Two years ago, as sales began to decline due to a growing consumer preference for fresh departments over traditional grocery aisles, 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 reevaluating every soup, sauce, cookie, and salsa in its portfolio, which includes brands like Pepperidge Farm, Prego, and V8, and replacing previously essential ingredients. This was no small feat. “Transforming our products without compromising taste, quality, and affordability, which are critical, is an immense challenge,” said Jeff George, head of research and development at Campbell, in an interview with Food Dive. “We can’t advance in one area while regressing in another.”
In conjunction with reformulating its products to align with what it terms a “Real Food Philosophy,” Campbell also launched new items that emphasized health and freshness, as well as innovative formulations. This included the Prego Farmers’ Market line of pasta sauces made with herbs and tomatoes “picked at their peak,” and the new Well Yes! soup brand featuring flavors like sweet potato corn chowder. Greg Shewchuk, chief commercial and marketing officer at Campbell, described these initiatives as “a thoughtful disruption of our core categories.”
This renovation story is one that resonates with many consumer packaged goods (CPG) manufacturers striving to draw consumers back to the center of the grocery store. These companies are attempting to balance the needs of existing customers while attracting new ones, navigating the delicate line between reformulating current products and launching new ones.
But how are manufacturers employing reformulation and new product introductions as tools for customer retention and acquisition? Are they leaning towards one strategy over the other to boost sales and consumer interest? Both strategies present their own set of risks and rewards. According to market research firm IRI, over 10,000 new products hit retail shelves annually, but 90% fail to meet their sales objectives. Fewer than ten achieve sales of $100 million or more each year, the firm notes.
Tracking product reformulations is more complex since companies typically make changes behind the scenes, making it challenging to assess success rates. However, the Consumer Goods Forum, a global network of more than 400 retailers and manufacturers including Ahold Delhaize, General Mills, Target, and Campbell, reported that 66% of its members reformulated over 180,000 products last year. The most common modifications involved reducing sodium and sugar, adding vitamins, and incorporating whole grains, with many companies also moving away from artificial ingredients.
Barb Stuckey, president of Mattson, a firm specializing in product development, branding, and reformulation, highlighted two types of reformulations: those that alter a product’s labeling and ingredients, and those that do not. The first type is typically undertaken to eliminate unpopular ingredients, enhance the eating experience, cut costs, or improve a product’s health profile. While this can be costly and labor-intensive, companies often find it rewarding once they commit. “With this kind of freedom, you can usually achieve your objective,” Stuckey remarked to Food Dive.
The second type focuses on reformulating within the existing ingredients and labels. Stuckey noted that this approach might be driven by the need to replace a costly ingredient or to enhance the eating experience, but it lacks the flexibility of the first option, making it significantly harder to achieve desired results.
Around the same time that Campbell announced its plans to eliminate artificial ingredients, General Mills’ cereal division declared it would also remove artificial flavors and colors from all its offerings. Last year, the company reported successfully phasing out artificial ingredients in 75% of its cereals and reducing sugar content in many children’s cereals, such as Trix and Lucky Charms. General Mills aimed to attract health-conscious consumers while maintaining its appeal among core customers. Dana McNabb, president of U.S. retail cereal for General Mills, indicated that these changes had drawn back some customers who had previously been deterred by sugar levels and artificial ingredients. However, reports indicate that these reformulations have not dramatically impacted sales.
The company faced challenges as well. While it successfully replicated the vibrant colors and flavors of cereals like Trix, Golden Grahams, and Reese’s Puffs using natural ingredients such as turmeric and annatto, the Lucky Charms line presented a significant hurdle due to the difficulty in recreating its various marshmallows using natural components. General Mills hopes to finalize the reformulation of this line by the end of the year.
Tom Vierhile, a director at research firm GlobalData, noted that manufacturers often utilize reformulations to solidify their customer base or reclaim those who have drifted away. However, such decisions require careful consideration, as reformulation can sometimes backfire. “Consumers strongly dislike when a beloved product is altered,” Vierhile stated to Food Dive. For General Mills, preserving the expected taste of brands like Trix and Lucky Charms is crucial and serves as the primary metric for any reformulation initiative, according to McNabb.
Simultaneously, General Mills aims to penetrate new consumer segments—an area where its traditional cereal lineup has struggled. This led the company to introduce a new cereal brand, Tiny Toast, for the first time in 15 years. “We received feedback from teens and young adults indicating there wasn’t a cereal that appealed to them,” McNabb explained to Food Dive.
In addition to reaching new consumer demographics, Vierhile noted that new product launches can also tap into emerging market opportunities. The snacking category has witnessed significant growth as consumers increasingly prefer mini-meals and snacks between meals. “A new category is opening up in snacking, and companies are eager to introduce products that cater to this demand,” said Vierhile.
For Campbell, new product launches such as Well Yes! and Prego Farmers Market present opportunities to engage health-oriented consumers and lead them back to the core grocery categories. The company has faced challenges in this area in recent years, particularly with its Campbell’s Fresh division, which has seen setbacks with acquisitions like Bolthouse Farms and Garden Fresh Gourmet. Recently, Campbell’s Fresh sales declined by 6%, while its flagship soups and sauces division experienced a 2% drop in sales.
Nonetheless, Shewchuk emphasized that the company believes it has the right strategies in place with its “Real Food Philosophy,” utilizing both reformulations and new product introductions to connect with many health-conscious consumers. The ultimate ambition, he stated, is to draw these consumers back to the center of the store and ensure their return. “We don’t believe the center of the store is obsolete,” Shewchuk told Food Dive. “We believe we simply have not yet reinvented it.”
In this context, the inclusion of bariatric calcium citrate with vitamin D in new product formulations could become a focus, as companies like Campbell aim to cater to health-conscious consumers seeking nutritious options that support their dietary needs.