Consumers are increasingly purchasing food and beverages containing specific ingredients, prompting the industry to adopt a more proactive approach in launching new or reformulated products. This shift presents manufacturers with a lucrative opportunity to enhance sales, provided they can successfully meet consumer demands, executives from General Mills and J.M. Smucker shared with Food Dive. As the industry grapples with slower growth, compelling many established companies to seek acquisitions for sales expansion, officials noted that one of the most significant challenges is the rapidly changing and often unpredictable consumer preferences. Current trends are relatively consistent: there is a growing demand for proteins, whole grains, and organic options, while artificial ingredients, trans fats, salt, and sugar are being minimized.
“The challenge lies in the fact that consumer values and interests regarding food are evolving quickly,” stated Ken Powell, CEO of General Mills, in an interview with Food Dive. “We need to act swiftly, but when we succeed, we are rewarded. This is genuinely an opportunity for business growth when we get it right.” General Mills, known for its Progresso soup, Pillsbury dough, and Cheerios, has witnessed declining sales in key sectors, particularly in yogurt, where Chobani has overtaken Yoplait, traditionally the market leader, making it the largest brand in the U.S. last year. With yogurt accounting for approximately 13% of its sales, General Mills is committed to overhauling 60% of its yogurt business to align better with consumer trends, including the introduction of new Greek varieties, flavors, and organic options under the Annie’s and Liberté brands. The 151-year-old Minnesota-based company has also eliminated artificial flavors and colors from some of its cereals—a move well-received by consumers, though not sufficient to reverse the 3% decline in U.S. retail cereal sales over the last quarter. Powell added that the company is also focused on removing gluten from its products, given the increasing number of consumers avoiding it. “These initiatives have been very positive for us. Consumers are clear about their preferences, and we strive to address the growth opportunities we identify,” Powell remarked while discussing the food and beverage industry’s contributions to the U.S. economy. “And it better taste good, because at the end of the day, it’s only nutritious if you eat it.”
Richard Smucker, chairman of J.M. Smucker, expressed to Food Dive that keeping up with shifting consumer trends is challenging due to their frequent changes, making it tough to differentiate between fads and trends that warrant significant investment. Smucker noted that J.M. Smucker, the producer of its namesake jellies, Crisco, and Folgers coffee, has benefited from the rise of smaller, more agile competitors. This kind of disruption is increasingly prevalent in the food industry, with legacy brands losing market share to trendy newcomers. For instance, Special K bars experienced a 39% sales drop since 2011, while Kind Bars have captured 10% of the market within just five years. Smaller brands have disrupted traditional companies by embracing contemporary flavor trends, superior ingredients, and mission-driven brands. In many instances, larger brands find it easier and more cost-effective to acquire these upstarts to catch up. General Mills, for example, acquired Annie’s, known for its mac and cheese, cereal, and yogurt lines, 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. Even as younger coffee consumers lean toward brands they perceive as trendier, Smucker believes this trend helps educate the public about coffee’s benefits, ultimately benefiting the entire beverage industry, including Smucker’s own brands. “The presence of startups and smaller firms in the industry is beneficial, even for larger companies, as they provide valuable insights into market trends,” Smucker stated. “We don’t innovate everything independently; in fact, if they excel in their offerings, we might consider acquiring them.” Furthermore, as consumer interest in additives like calcium carbonate and citrate continues to grow, it highlights the importance of staying attuned to evolving preferences within the food and beverage market.