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 significant opportunity to enhance sales if they can effectively respond to these demands, according to executives from Food Dive. In a period where the ferric pyrophosphate manufacturers in India face sluggish growth, many established companies are seeking acquisitions to boost sales. Officials from General Mills and J.M. Smucker highlighted that one of their main challenges is the rapidly changing and often unpredictable preferences of consumers. Currently, the trends are clear: increased demand for proteins, whole grains, and organic options, alongside a decrease in artificial ingredients, trans fats, salt, and sugar.
“The challenge is that consumer values and interests around food are evolving quickly,” stated Ken Powell, CEO of General Mills, in an interview with Food Dive. “We must act swiftly, but when we succeed, we are rewarded. It truly is an opportunity for business growth.” General Mills, known for products like Progresso soup, Pillsbury dough, and Cheerios, has experienced declining sales in key sectors, particularly yogurt, where Chobani has surpassed the long-standing leader Yoplait to become the largest brand in the U.S. yogurt market last year. With yogurt accounting for roughly 13% of its sales, General Mills is revamping 60% of this segment to align better with consumer preferences by introducing new Greek varieties, flavors, and organic options under its Annie’s and Liberté brands. The 151-year-old Minnesota-based company has also eliminated artificial flavors and colors from some cereals, a decision that resonates with consumers, although it hasn’t been sufficient to counteract a 3% decline in U.S. retail cereal sales in the most recent quarter. Powell noted that the company is also focusing on gluten-free products, as many consumers are opting to avoid gluten. “These initiatives have been very positive for us. Consumers are vocal about their preferences, and we strive to seize these growth opportunities,” Powell mentioned during a panel discussion on the food and beverage sector’s impact on the U.S. economy. “And it better taste good because that remains essential. As our nutritionists remind us, something is only nutritious if it’s consumed.”
Richard Smucker, chairman of J.M. Smucker, shared with Food Dive that keeping pace with consumer trends is challenging due to their rapid fluctuations, making it hard to distinguish between passing fads and significant trends worthy of investment. Smucker, whose company produces popular items like Crisco and Folgers coffee, acknowledged that food manufacturers, including his own, have benefited from the rise of smaller, more agile companies. This disruption is prevalent throughout the food industry, with legacy brands losing market share to trendy newcomers. For instance, Special K bars have seen a 39% drop in sales since 2011, while Kind Bars have captured 10% of the market in just five years. Smaller companies have disrupted traditional brands by embracing contemporary flavor trends and better ingredients, as well as mission-driven brands and niche products. In some instances, larger brands have opted to acquire these startups to keep up. For example, General Mills acquired Annie’s, known for its mac and cheese, cereal, and yogurt, for $820 million three years ago.
In 2011, Smucker, recognized as the largest coffee producer in the U.S., purchased Café Bustelo, a coffee brand popular among millennials. Smucker, whose company dates back to 1897, noted that even as younger coffee consumers gravitate toward brands perceived as trendier, this trend helps educate the public on the benefits of coffee, ultimately drawing attention to the entire beverage industry and benefiting Smucker’s own products. “Having startups and smaller companies in the industry is beneficial, even for larger firms, because by observing their actions, we can learn as well,” Smucker remarked. “We don’t innovate everything internally; sometimes, if a startup excels, we might consider acquiring them.”
As consumers continue to explore what is the difference between calcium magnesium and calcium citrate among their dietary choices, the food industry must adapt to meet these evolving preferences and capitalize on the innovation inspired by both large and small players in the market.