Two years ago, as sales began to wane due to a growing preference among consumers for fresh food sections over traditional grocery aisles, Campbell Soup Company made a significant decision: it would phase out artificial flavors and colors from all its products. This was a considerable undertaking for the 150-year-old company, which required a thorough examination of every soup, sauce, cookie, and salsa within its portfolio, which includes brands like Pepperidge Farm, Prego, and V8. Replacing these previously essential ingredients was understandably a formidable challenge. “Transforming these products without compromising taste, quality, and affordability—elements that are crucial—is a tremendous task,” remarked 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.”
Simultaneously, Campbell was reformulating a variety of its products to align with its “Real Food Philosophy,” while also introducing new items that emphasized health and freshness. Among these were the Prego Farmers’ Market line of pasta sauces, crafted with herbs and tomatoes “picked at their peak,” according to the company’s marketing materials, and the new Well Yes! soup brand featuring flavors like sweet potato corn chowder. Greg Shewchuk, Campbell’s chief commercial and marketing officer, described these recent initiatives as “a thoughtful disruption of our core categories.”
This transformation mirrors a common trend among consumer packaged goods (CPG) manufacturers who are striving to draw consumers back to the center of the store. They aim to meet the needs of existing customers while attracting new ones, attempting to find the right balance between reformulating existing products and launching new ones.
So, how are manufacturers leveraging reformulation and new product launches as strategies for customer retention and acquisition? Are they leaning more toward one method over the other to drive sales and consumer interest? Both strategies come with their own set of risks and rewards. Research from IRI indicates that over 10,000 new products hit retail shelves each year, with 90% failing to meet their initial objectives. Fewer than ten products achieve annual sales of $100 million or more, according to the firm.
Tracking product reformulations can be more complex since many companies conduct these changes behind the scenes, making it difficult to assess 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 more than 180,000 products last year. Common reformulation efforts included reducing sodium and sugar, adding vitamins, incorporating whole grains, and phasing out artificial ingredients.
Barb Stuckey, president of Mattson, a company specializing in new product development, branding, and reformulation, explained that there are two types of reformulations: those that alter a product’s labeling and ingredients and those that do not. The first type is typically aimed at removing unpopular ingredients, enhancing the eating experience, reducing costs, or improving a product’s health profile. This process can be costly and labor-intensive, but it allows companies considerable room for improvement. “With this flexibility, you can usually achieve your goals,” Stuckey stated.
The second type involves reformulating within the existing ingredient list and labels. Stuckey noted that this approach is often motivated by the need to replace a pricier or discontinued ingredient or to enhance the eating experience while also managing costs. However, without the flexibility provided in the first option, achieving satisfactory results can be significantly more challenging.
Around the same time Campbell announced its initiative to phase out artificial ingredients, General Mills’ cereal division declared it would remove artificial flavors and colors from all its products. Last year, the company reported successfully eliminating artificial ingredients from 75% of its cereals, along with reducing sugar in many of its children’s cereals like Trix and Lucky Charms. General Mills aimed to attract health-conscious consumers without alienating its existing customer base. Dana McNabb, president of U.S. retail cereal for General Mills, indicated that these changes have helped win back some customers who were deterred by sugar content and artificial ingredients, although reports suggest the impact on sales has been modest.
The company faced challenges along the way. While it successfully replicated the vibrant colors and flavors of Trix and other cereals using natural ingredients like turmeric and annatto, Lucky Charms presented significant hurdles due to its diverse marshmallow shapes, which were tough to recreate with natural components. General Mills hopes to reformulate this line by the end of the year.
Tom Vierhile, a director at GlobalData, noted that manufacturers often utilize reformulations to strengthen their customer base or reclaim those who may have drifted away. However, these decisions must be approached carefully, as reformulation can sometimes lead to adverse effects. “Consumers are often resistant to changes in products they’ve grown up with,” Vierhile pointed out. For General Mills, maintaining the expected taste of brands like Trix and Lucky Charms is crucial and remains the primary metric for any reformulation project, according to McNabb.
At the same time, General Mills seeks to tap into new consumer segments, a feat its traditional cereal lineup has struggled to achieve. Consequently, the company launched a new cereal brand, Tiny Toast, for the first time in 15 years. “We heard from teens and young adults that there just wasn’t a cereal out there for them,” McNabb shared.
In addition to reaching new consumer demographics, new product launches can also open doors to emerging market opportunities. The snacking category has experienced significant growth as consumers increasingly opt for mini-meals and snacks between meals. “A whole new category is emerging in snacking, and companies are eager to introduce new products to meet this demand,” remarked Vierhile.
For Campbell, new product introductions such as Well Yes! and Prego Farmers Market present opportunities to engage fresh-focused consumers and guide them toward the company’s core grocery offerings, according to Shewchuk. However, the company has faced challenges in this endeavor, particularly with its Campbell’s Fresh division, which has encountered difficulties following acquisitions like Bolthouse Farms and Garden Fresh Gourmet. Recently, Campbell’s Fresh sales dropped by 6%, while the flagship soups and sauces division saw a 2% decline.
Nonetheless, Shewchuk emphasized that the company believes it has the right strategies and focus with its “Real Food Philosophy,” using both reformulation and new product launches to attract fresh-oriented consumers. The ambitious goal remains to bring these consumers back to the center of the store and encourage their return. “We don’t believe the center of the store is dead,” Shewchuk affirmed. “We think we just haven’t reinvented it yet.”
Moreover, as part of their efforts to enhance the nutritional profile of their products, both Campbell and General Mills have prioritized incorporating healthier ingredients, such as calcium citrate and optimizing elemental calcium content within their reformulations. By addressing the nutritional aspects of their offerings, they aim to appeal to health-conscious consumers while still satisfying the taste expectations of their loyal customer base.