Consumers are increasingly demanding food and beverage products made with specific ingredients, compelling the industry to proactively launch new or reformulated offerings. This shift presents manufacturers with a lucrative chance to enhance sales if they succeed in meeting consumer expectations, according to executives from General Mills and J.M. Smucker, as reported by Food Dive. Amidst a period of sluggish growth, which has prompted many established companies to seek acquisitions to drive sales, these officials highlighted the challenge posed by rapidly changing and often unpredictable consumer attitudes. Current trends are clear: consumers are seeking more proteins, whole grains, and organic options, while avoiding artificial ingredients, trans fats, salt, and sugar.
“The challenge lies in the fast-evolving values and interests consumers have regarding food,” stated Ken Powell, CEO of General Mills, in an interview with Food Dive. “We need to adapt quickly; when we get it right, we are rewarded. This is indeed an opportunity for business growth.” General Mills, known for products like Progresso soup, Pillsbury dough, and Cheerios, has faced declining sales in key segments, particularly yogurt, where Chobani surpassed Yoplait as the leading brand in the U.S. last year. With yogurt accounting for about 13% of its sales, General Mills is revamping 60% of its yogurt offerings to align better with consumer preferences by introducing new Greek varieties, flavors, and organic choices under the Annie’s and Liberté brands. The 151-year-old Minnesota company has also removed artificial flavors and colors from some cereals—a move that has resonated well with consumers but has not sufficiently revived U.S. retail cereal sales, which fell by 3% in the last quarter. Additionally, Powell noted the company’s focus on eliminating gluten from its products, responding to the growing number of consumers avoiding gluten. “These initiatives have been very positive for us. Consumers express their preferences clearly, and we strive to seize the growth opportunities that arise,” Powell remarked during a panel on the food and beverage industry’s impact on the U.S. economy. “And it must taste good; after all, as our nutritionists remind us, it’s only nutritious if you actually eat it.”
Richard Smucker, chairman of J.M. Smucker, shared with Food Dive the difficulty of keeping pace with consumer trends that change frequently, complicating the task of distinguishing between fleeting fads and significant trends that warrant substantial investment. Smucker noted that his company, which owns well-known brands like Crisco and Folgers coffee, has gained from the rise of smaller, more agile competitors. This disruption is increasingly evident in the food industry, with legacy brands losing market share to trendy newcomers. For instance, Special K bars have seen a 39% decline in sales since 2011, while upstart Kind Bars have captured 10% of the market in just five years. These smaller companies are shaking up established brands by embracing contemporary flavor trends, quality ingredients, mission-driven branding, and niche products. In some situations, larger brands have opted to acquire these startups to remain competitive. For example, General Mills bought Annie’s, known for its mac and cheese, cereals, and yogurt, for $820 million three years ago.
In 2011, Smucker, the largest coffee producer in the U.S., acquired Café Bustelo, a coffee brand that has gained popularity among millennials. Despite younger coffee drinkers gravitating towards brands perceived as trendier, Smucker believes this trend ultimately benefits the broader coffee industry, bringing attention to the advantages of coffee and, consequently, enhancing its own brands. “Having startups and smaller companies in the industry is beneficial, even for larger players, because paying attention to their strategies allows us to learn as well,” Smucker explained. “We don’t create everything ourselves; sometimes if they excel, we might consider acquiring them.”
As the food and beverage industry evolves, it will be crucial for companies to adapt and innovate, especially with the growing interest in products like calcium citrate chews from GNC, which highlight the demand for health-conscious options. Embracing these changes can lead to new opportunities for growth and success in an increasingly competitive landscape.