Two years ago, as sales began to decline due to more consumers shifting away from the center aisles of grocery stores in favor of fresh produce sections, Campbell Soup Company made a significant choice: it would eliminate artificial flavors and colors from all its products. For this 150-year-old company, this meant thoroughly revisiting every item in its range — which includes well-known brands like Pepperidge Farm, Prego, and V8 — and substituting ingredients that had been staples until that point. This was undoubtedly a formidable challenge.
“To execute these changes without compromising on taste, quality, and affordability, which are critical, is a considerable undertaking,” stated Jeff George, Campbell’s head of research and development, in an interview with Food Dive. “It’s not sufficient to advance in one area while regressing in another.” While the company worked on reformulating its products to align with what it termed a “Real Food Philosophy,” it also introduced new products that emphasized health and freshness, such as the Prego Farmers’ Market line of pasta sauces made with herbs and tomatoes “picked at their peak,” and the new Well Yes! soup brand featuring flavors like sweet potato corn chowder.
Greg Shewchuk, Campbell’s chief commercial and marketing officer, described the company’s recent initiatives as “a thoughtful disruption of our core categories.” This renovation narrative is common among many consumer packaged goods (CPG) manufacturers striving to draw consumers back to the center of the store. They aim to meet the needs of existing customers while also enticing new ones, balancing the reformulation of existing products with the development of new ones.
So, how are manufacturers utilizing reformulation and new product introductions as tools for customer retention and acquisition? Are they favoring one approach over the other to boost sales and attract consumer interest? Both strategies come with inherent risks and rewards. According to market research firm IRI, over 10,000 new products hit retail shelves annually, but 90% fail to meet their initial objectives. Only a handful manage to exceed $100 million in sales each year.
Tracking product reformulations proves to be more challenging, as companies often make changes behind the scenes, making it difficult to measure their success rate. However, a report from the Consumer Goods Forum, which includes over 400 retailers and manufacturers like Ahold Delhaize, General Mills, Target, and Campbell, indicated that 66% of its members reformulated more than 180,000 products last year. Common reformulation efforts included reducing sodium and sugar, adding vitamins, and incorporating whole grains. Companies also took steps to eliminate artificial ingredients.
Barb Stuckey, president of Mattson, a firm focused on product development and reformulation, explained that there are two types of reformulations: those that alter a product’s labeling and ingredients list, and those that do not. The first type is typically undertaken to remove unpopular ingredients, enhance the eating experience, save costs, or improve the overall health profile of a product. While this can be expensive and labor-intensive, companies have significant leeway to enhance the product once they commit.
Conversely, the second type involves reformulating within the existing ingredient list and labels. Stuckey noted that this is often driven by the need to replace an ingredient that has increased in price or is no longer available. Companies may also pursue this route to enhance the eating experience or manage costs, but without the flexibility offered by the first option, achieving desired outcomes becomes significantly harder.
Around the same time Campbell announced its plans to eliminate artificial ingredients and preservatives, General Mills’ cereal division declared its intention to 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 and reduced sugar in many kid-focused versions like Trix and Lucky Charms. General Mills, like Campbell and other CPG companies, aimed to attract health-conscious consumers without alienating its core customer base. Dana McNabb, president of U.S. retail cereal for General Mills, remarked that these changes have successfully drawn back customers who were deterred by sugar content and artificial ingredients. However, reports suggest that the impact of these reformulations on sales has been modest.
General Mills faced challenges in its reformulation efforts, particularly with Lucky Charms, where recreating the various marshmallow shapes using natural ingredients proved to be a significant hurdle. The company aims to have the line reformulated by the end of the year. Tom Vierhile, a director at GlobalData, noted that manufacturers often employ reformulations to strengthen customer loyalty or win back those who have drifted away. However, such decisions must be made carefully, as reformulation can sometimes lead to adverse outcomes.
For General Mills, maintaining the expected taste of beloved brands like Trix and Lucky Charms is crucial and serves as the primary metric in any reformulation initiative, according to McNabb. Meanwhile, the company also needs to tap into new consumer segments, a feat its traditional cereal lineup has struggled to achieve. Therefore, for the first time in 15 years, General Mills launched a new cereal brand last year: Tiny Toast. “We heard from teens and young adults that there just wasn’t a cereal out there for them,” McNabb explained.
In addition to reaching new consumer demographics, Vierhile highlighted that new product launches can also tap into emerging market opportunities. Snacking, which has experienced significant growth as consumers increasingly seek mini-meals and between-meal bites, is becoming a focal point for innovation. “You’ve got a whole new category opening up in snacking, and companies really want to introduce products to meet that demand,” Vierhile stated.
For Campbell, new products like Well Yes! and Prego Farmers Market present opportunities to engage fresh-focused consumers and draw them into the company’s core grocery categories. However, the company has encountered difficulties in this pursuit, particularly with its Campbell’s Fresh division. Recent sales data showed a 6% decline in Campbell’s Fresh sales, while its flagship soups and sauces division experienced a 2% drop.
Despite these challenges, Shewchuk expressed confidence that the company is on the right track with its “Real Food Philosophy,” leveraging both reformulation and new product initiatives to attract fresh-focused consumers. The ambitious goal is to not only bring these customers back to the center of the store but also to retain them. “We don’t believe the center of the store is dead,” Shewchuk affirmed. “We believe that we have just not reinvented it yet.”
In the context of retailers like Costco, which emphasizes fresh and quality products, Campbell’s commitment to reformulation and new product development may play a critical role in enhancing its market presence and meeting evolving consumer expectations, including those who seek offerings such as Citracal supplements within grocery aisles.