07-07-2025
How To Protect Your Brand From Rising Ingredient Costs In 2025
Eran Mizrahi is the CEO and cofounder of Source86, a natural ingredients importer.
With the proposed U.S. tariff hikes to Mexico, Canada (25%) and China (10%), a number of American consumers are stocking up on foreign goods. But that's only one way for clean- and private-label food companies to protect their brands. Let's take a look at other methods we've learned in the past decade.
The Ripple Effect Of Tariffs On Ingredients
Given the concentrated nature of global ingredient supplies, the proposed tariffs could hit food manufacturers particularly hard. Reformulation isn't always an option for clean-label brands committed to specific ingredient origins, in which case costs may need to be absorbed.
Private-label brands face a different challenge: Their value proposition depends on competitive pricing. But with key ingredients potentially facing tariffs, maintaining those low price points becomes increasingly tricky. Here are a few examples of key ingredients that could be affected:
• China: China is one of the largest global exporters of garlic, ginger and Vitamin C.
• Mexico: Mexico is the largest global exporter of avocados, the largest exporter to the U.S. for tomatoes and a major exporter of bell and chili peppers.
• Canada: Canada is the largest global exporter of canola oil and one of the top five export countries for wheat. It also provides 73% of the world's maple syrup production.
These ingredients are integral to many clean-label and private-label food brands, and the tariffs could make them pricier, slow down imports, increase paperwork and complicate logistics. Some brands weathered a similar storm during the 2018 trade war with early pivots. I believe the lessons they learned are even more important today.
Five Ways Clean-Label Brands Can Navigate 2025
Clean-label products promise high-quality (often imported) natural ingredients. So, how can your clean-label brand preserve its reputation and product integrity when higher tariffs threaten this promise? Here are five strategies to consider:
1. Diversify ingredient suppliers. Don't put all your eggs in one (import) basket. Explore alternative sourcing regions to reduce reliance on tariff-heavy markets.
2. Build inventory buffers. Stockpile key ingredients to protect against sudden price hikes or shortages. You can also use an inventory management system to help you avoid waste.
3. Optimize product formulations. Experiment with alternative ingredients that maintain quality while reducing costs. For example, consider local substitutes for imported spices or proteins.
4. Invest in supply chain agility. Use forecasting tools to anticipate disruptions and build flexibility into your logistics and sourcing plans so you can quickly pivot.
5. Speak to your customers. In my experience, today's consumers value honesty. Inform them about rising costs and how your brand is working to champion quality assurance and value.
Private-Label Brands: Staying Affordable And Reliable
Private-label brands, often trusted to deliver value, could face a tricky time as tariffs increase. Here's how your brand can adapt while maintaining affordability:
1. Reevaluate supplier relationships. Build connections in regions with fewer tariff impacts.
2. Negotiate long-term contracts. Lock in pricing agreements with suppliers to shield your brand from market fluctuations.
3. Strengthen inventory strategies. Maintain buffer stocks for essentials like soy protein and spices; this can help you ensure production continuity.
4. Refine pricing strategies. Consider introducing tiered pricing options. In my experience, this can be a win-win, attracting cost-conscious buyers while preserving margins.
5. Enhance consumer loyalty. Be up-front about challenges with your customers, emphasizing your efforts to maintain affordability without compromising quality.
Turning Disruption Into Opportunity
While the new changes could disrupt global food and agricultural trade, I believe this can also be the perfect time to innovate and strengthen your brand's ingredients supply chain. Here are two methods to consider:
• Explore local sourcing. In my experience, while tariffs may complicate global trade, they can create openings to work with local producers. This can help you reduce costs, shorten supply chains and appeal to sustainability-conscious consumers.
• Invest in technology. Consider adopting AI forecasting and blockchain tools; these can allow you to improve your supply chain visibility and efficiency as well as respond to disruptions in real time.
Taking The Long View
Rising ingredient costs could be challenging for clean-label and private-label brands alike. However, the new tariffs may also provide opportunities for brands to adapt and grow. It may not be easy, but I believe that with thoughtful planning, clear communication and a willingness to pivot, your company can navigate these changes and emerge even stronger.
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