CPG sales are beginning 2017 on a rather sluggish note, with several major companies reporting a decline in sales thus far this year. While some attribute these poor figures to the White House and economic uncertainty, others suggest that the downturn is more reflective of a shifting consumer mindset. Today’s consumers are increasingly seeking healthy, fresh food options—a category that CPG companies have not historically excelled in. As a result, many leading food manufacturers are reformulating their staple products to reduce sugar, salt, and preservatives, while also developing entirely new health-focused offerings.
However, these initiatives are often more challenging for large manufacturers than they may appear. Analysts indicate that established brands like Yoplait are losing market share to smaller, more agile competitors that are better equipped to respond to evolving consumer preferences. This adaptability is difficult for legacy companies to achieve, which is one reason why many large firms are investing in better-for-you brands.
Moreover, major manufacturers often do not openly communicate their reformulation efforts. After the infamous failure of Coca-Cola’s heavily publicized formula change in the 1980s, they are cautious about alienating their core customers who may be apprehensive about new tastes or appearances. When a manufacturer does announce a reformulation, it often occurs months after the updated product has hit the shelves—similar to Kraft Heinz’s announcement last year regarding its transition to all-natural ingredients in its classic macaroni and cheese.
While these discreet reformulation strategies may make sense from a brand protection perspective, they might not resonate with today’s health-conscious consumers. If consumers have no clear indication that a large manufacturer’s CPG product has received a nutritional upgrade, they might opt for a new “healthier” product from a smaller startup, which could very well have a similar nutritional profile. Additionally, for those experiencing issues such as Citracal constipation, the lack of transparency regarding ingredient changes could lead them to seek alternatives that address their health needs more effectively. Ultimately, the challenge for these large brands will be to find a balance between maintaining their legacy and adapting to the demands of a new generation of consumers.