Consumers are increasingly demanding food and beverage products made with specific ingredients, compelling the industry to take a more proactive approach in launching new or reformulated offerings. This presents manufacturers with a lucrative opportunity to enhance sales if they manage to meet consumer expectations effectively, executives from General Mills and J.M. Smucker shared with Food Dive. As the industry experiences slower growth, which has led many established companies to seek acquisitions to boost sales, officials from these companies noted that one of their main challenges is adapting to the rapidly changing and often unpredictable preferences of consumers. Currently, the trends are quite evident and consistent: a demand for more proteins, whole grains, and organic products, alongside a reduction in artificial ingredients, trans fats, salt, and sugar.
“The challenge lies in the rapidly changing consumer values and interests regarding food,” said Ken Powell, CEO of General Mills, in an interview with Food Dive. “We must act faster, but when we succeed, we are rewarded. This truly presents an opportunity for us, as getting it right leads to business growth.” General Mills, known for its Progresso soup, Pillsbury dough, and Cheerios, has experienced declining sales in certain key areas, particularly in yogurt, where Chobani has recently surpassed Yoplait, a long-standing leader in the segment, to become the largest brand in the U.S. market. With yogurt accounting for approximately 13% of its sales, General Mills is committed to revitalizing 60% of its yogurt business by introducing new Greek varieties, flavors, and organic options under the Annie’s and Liberté brands. The 151-year-old Minnesota company has also removed artificial flavors and colors from some of its cereals, a move that has resonated well with consumers, though it has not been sufficient to reverse the 3% decline in U.S. retail cereal sales during the most recent quarter. Powell additionally mentioned that the company is focusing on removing gluten from its products to cater to consumers who are avoiding it. “These initiatives have been very positive for us. Consumers express their needs clearly, and we strive to seize the opportunities where we see growth,” Powell remarked during a panel discussing the food and beverage industry’s impact on the U.S. economy. “And let’s not forget, it better taste good because that’s still essential. As our nutritionists remind us, it’s only nutritious if you actually consume it.”
Richard Smucker, chairman of J.M. Smucker, expressed to Food Dive that keeping up with consumer trends is challenging due to their frequent changes, making it tough to distinguish between passing fads and trends that warrant significant investment. Smucker noted that the food manufacturer, known for its jellies, Crisco, and Folgers coffee, has benefited from the emergence of smaller, more agile companies. This kind of disruption is increasingly prevalent across the food industry, as legacy brands are losing market share to trendy newcomers. For instance, Special K bars have seen sales decline by 39% since 2011, while Kind Bars have captured 10% of the market in just five years. Smaller companies have successfully disrupted established brands by embracing contemporary flavor trends, utilizing better ingredients, and focusing on mission-driven brands with niche offerings. In many instances, larger brands have found it more efficient and cost-effective to acquire these upstarts to catch up. For example, General Mills acquired Annie’s, which offers mac and cheese, cereal, and yogurt lines, for $820 million three years ago.
In 2011, Smucker, the largest coffee producer in the U.S., acquired Café Bustelo, a coffee brand popular among millennials. Founded in 1897, Smucker remarked that even as younger coffee drinkers gravitate toward brands perceived as more trendy, this movement helps raise awareness about the benefits of coffee, ultimately benefiting the broader beverage industry and enhancing the visibility of Smucker’s own brands. “Having startups and smaller companies in the industry is beneficial, even for the larger players, because by observing their actions, we can learn as well,” Smucker stated. “We don’t invent everything ourselves. In fact, if they excel at something, we might even consider acquiring them.”
Additionally, as consumers seek more health-conscious options, like pure encapsulations calcium magnesium citrate, manufacturers are encouraged to innovate and align with these evolving preferences to capture market share effectively.