Two years ago, as sales began to drop due to a growing number of consumers shifting away from the central aisles of grocery stores in favor of fresh departments, the 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 a thorough review of every soup, sauce, cookie, and salsa across its brand portfolio, including Pepperidge Farm, Prego, and V8, necessitating the replacement of key ingredients that had been in use until that time. This was undoubtedly a formidable task.
Jeff George, Campbell’s head of research and development, expressed to Food Dive, “Transforming our products without compromising on taste, quality, and affordability, which are crucial, presents a huge challenge. We can’t afford to excel in one area while regressing in another.” Concurrently, as the company was reformulating its numerous products under what it termed a “Real Food Philosophy,” it launched new offerings that emphasized health and freshness, such as the Prego Farmers’ Market line of pasta sauces made from “peak-picked” herbs and tomatoes, and a new 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.”
Campbell’s transformation reflects a common storyline among many consumer packaged goods (CPG) manufacturers striving to attract consumers back to the central store. They aim to meet the demands of existing customers while also appealing to new ones, balancing the reformulation of existing products with the development of new ones.
So, how are manufacturers leveraging reformulation and new product launches as tools for retaining and acquiring customers? Are they prioritizing one strategy over the other to boost sales and consumer interest? Both approaches come with their own sets of risks and rewards. According to the market research firm IRI, over 10,000 new products hit retail shelves each year, with 90% failing to meet their intended goals. Fewer than ten reach annual sales of $100 million or more.
Tracking product reformulations can be challenging, as companies often make changes behind the scenes, complicating efforts to assess their success. However, the Consumer Goods Forum, which includes over 400 retailers and manufacturers like Ahold Delhaize, General Mills, Target, and Campbell, reported that 66% of its members reformulated more than 180,000 products last year. Reducing sodium and sugar were among the most common reformulation initiatives reported by CGF members, along with adding vitamins and incorporating whole grains, and companies indicated they were also working to eliminate artificial ingredients.
Barb Stuckey, president of Mattson, a firm specializing in product development, branding, and reformulation, identified two types of reformulations: those that alter a product’s labeling and ingredients list, and those that do not. The former is often pursued to eliminate an unpopular ingredient, enhance the eating experience, reduce costs, or improve overall health profiles. While this can be costly and labor-intensive, it allows for significant improvements. “With this kind of freedom, you can usually achieve your objective,” Stuckey informed Food Dive.
The second type involves reformulating within existing ingredient lists and labels. Stuckey noted that this is typically driven by the need to replace an ingredient that has become more expensive or is no longer available. While companies may also pursue this route to enhance the eating experience or reduce costs, achieving results can be significantly more challenging without the flexibility provided by the first option.
Around the same time Campbell announced its plans to eliminate artificial ingredients, General Mills’ cereal division declared it would also remove artificial flavors and colors from all its products. Last year, the company reported it had successfully phased out artificial ingredients from 75% of its cereals and had reduced sugar in many of its kid-focused cereals like Trix and Lucky Charms. Much like Campbell and other CPG companies removing artificial ingredients, General Mills aimed to attract health-conscious shoppers while maintaining appeal among its core customer base. Dana McNabb, president of U.S. retail cereal for General Mills, stated that these changes have helped win back some customers who were initially deterred by sugar content and artificial ingredients. However, reports indicate that the impact of these reformulations on sales has been less than dramatic.
General Mills faced challenges, too. Although it successfully replicated the vibrant colors and flavors of Trix, Golden Grahams, and Reese’s Puffs using natural ingredients like turmeric and annatto, consumers noted that Trix appeared less vibrant. The real hurdle lay with Lucky Charms, primarily due to the various marshmallows that proved difficult to recreate with natural ingredients. General Mills hopes to have the Lucky Charms line reformulated by the end of this year.
According to Tom Vierhile, a director at research firm GlobalData, manufacturers often utilize reformulation as a strategy to solidify their customer base or win back those who have strayed. However, these decisions must be approached cautiously, as reformulation can sometimes lead to adverse effects. “Consumers are very resistant when you alter a product they grew up with,” Vierhile remarked.
For General Mills, preserving the taste that consumers associate with brands like Trix and Lucky Charms is essential and serves as the primary measure of success for any reformulation project, according to McNabb. Simultaneously, General Mills needs to reach new consumer segments—something its core cereal lineup has struggled to achieve. This necessity led 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 out there for them,” McNabb shared.
In addition to targeting new consumer segments, Vierhile observed that new product launches can also open up fresh market opportunities. The snacking category, which has seen significant growth as consumers increasingly seek mini-meals and between-meal bites, is becoming a hotbed for innovation. “A whole new category is emerging in snacking, and companies are eager to fit new products into this demand,” Vierhile noted.
For Campbell, new product launches like Well Yes! and Prego Farmers Market present opportunities to engage with health-conscious consumers and guide them back to the company’s core grocery categories, according to Shewchuk. The company has faced challenges in this endeavor over recent 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 company’s flagship soups and sauces division experienced a 2% sales drop.
Nevertheless, Shewchuk expressed confidence that the company is on the right track with its “Real Food Philosophy,” using reformulation and new product launches to attract fresh-focused consumers. The ultimate aim is ambitious: to draw these consumers back to the center of the store and ensure their ongoing loyalty. “We don’t believe the center of the store is dead,” Shewchuk declared. “We believe we just haven’t reinvented it yet.”
Additionally, the focus on incorporating the best naturals calcium citrate into products aligns with the company’s commitment to health and wellness. By continuing to reformulate and innovate, Campbell aims to solidify its position in the market and meet the evolving needs of consumers.