Organic products are a major growth industry. Already worth more than $255 billion worldwide, analysts predict that organic food and beverage sales will exceed $849 billion by 2028.
But CPG brands looking to get a foothold in organic, or who want to increase your stake in this sector, need to tread carefully. Because the legalities surrounding the cultivation, processing, distribution and marketing of organic goods is continually evolving.
Case and point is EU Regulation 2018/848, which will come into force on 1st January 2022. Several adjustments to organic production will be made under this new legislation, including how pre-packaged organic products made and sold within Europe must be labelled.
How exactly will the changes to organic food legislation impact CPG brands? And why is it important that you manage these changes correctly? Let’s take a closer look…
How is EU organic product legislation changing?
Organic legislation has been continually evolving since it was introduced in 1991 Initially, it only governed how unprocessed agricultural crops and the products made from them, livestock, and unprocessed livestock products could be harvested and sold, but the scope has since widened.
Now, animal products and non-food organic goods are subject to tight industry controls, to promote high welfare standards and increase consumer trust in organic goods. And EU Regulation 2018/848 is the latest compliance update contributing to these goals.
Originally scheduled for January 1st 2021, the new regulation was pushed back a year due to the pandemic. However, the European Commission has now confirmed that 2018/848 will apply from the start of 2022.
So, what do these new rules entail?
The good news for CPG brands is that many of the updates associated with 2018/848 will make it easier to market and sell organic products. For example:
- Organic certification will become available for a wider range of products – including salt, natural gums and resins, beeswax, and essential oils that are not intended for human consumption. Essential oils used in edible products can already be certified as organic.
- EU organic products can contain up to 5% non-EU agricultural ingredients without it affecting their EU organic certification; the previous allowance was just 2%.
- Any organic pre-packaged foods where the ingredients are sourced from a single country may display the region in which those ingredients originate – e.g. Cheshire, UK. They don’t need to stipulate EU/non-EU on the label as previously required.
There are some changes that will make product composition and marketing more difficult, however. For instance, any CPG brands manufacturing products with flavourings will only be able to receive organic certification if the source of the flavourings is natural and 95% unique.
The full requirements for natural flavourings are set out in Regulation 1334/2008.
What does new organic legislation mean for product labelling and packaging?
In theory, EU Regulation 2018/848 should make it simpler for brands to label organic products, as the number of certified goods is increasing and the ingredient origin information is becoming more streamlined. But it’s still important for CPG companies to think carefully about how this information is displayed.
Trust is critical to the success of the organic market, as consumers want complete confidence that organic labelling is a true reflection of the ingredients used in their products. And non-compliance can have a very damaging impact on sales.
Unfortunately, organic fraud is a serious industry issue, and cases seem to be rising. A 2019 exposé by Dutch broadcaster NTL found 1 in 10 ‘organic’ farmers did not comply with industry regulations in the Netherlands, for example.
And there are issues outside the EU as well. US investigators have uncovered many examples of organic fraud – including Iowa farmer, Randy Constant, who falsely sold over $142 million worth of organic grain when more than 90% of it didn’t meet industry standards.
While these scandals have affected producers rather than manufacturers, there’s still a knock-on impact for CPG brands. When a consumer buys a product with an organic label, they are trusting that your ingredients are authentic.
For organic brands, your packaging has to be more than just compliant; it needs to be consistent and clear about the quality and authenticity of the ingredients you’re using.
How can CPG brands continue building trust in organic products?
While new EU legislation opens the door for more products to be certified organic in 2022, and for organic product labelling to be easier for consumers to understand, CPG companies still need to work on building and maintaining consumer trust.
Organic legislation is an evolution not a revolution, so brands must keep an eye on continually evolving regulations surrounding the production, distribution and marketing of organic produce.
And remember that Regulation 2018/848 is just EU governance; other regions have their own, separate legislation and organic labelling systems, which need to be factored into global product roll-outs.
For organic brands’ growth strategies to work across all markets, packaging designing needs to be industry compliant while enabling consumers to understand your values. New legislation will take care of the first part; it’s up to CPG companies to partner with the right experts to achieve the second.
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