Top 5 Challenges Food Brands Face When Sourcing Ingredients

Last year, I asked several food CPG communities to participate in a consumer research survey to gain insight into how you think about your ingredient sourcing. Through this project with Planet FWD, who is building a platform to connect regenerative, sustainable, and climate-friendly food producers to food and beverage brands who want to take a bite out of climate change, I sketched out the landscape of how small and large brands source ingredients and what your pain points are.

Over a series of 20 structured discovery interviews and a much broader survey of nearly 40 CPG brands, I was able to learn more about your challenges and struggles and how Planet FWD can help you meet those pain points. As a report back to the community and thank you for your participation in the survey, this blog post will dive into our insights and how consumer research can help you make business decisions.

Let’s dive a little deeper into each of these sourcing challenges CPG brands face!

Small brands struggle with ingredient sourcing 

Let’s get to the point: small CPG brands (<$1M in annual revenue) experience the pain of ingredient sourcing much more than large brands. In the survey, small brands are 3x more likely to say that they find it very difficult or difficult to source ingredients that meet their requirements.

When you’re a small brand, finding delicious, affordable ingredients for your products that also meet any certifications that you want is time-consuming and challenging, and finding sustainable or climate-friendly ingredients is even harder. Most small brands lack internal resources dedicated to sourcing and may not be large enough to meet minimum order requirements. 

While sourcing can be more challenging for small CPG brands, small brands have more flexibility than larger brands. This means that you’re able to make unique partnerships with food producers directly or change your ingredient’s source much more quickly.

Consumer Research Implication: this insight gave Planet FWD information on their potential target consumer, allowing them to understand their pain points and where they are on their growth journey. 

image of two rows of tomato vines

Check out my Definitive Guide to Creating a Marketing Plan for Food Brands

Brands care about their products’ sustainability and climate impact

Of the brands surveyed, 86 percent of them are extremely or very interested in sourcing sustainable ingredients and 71 percent are extremely or very interested in addressing the climate impact of their products. This desire by brands corresponds to consumers wanting more sustainably-sourced products (Nielsen reports they expect sustainably-minded consumers to spend up to $150 billion on sustainable products by 2021). 

Our research also revealed that brands have different definitions of sustainability. Some brands may prioritize sustainable packaging, while other brands may prioritize sustainably sourced ingredients. Other brands are focusing on the overall environmental impact of their products. 

It’s important for you to focus on the values that make the most sense for your brand equity and values, and to focus on the areas of your business that have the most environmental impact. 

Consumer Research Implication: this insight validated a hypothesis that Planet FWD had about a need in the market and gave them the information they needed to describe the problem more clearly.

Brands aren’t using quantitative sustainability data

77% of brands are currently collecting information about the sustainability characteristics of their ingredients and are already purchasing sustainably sourced ingredients. The challenge most brands face, however, is a lack of accessible and reliable sustainability data that will allow them to make more informed and nuanced purchasing decisions. Instead, brands rely on certifications, like Organic, instead of quantitative data, like Life Cycle Assessment or Greenhouse Gas data. Without quantitative data, it’s harder to compare ingredients on the metrics that are most important to you as a brand. For example, how do you choose between two different sources of wheat flour if carbon impact is the most important metric to your brand? Right now, most brands don’t have this detailed information. 

Consumer Research Implication: this insight uncovered a consumer need and product requirement that Planet FWD is incorporating into their product development process.

Trust and reliability are table stakes in ingredient sourcing

When it comes to sourcing ingredients, brands identified trust, reliability, and transparency as key factors when building relationships with their suppliers. This poses a challenge for many smaller brands because it takes a considerable amount of time and effort to identify ingredient options, request information from each supplier, and sort through this information to identify reliable and trusted partners. 

In our survey, many brands said they are more inclined to trust suppliers with positive references from brands they know and respect. Several brands also said they’d shared a few of their trusted suppliers with other brands. Because of this consumer insight, Planet FWD is developing a tool, backed by data and brand references, to help brands identify trusted suppliers. 

Consumer Research Implication: this insight allowed Planet FWD to identify two key features that were musts for their consumers.

Download my FREE Guide to Avoiding the Top 3 Marketing Mistakes that food and beverage CPG brands make

Cost-competitive ingredients and proven consumer demand are key motivators for addressing climate impact

When asked what would motivate them to lower the climate impact of their products, 69 percent of brands identified cost-competitive, climate-friendly ingredients, while 64 percent cited proven consumer demand as a motivator. In other words, these are the blockers that we have to address in order to increase the adoption of food brands using climate-friendly ingredients. 

Studies have shown that consumers are willing to pay for sustainably-marketed products, even when it comes with a higher price tag. Research conducted by consumer research firm IRI and New York University Stern Center shows that sustainably-marketed products are growing in market share seven times faster than conventionally marketed products and are responsible for more than half of all growth in the CPG industry over the past five years. The same study revealed that the common drivers for this purchasing behavior were concern over environmental impact, attraction to brands’ commitments to renewable resources, and the overall benefit to the community. 

Consumer Research Implication: Planet FWD identified the biggest blockers to their tool’s success so they could address them head-on. Their tool addresses the first blocker (availability of cost-competitive, climate-friendly ingredients) while their sister business, Moonshot, addresses the second. Moonshot is the first climate-friendly snack brand in the US. Their first product is a climate-friendly cracker made with organic Edison wheat that is grown with regenerative agriculture practices. With wide coverage for the brand’s launch from Forbes, Fast Company, and Bloomberg Radio, they’re starting to demonstrate that consumer demand for climate-friendly products exists.

What’s Next? 

If you’ve experienced or are experiencing any of these sourcing challenges, you are not alone. These are pain points that most food brands experience as they’re working to launch or scale their products! Wouldn’t it be nice to have a tool that helps you provide sustainable and climate-friendly ingredients? Planet FWD is building a tool designed to do that very thing. Follow their journey to get early access and participate in beta testing for this new tool. If you’d like to have early input in the tool’s design, they’re doing more consumer interviews right now - reach out to to set-up a conversation!

And if you’re not incorporating consumer feedback into your business decision-making, reach out to me to discuss how consumer research can help you get clear about who your target consumer is, what they need, and the right words to use for your marketing messaging.