February 21, 2017

What Food Businesses Need To Know About Nutrition Labels (PODCAST)

nutrition labels for food businessNutrition labels and nutritional analysis.  Do you need them for your products?  And if so, what do you need to know about getting them done correctly.  That’s what we’re focused on in today’s podcast.

TRANSCRIPT:

Jennifer:Questions about nutrition labels are one of those things that come up time and time again for food entrepreneurs, which is why I asked Lev Berlin to join us today. Lev Berlin is the founder and owner of ReciPal, which is a web-based software program for nutrition labels, costing and inventory management.

 

As many of you can appreciate, Lev is a small business owner himself and thus is in charge of product management, web, email, traditional marketing, customer service, and everything in between. He has expertise in food labeling, starting and growing a business, SEO, and conversion optimization.

 

Prior to starting ReciPal, Lev co-founded several tech and food startups, including SlantShack Jerky, where focus on web marketing, retail sales, and labeling were some of his many responsibilities. Lev is a graduate of Princeton University and worked as a management consultant before striking off on his own. Lev, thank you for joining us today!

 

Lev:Glad to be here! Thanks for having me.

 

Jennifer:So as I mentioned right in the very beginning, nutrition labels, as you obviously understand having worked with many food entrepreneurs yourself and being a food business owner, nutrition labels are a huge area of concern for food entrepreneurs. Before we start talking about some of the nuts and bolts of nutrition labels though, I’d love if you could tell us a little bit about your background of how … Obviously I know you prior to this podcast, so I know your story, but can you share with our listeners your story of your struggle as a food startup, how that somehow led to this nutrition labeling tech business that you now have?

 

Lev:Yeah, so it’s kind of a long story, so feel free to interrupt and stop me if I ramble. I was a management consultant and figured out pretty quickly that that wasn’t my long-term career and I always had a lot of side projects, and some of our friends in New York started bringing this jerky to parties and always had a variety of jerky flavors and meat types at hand. My mom never … She would try to keep me from eating too much jerky as a kid because of the sodium and didn’t think it was a good snack for a kid, but whenever I had the chance I would jump at it.

 

So when these post-college, young, professional working parties would just have copious amounts of jerky, it immediately caught my eye. So I started making friends with these guys and seeing how I could get involved. At the time it wasn’t really a business. Our friend Josh had just … His mom made jerky for Christmas one year and I was like, “You can make jerky at home? This is a thing?” I thought you would just buy it at the store.

 

So he started making it in their apartment oven with the door open a little bit on the lowest heat setting and experimenting with flavors and just making it for fun. A whole group of friends, they basically … I would never recommend this for anyone else, but this wasn’t a business at the time, but basically 10 different people got involved on a part-time basis and it’s still not a business. Just helping out making it and learning and having fun together.

 

One of our friends recommended we try to go to one of the food vendor markets in Brooklyn, and this was before all the Smorgasburg and crazy organized things. It was in a church basement. It wasn’t permitted and got shut down within a year or so of it starting, but we went there and there were people in the food world that would come by and check it out just to see what was going on, food bloggers, and we brought our jerky and managed to sell out within an hour or so. People really loved it. People started talking about it and writing about it, and we’re not incorporated or an LLC or anything like that at this point.

 

We were like, “All right. Do we start a business? What’s the deal here? What do we do?” We were like, there’s 10 of us. Everyone has their jobs but is willing to help out in whatever capacity, and so we started putting our heads together and set up the business. Tried to figure out a co-packing solution because you can’t make jerky in your apartment. It’s definitely not covered under Cottage Food laws. Figured out the labeling. A million things. Hacit plans, all the things you have to do when you’re starting a food business and complicated a bit because it’s not under Cottage Food. It’s all under the USDA because you’re working with meat.

 

Jennifer:That’s what I was going to say. Once you throw meat into the equation, it gets significantly harder.

 

Lev:Yeah, it changes a bit. So we had to figure out a lot and we knew absolutely nothing. We were reasonably bright kids, but all pretty much on our first real jobs and didn’t know many people in the food world or have contacts. We were starting completely from scratch. No mentors or people to guide us really.

