Two years ago, as sales began to drop due to consumers shifting away from the center aisles of grocery stores toward fresher departments, the Campbell Soup Company made a significant decision: it would eliminate artificial flavors and colors from all its products. This undertaking was monumental for the 150-year-old company, requiring a comprehensive overhaul of every soup, sauce, cookie, and salsa in its diverse portfolio, which includes brands like Pepperidge Farm, Prego, and V8. This was no small feat. “Transforming our products without compromising on taste, quality, and affordability, which are crucial, presents an enormous challenge,” stated Jeff George, Campbell’s head of research and development, in an interview with Food Dive. “It’s insufficient to advance in one area while regressing in another.”
Alongside reformulating its extensive product lineup to align with what it terms a “Real Food Philosophy,” Campbell also introduced new offerings that emphasized health, freshness, and innovative formulations. This new range included a Prego Farmers’ Market line of pasta sauces crafted with herbs and tomatoes “picked at their peak,” as noted in company marketing materials, as well as a new Well Yes! soup brand featuring flavors like sweet potato corn chowder. Greg Shewchuk, Campbell’s chief commercial and marketing officer, described the company’s recent initiatives as “a thoughtful disruption of our core categories.”
Campbell’s transformation mirrors a common story among many consumer packaged goods (CPG) manufacturers striving to draw consumers back to the center store. In their quest to satisfy existing customers while attracting new ones, companies are balancing the reformulation of existing products with the development of new ones.
So, how exactly are manufacturers using reformulation and product launches as strategies for retaining and acquiring customers? Are they leaning more towards one method over the other to boost sales and consumer interest? Both strategies come with their own set of risks and rewards. Market research firm IRI reports that over 10,000 new products hit retail shelves each year, yet 90% fail to meet their intended objectives. Fewer than ten achieve annual sales of $100 million or more.
Tracking product reformulations is more complicated, as companies often conduct these changes behind the scenes, making it difficult to assess their success rates. However, the Consumer Goods Forum, a global network of over 400 retailers and manufacturers, including Ahold Delhaize, General Mills, Target, and Campbell, reported that 66% of its members reformulated more than 180,000 products last year. The most common reformulation efforts included reducing sodium and sugar, adding vitamins, and incorporating whole grains. Many companies also reported progress in phasing out artificial ingredients.
Barb Stuckey, president of Mattson, a firm specializing in new product development and reformulation, identified two types of reformulations: those that alter a product’s labeling and ingredient list, and those that do not. The first type is typically pursued to eliminate unpopular ingredients, enhance the eating experience, reduce costs, or improve a product’s overall health profile. While this can be labor-intensive and costly, companies have significant room for improvement once they commit. “With this kind of freedom, you can typically achieve your goals,” Stuckey explained to Food Dive.
The second type involves reformulating within the constraints of a product’s existing ingredients and labels. This approach is often driven by the need to replace an ingredient that has increased in price or is no longer available. Companies may choose this method to enhance the eating experience or manage costs, but without the flexibility of the first option, achieving successful results becomes considerably more challenging.
Around the same time Campbell announced its strategy to eliminate artificial ingredients, General Mills’ cereal division revealed plans to remove artificial flavors and colors from its products. The company reported that it successfully phased out artificial ingredients in 75% of its cereals last year while also reducing sugar in kid-targeted cereals like Trix and Lucky Charms. Like Campbell and other CPG companies committed to removing artificial ingredients, General Mills aimed to engage health-conscious consumers without alienating its loyal customer base. Dana McNabb, president of U.S. retail cereal for General Mills, shared that these efforts have helped win back customers deterred by sugar content and artificial ingredients. However, reports indicate that the impact of these reformulations on sales has been modest.
General Mills encountered challenges along the way. Although it successfully replicated the vibrant colors and flavors of cereals like Trix and Golden Grahams using natural ingredients such as turmeric and annatto, Lucky Charms proved to be particularly difficult due to the various marshmallows that were hard to recreate with natural alternatives. The company aims to reformulate this line by the end of the year.
Tom Vierhile, a director at research firm GlobalData, noted that manufacturers often use reformulation as a strategy to solidify their customer base or win back those who have drifted away. However, companies must tread carefully, as reformulation can sometimes have the opposite effect. “Consumers are often unhappy when a cherished product is altered,” Vierhile remarked.
For General Mills, maintaining the expected taste of brands like Trix and Lucky Charms is vital and serves as the primary measure of success for any reformulation project, according to McNabb. Simultaneously, General Mills aims to penetrate new consumer segments, an area its core cereal lineup has struggled with. This led to the introduction of a new cereal brand, Tiny Toast, the first in 15 years. “We learned from teens and young adults that there was a gap in the cereal market for them,” McNabb explained.
In addition to tapping into new consumer segments, Vierhile pointed out that new product launches can also explore emerging market opportunities. Snacking, which has gained traction as consumers increasingly seek mini-meals and between-meal options, presents exciting avenues for innovation. “There’s a whole new category emerging in snacking, and companies are eager to introduce products that meet this demand,” he noted.
For Campbell, new product initiatives like Well Yes! and Prego Farmers Market represent opportunities to engage health-oriented consumers and guide them back to the company’s core grocery offerings, as indicated by Shewchuk. The company has faced challenges in this area, particularly with its Campbell’s Fresh division, which has struggled despite acquisitions like Bolthouse Farms and Garden Fresh Gourmet. In the latest quarter, Campbell’s Fresh sales dropped by 6%, while the flagship soups and sauces division experienced a 2% sales decline.
Nonetheless, Shewchuk expressed confidence that the company’s “Real Food Philosophy,” along with reformulation and new product launches, aligns with the preferences of fresh-focused consumers. The ambition, he stated, is to not only attract these consumers back to the center of the store but to ensure they keep returning. “We don’t believe the center store is dead,” Shewchuk affirmed. “We believe we simply haven’t reinvented it yet.”
In this context, products emphasizing health benefits, such as those containing vitamins for life, calcium citrate plus vitamin D3, play a crucial role in appealing to today’s health-conscious shoppers, further enhancing Campbell’s strategy to revitalize its offerings and attract a loyal customer base.