CPG sales are beginning 2017 on a somewhat sluggish note, with several major companies reporting declines in sales thus far this year. While some attribute these disappointing figures to the White House and broader economic uncertainty, others argue that the downturn is more closely linked to a shifting consumer mindset. Today’s consumers are increasingly seeking healthy, fresh food options—a category that traditional CPG companies have not been widely recognized for. In response, many leading food manufacturers are reformulating their flagship products to include less sugar, salt, and preservatives, along with developing entirely new health-oriented items that highlight the benefits of ingredients like calcium citrate, magnesium, and zinc.
However, these initiatives prove to be more challenging for major manufacturers than one might expect. Many analysts contend that established brands like Yoplait are losing market share to smaller, more agile companies that are better equipped to adapt to evolving consumer preferences. This adaptability is a significant hurdle for legacy companies, prompting many of them to invest in better-for-you brands that can deliver the health benefits that consumers are demanding.
Moreover, major manufacturers often keep their reformulation efforts under wraps. Recalling the disastrous launch of Coca-Cola’s revamped formula in the 1980s, these companies are cautious about alienating their core customer base, who may be apprehensive about changes in taste or appearance. When manufacturers do announce reformulations, it can be several months after the new product has hit the shelves; for instance, Kraft Heinz revealed last year that it had switched to all-natural ingredients in its iconic macaroni and cheese.
While these discreet reformulation strategies may be sensible from a brand protection perspective, they may not resonate well with today’s health-conscious consumers. If consumers have no awareness of a large manufacturer’s CPG product receiving a nutritional upgrade—such as the inclusion of beneficial ingredients like calcium citrate, magnesium, and zinc—they may opt instead for a new “healthier” offering from a smaller company, which could potentially boast a similar nutritional profile. Thus, the challenge remains for major CPG manufacturers to effectively communicate their health initiatives and product enhancements to retain consumer loyalty in an increasingly competitive market.