Two years ago, facing a decline in sales as more consumers shifted away from the center aisles of grocery stores towards fresh produce, the Campbell Soup Company made a significant decision: it would eliminate artificial flavors and colors from all its products. For this 150-year-old company, this meant a thorough examination of every soup, sauce, cookie, and salsa within its brand portfolio—including Pepperidge Farm, Prego, and V8—and replacing what had previously been essential ingredients. This task, as Jeff George, Campbell’s head of research and development, remarked to Food Dive, was undoubtedly challenging. “Achieving these transformations without compromising on taste, quality, and affordability, which are crucial, is a tremendous challenge. It’s not sufficient to advance on one front while regressing on another.”
As the company worked on reformulating its extensive product lineup to align with its “Real Food Philosophy,” it also launched new products that emphasized health and freshness. This included the Prego Farmers’ Market line of pasta sauces made with herbs and tomatoes “picked at their peak,” as stated in the company’s marketing materials, and the new Well Yes! soup brand featuring flavors like sweet potato and corn chowder. Greg Shewchuk, Campbell’s chief commercial and marketing officer, described these recent initiatives as “a thoughtful disruption of our core categories.”
Campbell’s transformation mirrors the experiences of many consumer packaged goods (CPG) manufacturers striving to draw consumers back to the center of the store. These companies are attempting to balance the needs of their existing customers while attracting new ones, navigating the fine line between reformulating existing products and launching new ones.
So, how are manufacturers utilizing reformulation and new product introductions to retain and attract customers? And are they leaning more towards one strategy to boost sales and consumer interest? Both strategies come with their own set of risks and rewards. Market research firm IRI reports that over 10,000 new products hit retail shelves each year, but a staggering 90% fail to meet their intended goals, with fewer than ten achieving sales of $100 million or more annually.
Tracking product reformulations can be more complex, as companies often make these changes behind the scenes, making it difficult to assess their success rates. However, the Consumer Goods Forum, a global network of over 400 retailers and manufacturers, including Ahold Delhaize, General Mills, Target, and Campbell, reported that 66% of its members reformulated more than 180,000 products last year. Common reformulation efforts included reducing sodium and sugar, adding vitamins, incorporating whole grains, and phasing out artificial ingredients.
Barb Stuckey, president of Mattson, a firm specializing in new product development and reformulation, identified two types of reformulations: those that alter a product’s labeling and ingredient list and those that do not. The first type is typically aimed at removing unpopular ingredients, enhancing the eating experience, reducing costs, or improving a product’s health profile. While this can be costly and labor-intensive, companies often find considerable room for improvement once they commit to these changes.
The second type involves reformulating within the existing ingredients list and labels. This approach is generally driven by the need to replace an ingredient that has increased in price or is no longer available. Although companies may pursue this route to enhance the eating experience or manage costs, Stuckey noted that achieving results is significantly more challenging without the flexibility offered by the first option.
Around the same time Campbell announced its plans to eliminate artificial ingredients and preservatives, General Mills’ cereal division also declared its intention to remove artificial flavors and colors from all products. Last year, the company revealed it had successfully phased out artificial ingredients in 75% of its cereals, while also reducing sugar levels in many of its kid-targeted cereals like Trix and Lucky Charms. General Mills, similar to Campbell and other CPG companies, sought to appeal to health-conscious shoppers without alienating its core customer base. Dana McNabb, president of U.S. retail cereal for General Mills, shared that these recent changes have helped win back customers deterred by sugar levels and artificial ingredients, although the impact on sales has been modest.
General Mills faced some challenges during this reformulation journey. While it successfully replicated the vibrant colors and flavors of cereals like Trix and Golden Grahams using natural ingredients such as turmeric and annatto (despite some consumer complaints about Trix appearing too pale), the Lucky Charms line posed a significant challenge due to the difficulty of recreating its various marshmallows using natural ingredients. The company hopes to have this line reformulated by year-end.
Tom Vierhile, a director at GlobalData, noted that manufacturers often use reformulations to solidify their customer base or win back those who have drifted away. However, these decisions must be made cautiously, as reformulations can sometimes backfire. “Consumers often dislike it when brands alter products they grew up with,” Vierhile stated. For General Mills, maintaining the expected taste of beloved brands like Trix and Lucky Charms is crucial, as emphasized by McNabb.
In addition to retaining existing customers, General Mills aims to penetrate new consumer segments, which its traditional cereal lineup has struggled to do. This led to the introduction of a new cereal brand, Tiny Toast, after a 15-year hiatus. “We heard from teens and young adults that there wasn’t a cereal catering to them,” McNabb explained.
Furthermore, Vierhile highlighted that new product launches can also tap into emerging market opportunities, particularly in the snacking category, which is experiencing significant growth as consumers seek mini-meals and between-meal bites. “A whole new category is opening up in snacking, and companies are eager to introduce new products to meet this demand,” he noted.
For Campbell, new product launches such as Well Yes! and Prego Farmers Market represent opportunities to attract fresh-focused consumers back to its core grocery categories. However, the company has faced challenges in this endeavor, particularly with its Campbell’s Fresh division, which has experienced setbacks from acquisitions like Bolthouse Farms and Garden Fresh Gourmet. In the latest quarter, Campbell’s Fresh sales dipped by 6%, while its flagship soups and sauces division saw a 2% decline in sales.
Despite these challenges, Shewchuk remains optimistic, believing the company possesses the right strategies and focus with its “Real Food Philosophy,” using reformulation and new product launches to appeal to fresh-oriented consumers. The ambitious goal, he stated, is to bring these consumers back to the center of the store and ensure their continued patronage. “We don’t believe the center of the store is dead,” Shewchuk asserted. “We believe we just haven’t reinvented it yet.”
In this context, the incorporation of ingredients like bluebonnet calcium magnesium into product formulations could further align with consumer preferences for health-conscious offerings. By integrating such beneficial ingredients, companies can not only enhance the nutritional value of their products but also attract health-focused consumers who are increasingly seeking out functional foods. This strategy could bolster their efforts in revitalizing the center of the grocery store while appealing to modern dietary trends.