation) exist.
In the EU, a sugar-free carbonated beverage with strawberry flavoring is likely to need a name that describes the product accurately: ‘strawberry flavored carbonated beverage with added sweetener’. However, in Japan, the same product could simply be called a ‘carbonated beverage’, or in South Africa, a ‘strawberry flavored carbonated beverage’.
Images of fresh strawberries would be acceptable in Japan, providing there is a large font, front-of-pack statement clarifying that it doesn’t contain real fruit. In the EU, pictorial depiction on labels is not harmonized across member states. Permissible use of a strawberry image would depend on multiple factors including source of flavoring, product taste and/or other ingredients.
Cultural differences also need to be considered. In some cases a ‘customary name’ that is accepted and understood without explanation can be used. An example is Yorkshire pudding. In the UK, any additional description is unnecessary. However, in the USA the name may not be sufficient in isolation as consumers are less familiar with the product.
3. Don’t feel you can’t make a common sense judgement (sometimes)
In many situations, risk-based decisions need to be made about rules that must be satisfied and those that can be relaxed. This should be managed strategically, drawing on insights and guidance from regulatory bodies governing the markets in question.
The obesity epidemic facing many developed markets has led to an increase in mandatory nutrition labelling over the last ten years, followed by front-of-pack nutrition labelling. This can be a ‘deal breaker’ when clustering labels. Top-line requirements are very similar around the world: energy value, amount of protein, carbohydrate, fat etc. However, the way nutrients are declared and methods for calculating values can be very different.
Combining labels for the EU, Australia and USA may appear straightforward since they all use English. However, different nutritional labelling formats are used in each market, and deviating from these may be construed as misleading the consumer. Having two different values for the same nutrient can also be confusing, so providing separate nutrition tables in different formats and languages may be less risky. On the other hand, in some cases, it is possible to seamlessly combine nutrition tables. Take, for instance, the UK and Saudi Arabia: there are only minor differences between them, so it would be prudent to combine labels for these markets when possible.
Final word: Go beyond ‘compare and contrast’ for a proportionate approach
Label clustering is both an art and a science.
At its core, the basic process involves a simple ‘compare and contrast’ technique. But it is essential that this is rooted in linguistic and regulatory expertise to maximise opportunities and avoid obstacles related to the nuanced requirements across different markets.
Managed well, label clustering can underpin a proportionate response to labelling requirements. This enables brands to rationalize and streamline variations across a global market whilst still satisfying the risk profile of the business.