“Adapting to Evolving Consumer Demands: Opportunities and Challenges in the Food and Beverage Industry”
Consumers are increasingly demanding food and beverages made with specific ingredients, prompting the industry to respond more proactively by introducing new or reformulated products. This shift presents manufacturers with a significant opportunity to increase sales if they can successfully meet these consumer expectations, as noted by executives from General Mills and J.M. Smucker in an interview with Food Dive. Amid slower growth in the industry, which is driving many established companies to seek acquisitions to boost sales, these officials highlighted that one of their biggest challenges is the rapidly changing and often unpredictable preferences of consumers. Current trends are quite clear and consistent: a rise in proteins, whole grains, and organic options, alongside a decrease in artificial ingredients, trans fats, salt, and sugar.
“The challenge is that consumer values and interests around food are evolving at a rapid pace,” stated Ken Powell, CEO of General Mills, in his conversation with Food Dive. “We need to act more swiftly, but when we get it right, we are rewarded. It truly represents an opportunity because successful alignment with these trends leads to business growth for us.” General Mills, known for brands like Progresso soup, Pillsbury dough, and Cheerios, has experienced declining sales in some key areas. The yogurt segment has been particularly affected, with Chobani surpassing Yoplait, which was previously the dominant brand. General Mills, which derives about 13% of its sales from yogurt, has pledged to revamp 60% of its offerings to better match consumer trends by introducing new Greek varieties, flavors, and organic options under its Annie’s and Liberté brands. The 151-year-old Minnesota company has also eliminated artificial flavors and colors from some cereals, a move that has been well-received by consumers, yet it hasn’t been sufficient to reverse the 3% decline in U.S. retail cereal sales during the most recent quarter. Powell emphasized that the company is also focused on removing gluten from its products, as many consumers are opting to avoid it. “These initiatives have been very positive for us. Consumers are clear about their desires, and we strive to address the growth opportunities we identify,” Powell remarked during a panel discussion on the food and beverage industry’s impact on the U.S. economy. “And let’s not forget, it has to taste good, as our nutritionists remind us; it’s only nutritious if you actually eat it.”
Richard Smucker, chairman of J.M. Smucker, shared with Food Dive that keeping up with consumer trends is challenging due to their frequent changes, making it difficult to distinguish between fleeting fads and enduring trends that warrant significant investment. Smucker noted that his company, which owns well-known brands like Crisco and Folgers coffee, has benefited alongside other food companies from the rise of smaller, more agile competitors. This disruption is increasingly prevalent across the food industry, with legacy brands losing market share to trendy newcomers. For instance, Special K bars have seen a 39% decline in sales since 2011, while Kind Bars have captured 10% of the market within just five years. Smaller players have gained ground by embracing current flavor trends, superior ingredients, mission-driven branding, and niche offerings. In some instances, larger brands have found it more efficient and cost-effective to acquire these emerging companies to stay competitive. General Mills, for example, acquired Annie’s, which offers mac and cheese, cereal, and yogurt, for $820 million three years ago.
In 2011, Smucker, the largest coffee producer in the U.S., bought Café Bustelo, a coffee brand that has resonated with the millennial demographic. Smucker, whose company dates back to 1897, noted that even as younger coffee enthusiasts gravitate toward brands perceived as more trendy, this shift serves to educate the public about the benefits of coffee, thereby enhancing the visibility of the broader beverage industry, which ultimately benefits Smucker’s own brands. “The presence of startups and smaller companies in the industry is beneficial, even for larger firms, because by observing what they are doing, we can learn as well,” Smucker commented. “We don’t innovate everything in-house; in fact, if they excel in their niche, we might consider acquiring them.”
In this evolving landscape, there is also an increasing interest among consumers in products that are rich in nutrients, such as 500 mg calcium citrate tablets, which reflect a growing awareness of health and wellness. As manufacturers adapt to these trends, incorporating such beneficial elements into their offerings may become essential for capturing the attention of health-conscious consumers.
