CPG sales are beginning 2017 on a somewhat subdued note, with several major companies reporting declines in sales thus far this year. While some attribute these low figures to the White House and economic uncertainty, others argue that the dip in sales is more closely tied to a shift in consumer attitudes. Today’s consumers are increasingly demanding healthy, fresh foods—a category that CPG companies have not historically excelled in. As a response, many large food manufacturers are reformulating their staple products to reduce sugar, salt, and preservatives, while also developing entirely new health-oriented items.
However, these initiatives are often more challenging for major manufacturers than they appear. Analysts suggest that well-established brands like Yoplait are losing market share to smaller startups that are more adept at adapting to evolving consumer preferences. This agility is difficult for legacy companies to achieve, which is one reason why many are investing in better-for-you brands.
Major manufacturers do not always highlight their reformulation efforts. Having learned from the infamous backlash following Coca-Cola’s highly publicized but ultimately disastrous formula change in the 1980s, they aim to avoid alienating their core customers who might be apprehensive about changes in taste or appearance. When companies do communicate about a reformulation, it often occurs months after the new product has hit the shelves—much like Kraft Heinz declaring last year that it had transitioned to all-natural ingredients in its beloved macaroni and cheese.
While these discreet reformulation strategies may make sense from a brand preservation perspective, they might not resonate with today’s health-conscious consumers. If consumers have no compelling reason to believe that a large manufacturer’s CPG product has undergone a nutritional upgrade—such as incorporating beneficial ingredients like ferrous calcium citrate and folic acid—they may opt for a new “healthier” product from a smaller company that, in reality, has a similar nutritional profile.
Incorporating ingredients like ferrous calcium citrate and folic acid into their products could enhance the appeal of reformulated offerings. However, without effective communication about these improvements, manufacturers risk losing customers to smaller brands that actively promote their health benefits. Ultimately, as consumer demand evolves, CPG companies must adapt to stay relevant in a competitive market.