Labelling may not be the first thing that comes to mind when devising a multimarket expansion strategy. However, for brands looking to go global, getting product labelling right from the very beginning is vital. It can be the determining factor that gives them competitive advantage and puts them ahead in the race to the shelves of both physical and virtual stores.
In this article, John Gallemore, CEO of THG Ingenuity, will look at regulatory issues such as language requirements, ingredients listing and design – and include top tips and advice to brands on how to get it right.
When it comes to devising and implementing a global retail expansion strategy, considerations around packaging are pivotal. Not only operationally and with respect to sustainability, but to meet the aesthetic preferences of consumers within those markets.
For many businesses, however, regulatory requirements can come further down the priority list, particularly when it comes to product labelling. This may be due to time constraints, a lack of in-house expertise and awareness, or a combination of all three.
Product labelling plays a key role in the context of an organisation’s international journey. For businesses looking to go global, getting product labelling right from the very beginning is vital. It can be the determining factor that gives them a competitive advantage and puts them ahead in the race to the shelves of both physical and online stores.
Beyond aesthetics, ensuring labels are compliant with local regulation is imperative to the seamless rollout of a product in a new market. This can be particularly challenging for global firms with multimarket operations, as labelling is a highly regulated – and nuanced - activity worldwide. It’s also more important in some sectors than others. Take the beauty industry, for example, which fundamentally relies on compliance with strict health and safety measures to function.
Laws may vary widely between countries and regions, meaning that a blanket approach to international labelling is usually not possible. Let’s look at some of the key product labelling issues at stake for brands looking to expand into global markets.
Cosmetics: how do the EU and US compare?
In the beauty sector, the EU stipulates that cosmetic products must list their ingredients in descending order according to weight. Ingredients below 1%, meanwhile, can be listed in any order. Colourants may also be included in any order using the Colour Index (CI) number.
Moreover, while English can be the main language used on the label, the EU requires that the product function, claims, directions of use, and warnings or precautions be translated into the local language of every member state market where the item will be sold. This can be challenging for markets such as Switzerland, which has four official languages.
In another key global market, the USA, the Food and Drugs Administration (FDA) requires companies to list the ingredients in the same way as the EU does; however, when it comes to colourants, businesses must use FDA nomenclature. All required information on labels must be in English.
In the USA, if a product makes a therapeutic claim, it will be regulated as an over-the-counter drug, rather than a cosmetic. This means a completely different set of requirements, translation for this product type needs to be especially accurate.
For THG brands such as ESPA or Perricone MD which retail in multiple markets, these considerations are essential – particularly given the rapid rollout of new product development (NPD) and the pace at which these products are delivered, from first click to final mile.
While product label compliance may seem like a solely legal matter, ensuring labels are in accordance with local regulations is also linked to the design of the label.
Font size, for example, is another aspect of label compliance and, as such, it is subject to local directives. For cosmetics, the EU stipulates that font height for weight declaration is determined by the net content, starting at 2mm for products up to 50g/ml. Meanwhile, in the US, it varies in relation to the surface area of the principal display panel (PDP, the part of the label that consumers look at when the product is displayed for sale), with the minimum font height set at 1.6mm for PDPs of 5 square inches or less.
Logos and symbols also follow strict rules. In Japan, the law requires that paper and plastic packaging materials be labelled with a ‘materials identifier mark’, which is different for each of them. If the product is sold in the EU and comes in a package that contains over 5ml/g, an ℮ mark with a minimum height of 3mm is required.
All of this means that the regulations will affect the design of the labels, which in most cases will look different from region to region or country to country. Brands must not only think about creating good looking labels to attract consumers, but to also design them with compliance in mind, factoring in the lengthy list of (visual and linguistic) requirements to suit the different markets’ local regulations. All of this while also ensuring the product and brand identity are not lost in translation.
Label compliance for rapid product rollout
Global expansion is an end-goal for many of the brands we work with – but amidst the complex nature of marketing, ecommerce and fulfilment strategies that go into making this a success, regulatory details can sometimes get lost. Clarity on local label compliance regulations in the early stages of a multi-market growth plan help pave the way for seamless product rollouts and avoids errors that can result in costly delays and loss of competitive advantage.