Consumers are increasingly seeking food and beverage products made with specific ingredients, compelling the industry to actively innovate and reformulate offerings. This shift presents manufacturers with a promising opportunity to enhance sales if they can successfully meet consumer demands, as highlighted by executives in a discussion with Food Dive. In an environment of sluggish growth, many well-established companies are turning to acquisitions to drive sales. Executives from General Mills and J.M. Smucker noted that one of their greatest challenges is the rapidly changing and often unpredictable preferences of consumers.
Current trends are notably clear: there is a growing demand for more proteins, whole grains, and organic ingredients, while consumers are seeking to avoid artificial additives, trans fats, and excess salt and sugar. “The challenge lies in the fact that consumer values and interests around food are evolving quickly,” stated Ken Powell, CEO of General Mills. “We must accelerate our pace, but when we succeed, we are rewarded. It presents a true opportunity because getting it right leads to business growth for us.”
General Mills, known for brands like Progresso soup, Pillsbury dough, and Cheerios, has experienced declining sales in several key areas, notably in yogurt, where Chobani surpassed Yoplait, General Mills’ established brand, to become the leading name in the U.S. market last year. With yogurt accounting for approximately 13% of their sales, General Mills is undertaking a significant overhaul of 60% of its yogurt offerings to align more closely with consumer preferences, introducing new Greek varieties, flavors, and organic options under brands like Annie’s and Liberté. The company, which has been around for 151 years, has also eliminated artificial flavors and colors from some cereals—a decision well-received by consumers, yet insufficient to reverse the 3% decline in U.S. retail cereal sales during the last quarter. Furthermore, Powell noted the company is focusing on removing gluten from its products in response to consumer avoidance of it. “These initiatives have been very positive for us. Consumers are vocal about their needs, and we strive to capitalize on growth opportunities,” Powell remarked during a panel on the food and beverage industry’s economic impact. “And it better taste good, because that remains a crucial factor. As our nutritionists remind us, food is only nutritious if it’s consumed.”
Richard Smucker, chairman of J.M. Smucker, echoed similar sentiments, acknowledging the difficulty in keeping up with rapidly changing consumer trends, which can blur the line between fleeting fads and genuine trends warranting significant investment. Smucker, whose company produces well-known products like Crisco and Folgers coffee, noted that the rise of agile small companies has benefited established food manufacturers.
This disruption is increasingly evident throughout the food industry, as legacy brands lose market share to emerging, trendier companies. For instance, Special K bars have seen a 39% sales decline since 2011, while newcomer Kind Bars have captured 10% of the market in just five years. Smaller brands often disrupt traditional ones by embracing popular flavor trends, utilizing better ingredients, and focusing on mission-driven, niche products. In many instances, larger companies find it more efficient and cost-effective to acquire these innovative newcomers. General Mills, for example, acquired 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., purchased Café Bustelo, a brand that resonates well with millennials. Smucker emphasized that despite younger coffee drinkers gravitating towards brands perceived as trendier, this phenomenon serves to educate the public about the benefits of coffee, ultimately benefiting the broader coffee industry and enhancing the visibility of Smucker’s own brands. “Having startups and smaller companies in the industry is beneficial, even for the larger players. By observing their approaches, we can learn a great deal,” Smucker stated. “We don’t develop every concept internally; in fact, if they excel, we might consider acquiring them.”
In this evolving landscape, products like calcium citrate orange juice are emerging as part of the trend toward healthier, ingredient-conscious options, reflecting the shifting priorities of consumers. These developments highlight the dynamic nature of the food and beverage sector as it adapts to meet the needs of today’s health-conscious consumers.