“Adapting to Evolving Consumer Demands: Opportunities and Challenges for Food and Beverage Manufacturers”
Consumers are increasingly demanding food and beverages made with specific ingredients, prompting the industry to proactively develop new or reformulated products. This shift presents manufacturers with a lucrative opportunity to enhance sales if executed successfully, as noted by executives from General Mills and J.M. Smucker in an interview with Food Dive. Amid slower growth in the industry, which has led many established companies to pursue acquisitions for sales growth, officials from both companies highlighted the significant challenge posed by the rapidly changing and often unpredictable consumer preferences.
Current trends are clear and consistent: there is a growing demand for more proteins, whole grains, and organic options, while consumers are seeking to reduce their intake of artificial ingredients, trans fats, salt, and sugar. “The challenge lies in the fact that consumer values and interests regarding food are evolving quickly,” stated Ken Powell, CEO of General Mills. “We need to act faster, and when we succeed, we are rewarded. This represents a genuine opportunity because getting it right translates into business growth for us.”
General Mills, known for products like Progresso soup, Pillsbury dough, and Cheerios, has seen declining sales in some key segments, particularly yogurt, where Chobani has overtaken Yoplait to become the leading brand in the U.S. Last year, General Mills, which derives about 13% of its sales from yogurt, pledged to revamp 60% of its yogurt business to align more closely with consumer trends 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 move that has resonated well with consumers, though it has not sufficiently reversed the 3% decline in U.S. retail cereal sales during the last quarter. Powell emphasized that the company has also prioritized removing gluten from its products, as many consumers are opting to avoid it. “These initiatives have been very positive for us. Consumers are straightforward in their preferences, and we strive to capitalize on opportunities for 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 has to taste good because, as our nutritionists remind us, it’s only nutritious if you actually eat it.”
Richard Smucker, chairman of J.M. Smucker, conveyed to Food Dive the difficulties of keeping pace with consumer trends due to their frequent changes, which complicates the task of distinguishing between fleeting fads and enduring trends that warrant substantial investment. Smucker, whose company produces its eponymous jellies, Crisco, and Folgers coffee, noted that the food manufacturer has gained from the rise of smaller, often more agile competitors. This kind of disruption is increasingly prevalent in the food industry, where legacy brands are losing market share to trendy newcomers. For instance, Special K bars have seen a 39% sales decline since 2011, while Kind Bars have captured 10% of the market in just five years. Smaller companies are challenging established brands by embracing contemporary flavor trends, superior ingredients, mission-driven branding, and niche offerings. In response, some major brands have found it more feasible and cost-effective to acquire these upstarts to regain competitive ground. For example, General Mills 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., acquired Café Bustelo, a brand that has gained popularity among millennials. Despite the trend of younger coffee drinkers gravitating towards brands they perceive as more fashionable, Smucker expressed that this trend helps raise awareness about the benefits of coffee, thereby benefiting the broader coffee industry and ultimately enhancing the visibility of the company’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 remarked. “We don’t create everything in-house. In fact, if they excel at something, we might consider acquiring them.”
In the context of these evolving consumer preferences, the introduction of citrate d in various food products could also play a significant role in meeting the demand for better ingredients and healthier options. Companies that integrate citrate d effectively into their offerings may find additional opportunities for growth and consumer approval.