 

I somehow got put in charge of figuring out the nutrition labeling and started doing the research, and like all people, my first instinct was … It’s an intimidating thing and your first instinct is we have to send this a lab. They’ll test it, do all their tests for protein and fat and vitamins, whatever, and then figure all that out and send it back, but it turns out lab tests are 500 to $1,000 per product and our thing at the time was customizable jerky. You could pick your meat type, your marinade, your rub, your glaze. So there were hundreds of permutations and combinations of flavors.

 

We’re like, we could maybe test one or two but definitely not tens or hundreds of products, I was like, all right, that’s definitely not an option and then started reading the nutrition labeling docs and realized you can also do this thing that’s called database analysis, which is one of two approved methods by … Accepted methods by the FDA. So you can either have your food lab tested or you can do what we call database analysis, which is … Basically you construct a recipe from ingredients that already have accepted nutrition information behind them, and the USDA has a public database that you can use.

 

So I started just doing this in Excel. Downloaded the database. Set up our recipe, like how much beef we’re using, how much salt, how much sugar, how much of each spice, and you can set up a nutrition label, do your nutrition analysis that way and then put it into a label format. I realized I’m probably not the only person out there that’s very intimidated by this and doesn’t have the capital to spend thousands of dollars on the nutrition analysis and labeling.

 

I was like, all right, maybe this is a business idea. I don’t know. Something to work on on the side. So that’s kind of how it was born out of SlantShack Jerky, and ReciPal kind of slowly emerged from that as a long, organic, slowly growing process as a side project. Then I guess almost three years ago now I started working on it full-time.

 

Again, people have really appreciated because we kind of try to simplify … It’s not like a crazy nutrition software where it’s designed for nutritionists or dieticians or people trying to manage obesity or a million different things, so it kind of focuses just on the nutrition labeling and it’s fairly powerful. You can use it for all those other things, but we try to simplify it for food businesses. They can get in, get out, and go back to the million other things that are involved in starting and running a food business. But yeah. I think I forgot your original question at this point because I started rambling as predicted, but …

 

Jennifer:No! You told a story and I think that’s something that listeners really appreciate is not … We’re going to talk a lot more about nutrition labeling and ReciPal in the next couple questions, but I feel like half the listeners, their journey hasn’t been the straightest into the food business and so it’s great to hear other people’s similar experiences, as like, “Well, I was starting out as this and then kind of took this left turn here and then that led me to a right turn here.” I think it’s something we can all relate to.

 

Lev:Yeah. Now we’re…

 

Jennifer:Yeah, actually … Let’s talk about, because you raised a great point, the database analysis approach versus lab testing, and so that folks are clear, ReciPal uses the database analysis approach. Correct?

 

Lev:Right.

 

Jennifer:Okay, and so both are approved by the FDA in order to create nutrition labels.

 

Lev:Yeah, so those are kind of the two generally accepted methods or recommended approaches I guess. The FDA doesn’t actually say you have to do it this way or that way. I don’t know … My not crazy example of this is if you know you’re making XYZ product and another company makes the same thing or something very similar, it’s not unacceptable to just take the nutrition information from their packaging and put it on yours. You’re obviously on the hook for that. You’re assuming that they did it correctly and it’s reliable.

 

Jennifer:Good point.

 

Lev:That’s a reasonable approach for it. There’s nothing completely crazy about it. I will say it’s not the smartest way to go about it and you want to do your due diligence. Maybe sense check it and try a couple other methods to be sure, but there’s no required way to do it. You’re just on the hook for it, whatever it is.

 

So lab analysis is fairly reliable if it’s a product that is heavily processed. Something like fried foods, if it’s hard to measure what the oil uptake is or if you’re processing something a lot and it’s unclear what you’re losing as far as the product itself, or vitamins and minerals, because those have some retention loss when they’re subjected to heat or air, whatever it is. So that’s the case where you’d want to do a lab analysis.

 

For things like baked goods, probably 90% of foods, it’s totally fine to do database analysis. You might have to measure your things very accurately for one, and do some estimation here and there, but it’s a totally reasonable way to do the nutrition analysis for I would say 90% of products. Yeah.

 

Jennifer:Then just so folks are clear that ReciPal, and I kind of want to be careful because, I mean, obviously I’m talking to you and I’ve used your tool just so folks know, and I really like it, but you have to go make your own decision and judgment as the business owner. But one of the things is not only does it do the nutrition analysis, but it’ll give you the labels because that’s a question that people have a lot of times too is like, “When I know how much Vitamin A is there, how do I set up the label?” And that through ReciPal, and I will say through other nutrition software services, they will create the label for you that you can then download and send to a graphic designer to include on your packaging or that you can include somewhere on your packaging or your website, all of that stuff. So it provides you with that graphic, which is I think what most of us are thinking of when we think nutrition label.

