Two years ago, as sales began to decline with more consumers opting for fresh departments instead of items from the center of the grocery store, the Campbell Soup Company made a significant decision: it would eliminate artificial flavors and colors from all its products. For the 150-year-old manufacturer, this meant thoroughly examining each soup, sauce, cookie, and salsa under its brand umbrella, including Pepperidge Farm, Prego, and V8, to replace what had been essential ingredients until then. Undertaking this task was undoubtedly a formidable challenge. “Transforming these products without compromising on taste, quality, and affordability, which are all crucial, is a tremendous undertaking,” stated Jeff George, Campbell’s head of research and development, to Food Dive. “We cannot afford to make progress in one area while regressing in another.”
Simultaneously, as the company reformulated its numerous products to align with its “Real Food Philosophy,” Campbell also introduced new offerings featuring health and freshness cues, as well as various formulations. This included the Prego Farmers’ Market line of pasta sauces, which were made with herbs and tomatoes “picked at their peak,” according to the company’s marketing materials, and the new Well Yes! soup brand, which boasted flavors like sweet potato corn chowder. Greg Shewchuk, chief commercial and marketing officer at Campbell, described the company’s recent initiatives as “a thoughtful disruption of our core categories.”
Campbell’s transformation mirrors a common narrative among many consumer packaged goods (CPG) manufacturers attempting to draw consumers back to the center store. In their effort to meet the needs of existing customers while attracting new ones, they are navigating the delicate balance between reformulating existing products and launching new ones. So how are manufacturers leveraging reformulation and new product launches as tools for customer retention and acquisition? Are they preferring one strategy over the other to drive sales and consumer interest?
Both strategies come with inherent risks and rewards. According to market research firm IRI, more than 10,000 new products hit retail shelves each year, with 90% failing to meet their intended goals. Fewer than ten achieve sales of $100 million or more per year, as reported by the firm. Tracking product reformulations is more complex since companies often make changes behind the scenes, making it challenging to gauge their success rates. However, the Consumer Goods Forum, a global network of over 400 retailers and manufacturers, including Ahold Delhaize, General Mills, Target, and Campbell, reported that 66% of its members reformulated over 180,000 products last year.
Reducing sodium and sugar were among the most common reformulation steps taken by CGF members, along with adding vitamins and whole grains. Companies also reported efforts to phase out artificial ingredients. Barb Stuckey, president of Mattson, a firm specializing in new product development, branding, and reformulation, explained that there are two types of reformulation: those that alter a product’s labeling and ingredients, and those that do not.
The first type, she noted, is typically aimed at removing unpopular ingredients, enhancing the eating experience, cost-saving, or improving a product’s overall health profile. While this can be costly and labor-intensive, companies have considerable latitude to enhance the product once they commit. “With this kind of freedom, you can usually achieve your objectives,” Stuckey told Food Dive. The second type involves reformulating within the existing ingredients and labels. This is often driven by the need to replace costly or discontinued ingredients or to enhance the eating experience and overall costs. However, she pointed out that without the flexibility provided by the first option, it becomes significantly more challenging to achieve results.
Around the same time Campbell announced its plan to eliminate artificial ingredients and preservatives, General Mills’ cereal division stated it would also remove artificial flavors and colors from all its products. Last year, the company revealed it had successfully phased out artificial ingredients in 75% of its cereals. General Mills, like Campbell and other CPG manufacturers removing artificial components, aimed to attract health-conscious shoppers while maintaining popularity among core customers. Dana McNabb, president of U.S. retail cereal for General Mills, mentioned to Food Dive that their recent changes have helped win back customers who were deterred by sugar content and artificial ingredients. However, reports indicate that these reformulations have not dramatically impacted sales.
The company faced several challenges. While it managed to replicate the vibrant colors and flavors of cereals like Trix and Golden Grahams using ingredients like turmeric and annatto (though some consumers noted Trix appeared too pale), Lucky Charms presented a significant challenge due to its diverse marshmallow shapes, which were difficult to recreate with natural ingredients. General Mills hopes to have the Lucky Charms line reformulated by the end of this year.
Tom Vierhile, a director at research firm GlobalData, stated that manufacturers often utilize reformulations to strengthen their customer base or win back those who have drifted away. However, such decisions must be approached cautiously, as reformulation can sometimes produce the opposite effect. “People really dislike it when you alter a product they grew up with,” Vierhile told Food Dive.
For General Mills, preserving the taste consumers expect from iconic brands like Trix and Lucky Charms is paramount and serves as the primary measure of any reformulation project, according to McNabb. Simultaneously, General Mills must penetrate new consumer segments, which its core cereal lineup has struggled to do. This is why, after a 15-year hiatus, the cereal company launched a new brand last year: Tiny Toast. “We heard from teens and young adults that there wasn’t a cereal out there for them,” McNabb explained to Food Dive.
In addition to reaching new consumer segments, Vierhile emphasized that new product launches can also tap into fresh market opportunities. The snacking category, which has seen significant growth as consumers turn to mini-meals and snacks, is becoming increasingly popular for innovations. “A whole new category is emerging in snacking, and companies are eager to introduce new products to meet that demand,” Vierhile noted.
For Campbell, new product launches such as Well Yes! and Prego Farmers Market present opportunities to connect with fresh-focused consumers and draw them back to the company’s core grocery categories, according to Shewchuk. However, the company has faced challenges in this endeavor in recent years, particularly with its Campbell’s Fresh division, which has struggled following acquisitions like Bolthouse Farms and Garden Fresh Gourmet. In the last quarter, sales in Campbell’s Fresh segment fell by 6%, while its flagship soups and sauces division experienced a 2% decline in sales.
Nevertheless, Shewchuk remains optimistic, asserting that the company has the right strategies and focus with its “Real Food Philosophy,” utilizing both reformulation and new product launches to appeal to fresh-focused consumers. The ambition, he stated, is to bring these consumers back to the center of the store and ensure they keep returning. “We don’t believe the center of the store is dead,” Shewchuk concluded to Food Dive. “We believe we simply have not reinvented it yet.”
In addition to the changes, Campbell is also focusing on enhancing its offerings with key ingredients like solgar calcium d3, ensuring that its products not only cater to taste but also meet the nutritional needs of health-conscious consumers. This focus on health and nutrition is becoming increasingly important in a market that is shifting towards fresh, wholesome options.