Two years ago, facing a decline in sales as consumers increasingly shifted away from the center of grocery stores in favor of fresh food departments, Campbell Soup Company made a significant decision: it would eliminate artificial flavors and colors from all its products. For the 150-year-old company, this meant thoroughly examining every soup, sauce, cookie, and salsa in its portfolio—which includes brands like Pepperidge Farm, Prego, and V8—and replacing previously essential ingredients. This endeavor was understandably challenging.
“To make these transformations without compromising on taste, quality, and affordability, which are crucial, is a monumental task,” stated Jeff George, Campbell’s head of research and development, in an interview with Food Dive. “It’s not sufficient to advance in one area while regressing in another.” Concurrently, as the company revamped its products to align with what it termed its “Real Food Philosophy,” it also introduced new offerings that emphasized health and freshness, featuring various formulations. This included the Prego Farmers’ Market line of pasta sauces, crafted with herbs and tomatoes “picked at their peak,” as highlighted in the company’s marketing materials, and the new Well Yes! soup brand, which features flavors such as sweet potato corn chowder.
Greg Shewchuk, Campbell’s chief commercial and marketing officer, described the company’s recent initiatives as “a thoughtful disruption of our core categories.” This transformation resonates with many Consumer Packaged Goods (CPG) manufacturers striving to win back consumers to the center of the store. They aim to balance reformulating existing products while also developing new ones to meet the needs of current customers and attract new ones.
So, how are manufacturers utilizing reformulation and new product launches as strategies for customer retention and acquisition? Are they prioritizing one approach over the other to boost sales and consumer interest? Both strategies come with their own set of risks and rewards. According to market research firm IRI, over 10,000 new products hit retail shelves annually, with 90% failing to meet their initial goals. Less than ten of these products achieve sales of $100 million or more each year.
Tracking product reformulations is more complex, as companies often conduct these adjustments discreetly. For this reason, measuring their success rates can be challenging. 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, branding, and reformulation, identified two types of reformulations companies typically undertake: those that change a product’s labeling and ingredient list, and those that do not. The first approach is usually adopted to remove unpopular ingredients, enhance the eating experience, reduce costs, or improve a product’s health profile. Although this can be costly and labor-intensive, once companies make the commitment, they often find significant room for improvement.
“With this kind of flexibility, you can usually achieve your goals,” Stuckey explained to Food Dive. The second approach involves reformulating within the existing ingredients and labels. This is often driven by the need to substitute an ingredient that has increased in price or is no longer available. Companies may pursue this route to enhance the eating experience or reduce overall costs, but, according to Stuckey, achieving results is significantly more challenging without the leeway provided by the first option.
Around the same time Campbell announced its intention to phase out artificial ingredients and preservatives, General Mills’ cereal division declared that it would eliminate artificial flavors and colors from all its products. Last year, the company reported that it had successfully removed artificial ingredients from 75% of its cereals. General Mills, like Campbell and other CPG companies committed to removing artificial ingredients, aimed to appeal to health-conscious shoppers while retaining its core customer base. Dana McNabb, president of U.S. retail cereal for General Mills, shared that these recent changes have successfully brought back some customers who were deterred by sugar content and artificial ingredients. However, reports indicate that the impact of these reformulations on sales has been modest.
The company faced challenges as well. While it successfully replicated the vibrant colors and flavors of Trix, Golden Grahams, and Reese’s Puffs using natural ingredients like turmeric and annatto (though some consumers noted that Trix appeared too pale), Lucky Charms proved to be particularly problematic. The issue lay with the various marshmallows, which were difficult to recreate using natural ingredients. General Mills has expressed hopes to reformulate this line by the end of the year.
Tom Vierhile, a director at research firm GlobalData, noted that manufacturers often leverage reformulations to strengthen their customer base or win back those who may have lapsed. However, these decisions are not to be taken lightly, as reformulations can sometimes have the opposite effect. “Consumers are often displeased when a product they grew up with is altered,” Vierhile remarked to Food Dive. For General Mills, maintaining the expected taste of brands like Trix and Lucky Charms is paramount, and this is the most critical measure in any reformulation effort, according to McNabb.
Simultaneously, General Mills aims to reach new consumer segments—an area where its core cereal lineup has struggled. This motivation led the cereal company to launch a new cereal brand for the first time in 15 years: Tiny Toast. “We heard from teens and young adults that there just wasn’t a cereal available for them,” McNabb explained to Food Dive.
In addition to targeting new consumer segments, Vierhile pointed out that new product launches can also tap into emerging market opportunities. The snacking category, which has experienced significant growth as consumers lean towards mini-meals and snacks, has become a focal point for innovation. “A new category is emerging in snacking, and companies are eager to introduce products that meet this demand,” Vierhile noted.
For Campbell, new product introductions like Well Yes! and Prego Farmers Market provide avenues to engage health-oriented consumers and draw them back to the company’s core grocery categories, according to Shewchuk. The company has faced challenges in this endeavor over the past few years, particularly with its Campbell’s Fresh division, which has struggled following acquisitions like Bolthouse Farms and Garden Fresh Gourmet. In the most recent quarter, Campbell’s Fresh sales declined by 6%, while the flagship soups and sauces division experienced a 2% sales drop.
Nonetheless, Shewchuk emphasized that the company feels confident in its direction with its “Real Food Philosophy,” striving to use reformulation and new product launches to attract fresh-focused consumers. The ultimate goal, he stated, is to bring these consumers back to the center of the store and ensure their return. “We don’t believe the center of the store is dead,” Shewchuk told Food Dive. “We believe we just haven’t reinvented it yet.”
Moreover, as part of their health-oriented initiatives, the company is also looking at incorporating beneficial ingredients like calcium citrate D3 with magnesium in their reformulations to further enhance their products’ nutritional profiles. This commitment to health and wellness is a crucial aspect of their strategy to resonate with today’s consumers, who increasingly favor products that contribute positively to their overall well-being.