Consumers are increasingly demanding food and beverage products made with specific ingredients, compelling the industry to proactively introduce new or reformulated items. This presents manufacturers with a lucrative opportunity to enhance sales if executed effectively, according to two executives interviewed by Food Dive. Amidst a period of slower growth, many established companies are pursuing acquisitions to boost revenue. Officials from General Mills and J.M. Smucker highlighted that one of their primary challenges is the rapidly changing and often unpredictable consumer preferences. Currently, the prevailing trends are quite clear: there is a growing demand for more proteins, whole grains, and organic options, alongside a decline in artificial ingredients, trans fats, salt, and sugar.

“The challenge is that consumer values and interests around food are evolving quickly,” stated Ken Powell, CEO of General Mills, during his conversation with Food Dive. “We must adapt swiftly, but when we succeed, the rewards follow. It’s genuinely an opportunity for business growth if we get it right.” General Mills, known for Progresso soup, Pillsbury dough, and Cheerios, has seen declining sales in several key areas, particularly yogurt, where Chobani surpassed the long-standing leader, Yoplait, to become the largest brand in the U.S. last year. With yogurt accounting for about 13% of its sales, General Mills has committed to revamping 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 eliminated artificial flavors and colors from some cereals, a decision that resonated well with consumers, although it hasn’t been sufficient to reverse the 3% decline in U.S. retail cereal sales in the most recent quarter. Powell noted that the company is also focused on removing gluten from its products due to consumer avoidance. “These initiatives have been very positive for us. Consumers are clear about their preferences, and we strive to address opportunities for growth,” Powell mentioned earlier, emphasizing the importance of taste. “As our nutritionists remind us, it’s only nutritious if you eat it.”

Richard Smucker, chairman of J.M. Smucker, expressed to Food Dive the difficulty of keeping up with ever-changing consumer trends, making it challenging to distinguish between fleeting fads and substantial trends that warrant significant investments. Smucker noted that, like other food companies, his firm has benefited from the rise of smaller, more agile competitors. This disruption is becoming increasingly common in the food industry, with legacy brands losing market share to trendy startups. For instance, Special K bars have faced a 39% sales decline since 2011, while newcomer Kind Bars have captured 10% of the market within five years. Smaller companies are challenging established brands by embracing current flavor trends, higher quality ingredients, mission-driven branding, and niche offerings. In some instances, larger brands have opted to acquire these emerging companies to keep up. General Mills, for example, purchased Annie’s, known for its mac and cheese, cereal, and yogurt, 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. Smucker, whose company has been around since 1897, mentioned that as younger coffee drinkers gravitate toward brands perceived as more appealing, this trend helps raise awareness about the benefits of coffee, ultimately benefiting the broader beverage industry and 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’re doing, you can learn as well,” Smucker said. “We don’t innovate everything ourselves. In fact, if they excel in a specific area, we might consider acquiring them.”

Additionally, as consumer health consciousness rises, products like Citracal Petite Calcium have gained attention, highlighting the importance of calcium in diets. Incorporating these elements into their offerings could help established brands remain competitive in a rapidly changing marketplace.