 

Lev:Yeah, exactly. Some people come to us, they already have the nutrition information for … Whether they worked with a lab or had someone do it but not the labeling. But yeah, the output people want is usually not the nutrition information, but it’s in the FDA or Canadian labeling format so they can slap it on their packaging directly or modify, hand off to their graphic designer and combine with the rest of their artwork and marketing materials. Yes, that’s definitely the … That output is not the nutrition analysis so much as the label.

 

Jennifer:Yeah.

 

Lev:They can go on and start selling retail or just have a more professional and buttoned up product.

 

Jennifer:So let’s talk about that piece of it a little bit because not every food business actually needs to have nutrition labels, but the need versus is it a good idea, that’s something that each person is going to have to judge for themselves, but can you talk a little bit about the small business nutrition labeling exemptions, so why not every business needs to have a nutrition label? But then on the flip side, even if you’re not required to, why you may want to be considering it.

 

Lev:Yeah, so I’m not sure I remember the exact numbers for the exemption off the top of my head, but for pretty much any new business, you’re exempted from having nutrition labels on your packaging. You still have to have the other key parts, like the statement of identity and the net weight and the ingredient statement and allergens and all that, but the nutrition label is not required right away. There’s a threshold for full-time employees, which is actually super high. I want to say it’s like 50 employees or maybe even more. So yeah, if you’re below that threshold, that’s one exemption.

 

Then below I think $500,000 of food sales is the other, so that’s obviously … Probably get there before you get to the full-time employees. I think after you pass that threshold, there’s still a pretty reasonable time window that you have to comply with the nutrition labeling rules, so once you start and then hit that threshold, and then the window, you probably have at least a couple years to do it, which is great and kind of takes one thing off the table when you’re starting out. But then the complications arise when you start … If one of your goals is to sell retail, so if you want to sell in like a Whole Foods or probably not your corner shop or specialty store necessarily, but the bigger retailers, then they’ll probably fall under outside of the exemption and then you’re under their umbrella.

 

Very quickly, if you’re selling retail, even if you have the exemption, someone else might not. Or just to sell in like a Whole Foods, they’ll want to have nutrition labels on your packaging either because of requirements or just because of their customer base. If people expect and want to see that, that’s kind of the table stakes for being in that business, so even if you fall under the exemption, if you want to be competitive in the market and sell to a specific type of customer, they’ll probably want to see it. It’s probably not a deal breaker, but it probably does put you in their sights and makes you a more competitive and intriguing product for someone, for a shopper that’s interested in that kind of thing.

 

Pretty quickly, even if you’re … We’ve seen people who have the exemption, they decide or need to do the nutrition labeling either because of their client base, and that’s both the direct consumer and the retailers that they’re working with, so that’s what we’ve seen a lot of early on. So the exemption is kind of misleading I would say because it’s just not that grounded in the real world I guess.

 

Jennifer:Yeah. Absolutely. I appreciate you talking about that because I do agree. I mean, on the one hand it’s nice because it’s a food business. That may be one thing that you don’t have to worry about right at the very beginning.

 

Lev:Yeah.

 

Jennifer:But I think especially, even if the buyer isn’t requiring it, if you’re selling wholesale, think about … And sorry, I’m not talking to you, I’m talking to the listeners. But think about the fact that consumers today, especially those who are buying specialty food items, which cost a little bit more, they are looking for transparency and they’re looking for information, and I think you just start watching customers, how they shop, and even a farmer’s market, people are turning packages over and looking at the back or they’re asking questions of the vendor and that label does make you look more, and it provides the customer with the information that they want so that they can make a solid choice based off of having all the information in hand.

 

Lev:Yeah, 100%.

 

Jennifer:Then there’s another piece of that too though, which I was hoping that you can talk to, is the idea of … I always get asked questions about, “Well, I know that my product is heart healthy, as an example, so I want to talk about it in my marketing that my product is heart healthy, but that comes with some big asterices.” Can you talk about that and why understanding the nutrition within your product is key to being able to market your product as having any of those kind of virtues?

