Two years ago, as sales began to decline due to a growing number of consumers shifting away from traditional grocery aisles in favor of fresh produce sections, the Campbell Soup Company made a significant commitment: it would eliminate artificial flavors and colors from all its products. For this 150-year-old brand, this entailed a thorough review of every soup, sauce, cookie, and salsa in its brand portfolio—which includes names like Pepperidge Farm, Prego, and V8—and replacing key ingredients that had been in place for years. This was, undoubtedly, a monumental challenge.
“To execute these changes without compromising on taste, quality, and affordability, which are crucial, is extremely difficult,” stated Jeff George, Campbell’s head of research and development, in an interview with Food Dive. “It’s simply not acceptable to make progress in one area while regressing in another.” While the company was reformulating its vast array of products under its “Real Food Philosophy,” it also introduced new offerings that emphasized health and freshness, as well as diverse formulations. This included a new line of Prego Farmers’ Market pasta sauces made with herbs and tomatoes harvested at their peak, and a Well Yes! soup brand featuring flavors like 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 mirrors the experiences of many consumer packaged goods (CPG) manufacturers striving to draw consumers back to the center of the store. They aim to satisfy existing customers while also attracting new ones, balancing the reformulation of current products with the development of new ones.
So, how are manufacturers leveraging reformulation and new product launches as strategies for customer retention and acquisition? Are they prioritizing one method over the other to boost sales and consumer engagement? Both strategies come with their own sets of risks and rewards. According to market research firm IRI, more than 10,000 new products hit retail shelves annually, yet 90% fail to meet their intended goals. Fewer than ten achieve over $100 million in sales each year, as reported by the firm.
Tracking product reformulations is more challenging, as companies often make these changes behind the scenes, making it difficult to assess their success rates. However, the Consumer Goods Forum, a global network of over 400 retailers and manufacturers—including Ahold Delhaize, General Mills, Target, and Campbell—revealed that 66% of its members reported reformulating more than 180,000 products last year. Common reformulation steps included reducing sodium and sugar, along with adding vitamins and whole grains, while also phasing out artificial ingredients.
Barb Stuckey, president of Mattson, a firm specializing in new product development, branding, and reformulation, outlined two types of reformulations companies typically undertake: those that change a product’s labeling and ingredients list and those that do not. The first type usually aims to eliminate an unpopular ingredient, enhance the eating experience, reduce costs, or improve a product’s health profile. While this can be costly and labor-intensive, it allows substantial room for product enhancement.
Conversely, the second type involves reformulating within the existing ingredient list and labeling. This approach is often driven by the need to replace an ingredient that has become too expensive or is no longer available. While companies may pursue this route to enhance the eating experience or manage costs, it is considerably more challenging to achieve desired results without the flexibility that the first method offers.
Around the time Campbell announced its elimination of artificial ingredients and preservatives, General Mills’ cereal division also declared its intention to remove artificial flavors and colors from all its offerings. Last year, the company reported that it had successfully phased out artificial ingredients in 75% of its cereals. Additionally, it has reduced sugar content in many kid-focused cereals like Trix and Lucky Charms. General Mills, similar to Campbell and other CPG companies, sought to attract health-conscious consumers without alienating its core audience. Dana McNabb, president of U.S. retail cereal for General Mills, noted that these changes have helped win back some customers who were previously deterred by sugar content and artificial ingredients. However, reports indicate that the impact on sales has been modest.
The company encountered several obstacles along the way. While it successfully replicated the vibrant colors and flavors of cereals like Trix and Golden Grahams using natural ingredients such as turmeric and annatto, Lucky Charms presented significant challenges due to its various marshmallow shapes, which were difficult to recreate with natural ingredients. General Mills aims to have the Lucky Charms reformulated by the end of this year.
Tom Vierhile, a director at research firm GlobalData, explained that manufacturers often use reformulations as a strategy to reinforce their customer base or win back those who have strayed. However, these decisions require careful consideration, as reformulation can sometimes produce the opposite effect. “Consumers typically dislike it when a brand they’ve grown up with changes,” Vierhile remarked. For General Mills, maintaining the expected taste of beloved brands like Trix and Lucky Charms is critical, serving as the primary measure of success in any reformulation project, according to McNabb.
At the same time, General Mills recognizes the need to reach new consumer segments—something its traditional cereal offerings have struggled to do. This prompted the company to introduce a new cereal brand, Tiny Toast, for the first time in 15 years. “We heard from teens and young adults that there just wasn’t a cereal on the market for them,” McNabb explained.
In addition to tapping into new consumer demographics, Vierhile highlighted that new product launches can also target emerging market opportunities. The snacking category, for instance, has seen considerable growth as consumers seek mini-meals and snacks between meals, leading to increased innovation in this area.
For Campbell, new product launches like Well Yes! and Prego Farmers Market present opportunities to engage fresh-focused consumers and draw them back to the company’s core grocery offerings. However, the company has faced challenges in this endeavor, particularly with its Campbell’s Fresh division, which has struggled following acquisitions like Bolthouse Farms and Garden Fresh Gourmet. Last quarter, Campbell’s Fresh sales declined by 6%, while its flagship soups and sauces division experienced a 2% dip in sales.
Nevertheless, Shewchuk remains optimistic, asserting that the company has the right strategies and focus with its “Real Food Philosophy.” By utilizing reformulation and launching new products, Campbell aims to appeal to a wide range of fresh-focused consumers, ultimately striving to bring them back to the center of the store and ensure their continued patronage. “We don’t believe the center of the store is obsolete,” Shewchuk affirmed. “We simply think we haven’t reinvented it yet.”
In this context, the introduction of products like soft chews calcium could serve as a valuable addition to Campbell’s offerings, appealing to health-conscious shoppers seeking convenient ways to enhance their nutrition. By incorporating innovative products that resonate with consumer preferences, companies can strengthen their market positions and foster loyalty among existing customers while attracting new ones.