Consumers are driving the food and beverage industry to be more proactive in launching new or reformulated products that incorporate specific ingredients, presenting manufacturers with a profitable opportunity to increase sales if they succeed, according to executives from General Mills and J.M. Smucker in an interview with Food Dive. In a period of slower growth, which has compelled many established companies to explore acquisitions for sales growth, these officials emphasized that one of their significant challenges is the rapidly changing and often unpredictable consumer preferences. Present trends are relatively clear: a demand for more proteins, whole grains, and organic options, alongside a decrease in artificial ingredients, trans fats, salt, and sugar.
“The challenge is that consumer values and interests regarding food are evolving quickly,” stated Ken Powell, CEO of General Mills, to Food Dive. “We need to act more swiftly, but when we get it right, we reap the rewards. This is truly an opportunity for business growth.” General Mills, known for products like Progresso soup, Pillsbury dough, and Cheerios, has experienced declining sales in several key areas, particularly yogurt, where Chobani has surpassed Yoplait as the market leader. As yogurt accounts for approximately 13% of General Mills’ sales, the company has pledged to revamp 60% of its yogurt business 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 eliminated artificial flavors and colors from some cereals, a move welcomed by consumers, although it has not been sufficient to reverse the 3% decline in U.S. retail cereal sales during the last quarter. Powell noted that the company is also focused on removing gluten from its products, responding to a growing number of consumers avoiding gluten. “These initiatives have been very positive for us. Consumers are vocal about their preferences, and we strive to seize the growth opportunities that arise,” Powell remarked earlier at a panel discussing the food and beverage industry’s impact on the U.S. economy. “And it still must taste good, as our nutritionists remind us—it’s only nutritious if you consume it.”
Richard Smucker, chairman of J.M. Smucker, shared with Food Dive that keeping pace with consumer trends is challenging due to their frequent changes, making it tough to distinguish between a fleeting fad and a trend that warrants a substantial investment. Smucker noted that his company, which owns brands like Crisco and Folgers coffee, has benefited from the rise of smaller, often more agile companies. This disruption is increasingly evident in the food industry, where legacy brands are losing market share to trendy upstart firms. For instance, Special K bars have seen a 39% decline in sales since 2011, while newcomer Kind Bars have captured 10% of the market within just five years. Smaller brands have gained ground by aligning with current flavor trends, utilizing better ingredients, and adopting mission-driven approaches. In many cases, larger companies have opted to acquire these smaller brands to catch up. 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 coffee brand popular among millennials. Smucker, whose company dates back to 1897, observed that even as younger coffee drinkers gravitate toward brands perceived as trendier, this trend helps educate the public about coffee’s benefits, ultimately drawing attention to the broader beverage industry—a benefit for Smucker’s brands. “Having startups and smaller companies in the industry is beneficial, even for larger firms, because if you pay attention to what they’re doing, you can learn as well,” Smucker said. “We don’t invent everything ourselves. In fact, when they excel, we might consider acquiring them.”
In this evolving landscape, the introduction of healthy options such as calcium citrate in products can resonate well with consumers seeking nutritious choices. As the industry adapts to these changing consumer demands, the integration of such healthy options will be essential for sustained growth and market relevance.