Consumers are increasingly driving the food and beverage industry to proactively develop new or reformulated products, presenting manufacturers with a lucrative chance to enhance sales if executed correctly, according to two executives in an interview with Food Dive. Amidst slower growth in the industry, which has led many established companies to pursue acquisitions for sales boosts, officials from General Mills and J.M. Smucker identified the rapidly changing and often unpredictable consumer preferences as one of their biggest challenges. Current trends are evident: an increase in demand for proteins, whole grains, and organic products, alongside a decrease in artificial ingredients, trans fats, salt, and sugar.
“The challenge is that consumer values and interests regarding food are evolving quickly,” said Ken Powell, CEO of General Mills, during the interview. “We need to act faster, but when we get it right, we are rewarded. This is truly an opportunity because success leads to business growth for us.” General Mills, known for brands like Progresso soup, Pillsbury dough, and Cheerios, has seen declining sales in some key areas. The yogurt sector has been particularly affected, with Chobani surpassing Yoplait, a long-standing leader, to become the largest brand in the U.S. market last year. In response, General Mills, which derives about 13% of its sales from yogurt, plans to revamp 60% of its yogurt offerings by introducing new Greek varieties, flavors, and organic options under its Annie’s and Liberté brands. The 151-year-old Minnesota company has also removed artificial flavors and colors from some cereals, a move well-received by consumers, although it hasn’t been sufficient to reverse a 3% decline in U.S. retail cereal sales in the latest quarter. Powell noted that the company is also focusing on gluten-free products due to consumer avoidance. “These initiatives have been very positive for us. Consumers are clear about their preferences, and we strive to address the growth opportunities we see,” Powell remarked during a panel discussing the food and beverage sector’s impact on the U.S. economy. “And of course, it must taste good; as our nutritionists remind us, food is only nutritious if it is consumed.”
Richard Smucker, chairman of J.M. Smucker, expressed to Food Dive that keeping pace with consumer trends is challenging due to their frequent shifts, making it difficult to distinguish between a passing fad and a trend worthy of significant investment. Smucker’s company, which owns popular products like its namesake jellies, Crisco, and Folgers coffee, has seen benefits from the rise of smaller, more agile brands. This disruption is becoming increasingly prevalent in the food industry, where legacy brands are losing market share to trendy newcomers. For instance, Special K bars have experienced a 39% sales decline since 2011, while Kind Bars have rapidly captured 10% of the market within five years. These smaller companies have gained traction by embracing current flavor trends, high-quality ingredients, mission-driven branding, and niche offerings. In some cases, major brands have opted to acquire these upstarts to remain competitive. General Mills, for example, purchased Annie’s, known for its mac and cheese, cereal, and yogurt lines, for $820 million three years ago.
In 2011, Smucker, the largest coffee producer in the U.S., acquired Café Bustelo, a coffee brand popular among millennials. Smucker noted that even as younger coffee drinkers lean towards brands perceived as trendy, this trend helps educate the public about coffee’s benefits, ultimately benefiting the wider industry, including Smucker’s products. “Having startups and small companies in the industry is beneficial for larger firms, as it provides insights into their practices,” Smucker stated. “We don’t innovate everything ourselves; in fact, if they excel in certain areas, we might consider acquiring them.”
In light of these industry dynamics, there is an increasing emphasis on health-focused products, such as calcium citrate vitamin D3 zinc & magnesium tablets, which reflect consumer demand for nutritional supplements. The focus on enhancing health benefits aligns with consumer preferences for better ingredients, reinforcing the notion that addressing these evolving interests can lead to significant growth opportunities for established brands.