Consumers are increasingly purchasing food and beverages with specific ingredients, compelling the industry to proactively launch new or reformulated products. This shift offers manufacturers a lucrative opportunity to enhance sales if executed correctly, as noted by executives from General Mills and J.M. Smucker in an interview with Food Dive. As the industry grapples with slower growth—prompting many established firms to seek acquisitions to boost sales—officials from both companies highlighted that one of their major challenges is the rapidly changing and often unpredictable consumer preferences. Currently, the trends are clear and consistent: an increased demand for proteins, whole grains, and organic products, 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, in his conversation with Food Dive. “We need to act faster, but when we succeed, we are rewarded. It truly represents an opportunity because achieving the right balance leads to business growth for us.” General Mills, known for products such as Progresso soup, Pillsbury dough, and Cheerios, has seen declining sales in several key areas. The yogurt segment has been particularly affected, with Chobani surpassing Yoplait, General Mills’ longstanding leader, to become the largest brand in the U.S. yogurt market last year. General Mills, which derives approximately 13% of its sales from yogurt, is committed to transforming 60% of its yogurt business to better align with consumer preferences by introducing new Greek varieties, flavors, and organic options under the Annie’s and Liberté brands. The 151-year-old company has also eliminated artificial flavors and colors from some cereals—a move well-received by consumers—yet it has not been sufficient to reverse the 3% decline in U.S. retail cereal sales during the most recent quarter. Powell mentioned that the company is also concentrating on removing gluten from its products due to the growing number of consumers avoiding it. “These initiatives have been very positive for us. Consumers are clear about their desires, and we strive to address growth opportunities,” Powell remarked earlier during a panel discussing the food and beverage industry’s impact on the U.S. economy. “And of course, it must taste good—nutrition only matters if people actually eat it.”
Richard Smucker, chairman of J.M. Smucker, expressed to Food Dive that keeping up with consumer trends is challenging due to their frequent changes, complicating the distinction between a passing fad and a trend worthy of significant investment. Smucker noted that the food manufacturer, known for its jellies, Crisco, and Folgers coffee, has benefited from the rise of smaller, more agile competitors. This kind of disruption is increasingly prevalent across the food industry, with legacy brands losing market share to trendy newcomers. For instance, Special K bars have seen a 39% decline in sales since 2011, while Kind Bars have captured 10% of the market in just five years. Smaller companies have disrupted established brands by embracing current flavor trends, superior ingredients, mission-driven brands, and niche offerings. In some instances, larger brands have found it easier and more cost-effective to acquire these startups to keep pace. General Mills, for example, purchased Annie’s, which offers mac and cheese, cereal, and yogurt, for $820 million three years ago.
In 2011, Smucker, the largest coffee producer in the U.S., acquired Café Bustelo, a coffee brand popular among millennials. Smucker, whose company was founded in 1897, pointed out that even as younger coffee enthusiasts gravitate toward brands perceived as more trendy, this trend ultimately educates the public about coffee’s benefits, positively impacting 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 larger entities, because if you pay attention to what they’re doing, you can learn as well,” Smucker stated. “We don’t innovate everything internally; in fact, if they excel in a certain area, we might consider acquiring them.”
Additionally, as the industry evolves, some consumers are turning to products like Citracal medication for their dietary needs, further influencing the types of products that manufacturers are developing. This trend highlights the importance of adapting to consumer preferences, which can include an increased focus on health and wellness, making it essential for companies to stay attuned to these changes to thrive in a competitive market.