Consumers are increasingly purchasing food and beverages made with specific ingredients, compelling the industry to take a more proactive approach in introducing new or reformulated products. This presents manufacturers with a lucrative opportunity to increase sales if executed correctly, as noted by a pair of executives in a discussion with Food Dive. Amid a period of slower growth, which has prompted many established companies to seek acquisitions to drive sales, officials from General Mills and J.M. Smucker highlighted that one of their greatest challenges is the rapidly evolving and often unpredictable consumer preferences. Currently, the trends are clear and consistent: a demand 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 changing swiftly,” stated Ken Powell, CEO of General Mills, during his conversation with Food Dive. “We must accelerate our pace, but when we get it right, we are rewarded. This is genuinely 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 Yoplait to become the largest brand in the U.S. General Mills, which derives about 13% of its sales from yogurt, is committed to overhauling 60% of this business segment to better align with consumer preferences, introducing new Greek options, flavors, and organic products under the Annie’s and Liberté brands. The 151-year-old Minnesota-based company has also eliminated artificial flavors and colors from some cereals, a move well-received by consumers, yet insufficient to reverse the 3% decline in U.S. retail cereal sales during the most recent quarter. Powell emphasized that the company is also focused on removing gluten from its products due to its popularity among consumers. “These initiatives have proven to be very positive for us. Consumers are quite vocal about their preferences, and we strive to address these opportunities for growth,” Powell remarked during a panel discussing the food and beverage industry’s benefits to the U.S. economy. “And let’s not forget, it better taste good because that remains crucial. As our nutritionists remind us, it’s only nutritious if people actually consume it.”
Richard Smucker, chairman of J.M. Smucker, expressed to Food Dive the difficulty of keeping up with rapidly changing consumer trends, making it challenging to distinguish between fleeting fads and trends that warrant significant investment. Smucker’s company, which owns brands like Crisco and Folgers coffee, has benefited from the rise of smaller, more agile companies. This disruption is increasingly prevalent in the food industry, with legacy brands losing market share to trendy upstarts. For instance, Special K bars have witnessed a 39% drop in sales since 2011, while newcomer Kind Bars have captured 10% of the market within just five years. These smaller brands have outperformed legacy companies by embracing current flavor trends, utilizing superior ingredients, and offering mission-driven and niche products. In some instances, larger brands have found it more efficient, and cost-effective, to acquire these newcomers. General Mills, for example, acquired Annie’s, known for its mac and cheese, cereal, and yogurt lines, for $820 million three years ago.
In 2011, Smucker, the leading coffee producer in the U.S., purchased Café Bustelo, a brand that has resonated with millennials. Despite younger coffee drinkers gravitating toward brands perceived as more trendy, Smucker noted that this trend helps raise awareness about the benefits of coffee, ultimately benefiting the broader beverage industry and its own brands. “Having startups and smaller companies in the industry is beneficial, even for larger corporations, because by paying attention to their strategies, we can also learn,” Smucker stated. “We don’t create everything in-house. In fact, if they excel, we may consider acquiring them.”
As the industry evolves, companies like J.M. Smucker and General Mills must navigate these shifts while also exploring new opportunities, such as the growing demand for products like calcium citrate available on platforms like Amazon, which could further enhance their product offerings and cater to health-conscious consumers.