 

Lev:Yes, that’s the other part of the exemptions. So the nutrition label itself might be optional for your business and there’s a lot of different parts of the label itself that are optional. There’s a whole slew of vitamins that you can put in there, like unsaturated fats. Probably half of the label is optional, but yeah, if you’re making specific claims, if you’re making a nutrition claim, then that has to be supported on the packaging.

 

So if you’re making a claim about your food being high in vitamin B-12 or being a good source of B-12, then you can’t omit that from your product because that’s kind of the proof. Obviously you can make that up and put a high amount of B-12 on your label, but that has to be supported on your packaging, and the same thing with the healthy claims. Those mean something in the FDA documentation. You’re not just saying, “Oh, this is good for you.” Saying it’s heart healthy means a very specific thing as far as fiber and cholesterol and fats, and that has to be supported by the nutrition label. So when you make a claim, you have to make sure that you’re backing that up properly via the nutrition label.

 

Jennifer:Excellent. So yeah, another reason, especially if … You know, I think there are a lot of entrepreneurs who are thinking about the fact that consumers are looking for “healthy,” whatever that means, products in their food. That they want to be able to market their products that way, but you’ve got to be able to support that, which is what a nutrition label can do for you!

 

Lev:Yeah. There are so many … I think if you pick up a product off the shelves in a store, you’d be hard pressed to find one without any claims at all, whether that’s organic or a certification like that, or gluten free. While those aren’t directly related to the nutrition label, the things like a good source of whatever nutrient or high in whatever, low in fat, or sugar free, that all does have to be supported by the nutrition label.

 

Jennifer:So speaking of nutrition labels, I’ve been hearing a lot, and I think obviously a lot of people who are keeping their ear to the ground on this are hearing a lot about these changes that are coming to nutrition labels.

 

Lev:Mm-hmm (affirmative).

 

Jennifer:Excuse me. So what’s happening and when?

 

Lev:Yeah, so it’s happening. The FDA is a big organization and they published their proposal seems like ages ago, and I think they expected it to be finalized within maybe a year, but so many … It was a very big document and a lot of kind of ambiguous parts and so many comments poured in from companies and lobby groups and everyone you can imagine, and probably nutrition analysis companies and labs, to question the validity and the motivations and just come up with a good end rule and come up with a solid set of changes, so that was finally … They went through all the comments and came up with the final ruling this past spring or summer, I want to say May or June, and so the rule is final. The changes are published.

 

There are a bunch of changes in the format and what’s on the label, but as far as the compliance and when everyone has to abide by it, so as of I think this past June, you could start using the new label two years from then, so June 2018 you’re required to use the new format if your business does more than 10 million dollars of sales per year, and then if you’re below that, then you have to start using the new label by June of 2019.

 

Jennifer:Okay.

 

Lev:So you can use it now if you want. I think people are kind of holding off on it. Some people want to get ahead of the game and just not have to worry about it, but for the small businesses that already have labels, you really don’t have to worry about it for quite a while.

 

Jennifer:So use up that packaging stock now.

 

Lev:Yeah, exactly. Yeah, definitely if you have supplies and inventory of labels, then you don’t have to freak out about that at all.

 

Jennifer:Okay. Well I have two more questions for you. One of them came in from a listener and was asking about how serving size is calculated because that’s a piece of the nutrition label. How do you know if your product has two or more servings? How do you accurately input that so that it can be reflected correctly and all the associated nutrition analysis can be reflected correctly in the nutrition label?

 

Lev:Yeah, so serving size, I would say it’s not really part of the nutrition analysis, but obviously getting the right ratio is key so that your final label is correct, but I would say that it’s probably the hardest part … Not the hardest, but one that is most often done incorrectly or easy to get wrong on the label just because most people kind of … It is kind of common sense. If you’re paying attention to packaging you probably have a good sense of … Like if you’re making cookies, what is the serving size for a cookie?

 

But the FDA does actually have guidelines for what the serving size is for different types of products. So for a cookie, it’s probably there’s 100 different categories, from cereals to snacks, like nut-based snacks to grain-based snacks to meat to mixed dishes and meals and more or less everything in between. There are obviously some gaps, and for those you’re supposed to find a similar thing in the FDA categories or write to them to figure out what it should be.

