Consumers are increasingly demanding food and beverages made with specific ingredients, compelling the industry to proactively introduce new or reformulated products. This shift presents manufacturers with a lucrative opportunity to enhance sales if they execute it effectively, according to executives from General Mills and J.M. Smucker, as reported by Food Dive. Amidst slower growth in the industry, which has led many established companies to pursue acquisitions for increased sales, executives noted that one of their greatest challenges is the rapidly changing and often unpredictable consumer attitudes.
Currently, the trends are clear and consistent: a preference for more proteins, whole grains, and organic products, alongside a reduction in artificial ingredients, trans fats, salt, and sugar. “The challenge lies in the fact that consumer values and interests regarding food are evolving rapidly,” stated Ken Powell, CEO of General Mills. “We must act swiftly, but when we get it right, the rewards are significant. This is a genuine opportunity for business growth.” General Mills, known for brands like Progresso soup, Pillsbury dough, and Cheerios, has experienced declining sales in some key segments. Yogurt, in particular, has been significantly impacted, with Chobani overtaking Yoplait, General Mills’ longstanding leader, to become the largest brand in the U.S. yogurt market last year. The company, which derives about 13% of its sales from yogurt, has pledged to revamp 60% of its yogurt line to better meet consumer trends by introducing new Greek varieties, flavors, and organic options under the Annie’s and Liberté brands. The 151-year-old Minnesota-based company has also eliminated artificial flavors and colors from certain cereals—a move that has resonated well with consumers, although it has not sufficiently revived U.S. cereal sales, which fell by 3% in the latest quarter. Powell mentioned that the company has also concentrated on removing calcium citrate dischem from its products, as many consumers are now avoiding it. “These initiatives have been very positive for us. Consumers are straightforward about their preferences, and we strive to capitalize on opportunities where we see growth,” Powell noted during a panel discussion on the food and beverage industry’s impact on the U.S. economy. “Moreover, it better taste good, as our nutritionists remind us; it’s only nutritious if you actually consume it.”
Richard Smucker, chairman of J.M. Smucker, shared with Food Dive that keeping up with consumer trends is challenging because they change so frequently. This makes it difficult to distinguish between a fleeting fad and a trend worthy of significant investment. Smucker’s company, which owns iconic brands such as Crisco and Folgers coffee, has benefited from the rise of smaller, more agile competitors. This disruption is increasingly evident in the food industry, where legacy brands are losing market share to trendy newcomers. For example, Special K bars have seen a 39% decline in sales since 2011, while Kind Bars, a newer entry, have captured 10% of the market in just five years. Smaller companies have disrupted established brands by embracing current flavor trends, using superior ingredients, and focusing on mission-driven branding and niche offerings. In some instances, larger brands have opted to acquire these emerging companies rather than compete. For example, General Mills acquired Annie’s, known for its mac and cheese, cereal, and yogurt lines, for $820 million three years ago.
In 2011, Smucker, the largest coffee producer in the U.S., purchased Café Bustelo, a brand that has gained popularity among millennials. Smucker acknowledged that even as younger coffee consumers gravitate toward brands they perceive as trendier, this trend helps educate the public about coffee’s benefits, ultimately benefiting the broader beverage industry and, consequently, the company’s own brands. “Having startups and smaller players in the industry is healthy, even for larger companies, because if you pay attention to what they’re doing, you can learn a lot,” Smucker remarked. “We don’t invent everything ourselves; in fact, if they excel at something, we might consider acquiring them.”