Consumers are increasingly demanding food and beverages made with specific ingredients, prompting the industry to proactively introduce new or reformulated products. This shift presents manufacturers with a lucrative opportunity to enhance sales if executed correctly, as highlighted by executives from General Mills and J.M. Smucker in a discussion with Food Dive. With the industry currently experiencing slower growth, many established companies are seeking acquisitions to boost sales. The executives noted that one of the main challenges they face is the rapidly changing and often unpredictable consumer attitudes.
Recent trends are clear: consumers are leaning towards increased protein, whole grains, and organic products while reducing their intake of 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. “We need to act faster, but when we succeed, the rewards follow. It’s genuinely an opportunity for business growth.”
General Mills, known for Progresso soup, Pillsbury dough, and Cheerios, has seen declines in some key sectors, particularly yogurt, where Chobani has surpassed Yoplait as the leading brand in the U.S. General Mills, which derives approximately 13% of its sales from yogurt, is committed to revamping 60% of its yogurt business to align 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 removed artificial flavors and colors from some cereals, a move that has resonated well with consumers, although it has not sufficiently reversed a 3% drop in U.S. retail cereal sales during its latest quarter.
Powell emphasized that the company is also focusing on gluten removal from its products due to the growing number of consumers avoiding gluten. “These initiatives have been very positive for us. Consumers communicate their needs clearly, and we strive to address these growth opportunities,” he mentioned during a panel discussing the food and beverage industry’s impact on the U.S. economy. “And it must taste good because, as our nutritionists remind us, food is only nutritious if it’s consumed.”
Richard Smucker, chairman of J.M. Smucker, acknowledged the difficulty of keeping up with fast-changing consumer trends, which complicates the distinction between fleeting fads and genuine trends that warrant significant investment. He noted that J.M. Smucker, which produces its namesake jellies, Crisco, and Folgers coffee, has benefited from the rise of smaller, more agile companies.
This disruption is increasingly prevalent in the food industry, where legacy brands are losing market share to trendy startups. For instance, Special K bars have seen a 39% sales decline since 2011, while new competitor Kind Bars have captured 10% of the market in just five years. Smaller brands have successfully disrupted the market by embracing current flavor trends, utilizing better ingredients, and focusing on mission-driven approaches. In many cases, larger brands have opted to acquire these emerging companies to stay competitive. For example, General Mills acquired Annie’s, which offers mac and cheese, cereal, and yogurt, for $820 million three years ago.
In 2011, Smucker, the largest coffee producer in the U.S., bought Café Bustelo, a coffee brand popular among millennials. Smucker, founded in 1897, noted that even as younger coffee drinkers gravitate towards brands perceived as more modern, this trend helps educate the public about coffee’s benefits, ultimately promoting the broader industry, including their own brands.
“Having startups and smaller companies in the industry is beneficial for the larger players as well. By observing and learning from them, we can adapt too,” Smucker remarked. “We don’t create everything ourselves. In fact, if they excel at something, we may want to consider acquiring them.”
In this evolving landscape, the integration of ingredients like calcitriol and calcium citrate malate is becoming increasingly important, as consumers seek products that offer enhanced nutritional benefits, aligning with their health-conscious values. Ultimately, the ability to adapt to these trends, including the demand for innovative ingredients, will be crucial for maintaining competitiveness in the food and beverage sector.