 

So for an example like cookies, the serving size, it’s supposed to be the number of cookies that give you roughly 30 grams of cookies. So if your cookies are an ounce each, then it would just be one cookie. If they’re really big, it would still probably be one cookie because no one’s probably going to eat half a cookie.

 

Then with the new rules, it’s a little tricky because things like when it’s below two servings per the FDA guidelines, then if your package is less than two servings, then you have to list it as a single serving package. So for example, if you were selling packs of two cookies and they’re 30 grams each, then the serving size would be two cookies or one package. That’s one intricacy of it.

 

But yeah, you basically have to find the product, the category in the FDA rules, see what the serving size is and then figure out what that amount is of your product. Some people will just list it in that number of grams, but it’s usually supposed to be descriptive, so your serving size is not 30 grams, it’s one cookie. That obviously makes it easier for consumers reading the label to understand it because nobody knows how much a gram is, but a cookie is pretty obvious.

 

Jennifer:Yeah, nobody’s carrying around a kitchen scale with them.

 

Lev:Yeah.

 

Jennifer:So then my last question, and you touched on this earlier, which is what sparked the question for me. Canadian labels versus US labels, and obviously the US labels are going through some change, but at a high level, can you talk a little bit about what’s different and can a US company have a Canadian label on them or do they need to have both? How does that work?

 

Lev:The products you’re selling in the US should have a label that follows the FDA rules and a label on a product that you’re selling in Canada should have a Canadian label on it. The nutrition label itself is fairly similar, at least the old FDA one is pretty similar to the Canadian one, but the main difference is that it’s bilingual, at least the Canadian can be, like usually is bilingual. So that’s one big difference.

 

They obviously have their own set of serving sizes. The US has their list of categories and the recommended amounts and the CFIA has their own set of categories and recommended amounts, and they’re pretty similar. Probably the same for the majority of categories, but it might be slightly different and have different categories for some things.

 

The ingredient lists are fairly similar. Again, it has to be bilingual. You need the English and French version if you’re doing a bilingual label. There’s slightly different rules as to what has to have sub-ingredients versus when you don’t have to have sub-ingredients and what the common names are for certain things.

 

Then probably the biggest difference is the allergens. So the Canadians are … Their rules are a little stricter about what allergens have to be on the label, so they include things like mustard, sulfites. I’ll try to pull it up so I can tell you exactly. But yeah, you have to list the type of gluten, if it is a gluten-based product, and sesame. So there’s a few more allergens and that’s probably the biggest difference.

 

They’re also a bit more sticklers for their nutrition label. Less so about the content but the formatting. Like if you have one little thing wrong on your Canadian label, you’re way more likely to be reprimanded for it. It seems like they just have more resources behind that stuff because they’re maybe a smaller, more organized or better funded bureaucracy up there than the FDA.

 

Jennifer:So if you’re a company, let’s say in the US, I mean, I’m here in Washington state. I’m probably an hour from the border. I know that you’re in the Northeast. If you’re a food company here in the US and are thinking that you’d like to sell … If part of your plan is to sell your products into Canada or vice versa, if you’re a Canadian food producer and you’re thinking you’d like to sell your products here in the US, and we won’t even get into the whole import-export piece of it, but then would your recommendation be to have both labels?

 

Lev:On the same product you mean?

 

Jennifer:Yeah.

 

Lev:That’s probably very confusing. You probably want to label … Like if you are shipping some to your distributor in the US or however you’re doing it, you probably want those ones to have the FDA labels and the Canadian ones to have the Canadian labels on them.

 

Jennifer:Okay. Just keep it all separate.

 

Lev:Yeah. I mean, most people probably don’t have the space to have both on one label and it’ll probably get confusing for consumers as well, but maybe logistically it’s a little complicated to separate the two, but it’s probably the best way to do it and not confuse anybody.

 

Jennifer:Great. Well, I really appreciate your help. There will obviously be a link to the ReciPal website in the transcript for this podcast, but Lev, thank you so much. Like I said, this is a topic that I get asked about time and time again, so loved being able to have you on to share your view from the trenches because you’re doing this for a lot of small food producers out there.

 

Lev:Thanks! Yeah, we do what we can. I don’t know if there’s a comments section on the podcast post, but if there is, feel free to post questions and I’ll try to follow that and answer whatever questions come up.

 

Jennifer:Great! Great. Appreciate it. Thank you so much.

 

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