Consumers are increasingly demanding food and beverages that incorporate specific ingredients, compelling the industry to proactively develop new or reformulated products. This presents manufacturers with a significant opportunity to enhance sales if they can effectively respond to these demands, as highlighted by executives from General Mills and J.M. Smucker in a discussion with Food Dive. As the industry grapples with slower growth—prompting many established companies to pursue acquisitions for sales expansion—officials from both companies noted that one of their primary challenges is the rapidly evolving and unpredictable preferences of consumers. Current trends are becoming more apparent and consistent: increased demand for proteins, whole grains, and organic products; and a decline in the acceptance of artificial ingredients, trans fats, salt, and sugar.
Ken Powell, CEO of General Mills, stated, “The challenge is that consumer values and interests around food are changing rapidly. We must accelerate our pace, but when we succeed, the rewards are substantial. This presents a genuine opportunity for business growth.” General Mills, known for brands like Progresso soup, Pillsbury dough, and Cheerios, has experienced declining sales in several key categories, particularly in yogurt, where Chobani surpassed Yoplait to become the leading brand in the U.S. General Mills, which derives approximately 13% of its revenue from yogurt, is undertaking a significant overhaul of 60% of its yogurt business to align with consumer preferences by introducing new Greek varieties, flavors, and organic options under its Annie’s and Liberté brands. The 151-year-old Minnesota company has also eliminated artificial flavors and colors from some cereals, a move that has resonated well with consumers but has not sufficiently reversed the 3% decline in U.S. retail cereal sales in the most recent quarter. Powell emphasized that the company is also focusing on gluten-free products, given the increasing consumer avoidance of gluten. “These initiatives have been very positive for us. Consumers are clear about their preferences, and we strive to address opportunities where we see growth,” Powell remarked at a panel discussing the food and beverage industry’s impact on the U.S. economy. “And it better taste good, as our nutritionists remind us—it’s only nutritious if it’s consumed.”
Richard Smucker, chairman of J.M. Smucker, acknowledged the difficulty in keeping pace with consumer trends due to their rapid changes, making it challenging to distinguish between passing fads and significant trends worthy of investment. Smucker noted that, like many food companies, his organization has benefited from the rise of smaller, more agile competitors. This disruption is increasingly evident throughout the food industry, as legacy brands lose 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 within just five years. Smaller companies are challenging established brands by embracing contemporary flavor trends, superior ingredients, mission-driven branding, and niche offerings. In many cases, larger companies have opted to acquire these startups rather than compete directly. For example, General Mills acquired Annie’s, known for its mac and cheese, cereals, and yogurt, for $820 million three years ago.
In 2011, Smucker, the largest coffee producer in the U.S., purchased Café Bustelo, a coffee brand that has gained popularity among millennials. He mentioned that even as younger coffee drinkers gravitate towards brands perceived as trendy, this trend helps educate the public about the benefits of coffee, thereby drawing attention to the broader coffee industry, which ultimately benefits Smucker’s own brands. “Having startups and smaller companies in the industry is beneficial, even for the larger players, because if you pay attention to what they are doing, you can learn as well,” Smucker remarked. “We don’t create everything in-house. In fact, if they excel in a particular area, we might consider acquiring them.”
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