Smaller Food Companies Earning Big Praise

Natural and organic food companies are feasting on shifts in consumer tastes for healthier foods.

March 30, 2015

NEW YORK – Smaller food companies that are focused on natural and organic foods are “feasting on shifts in tastes among consumers distrustful of established food giants’ products and ingredients,” writes The Wall Street Journal, and shifting demand away from the larger brands commonplace in American households.

Credit Suisse analyst Robert Moskow told the Journal that the 25 biggest U.S. food and beverage companies collectively had 45.1% of the industry’s $418 billion in 2014 sales, down 4.3 percentage points from five years earlier. Meanwhile, share for smaller brands – including organic foodmaker Amy’s Kitchen Inc. – rose to 35.3% from 32.1% during the same time period, with the rest going to companies that produce private-label brands for grocers.

Other smaller companies such as Amy’s are enjoying growth. For example, bar maker KIND LLC, which began in 2004 and is a NACS Hunter Club member, has gone from less than 0.5% share of the snack-bar market in 2011 to nearly 6% today, according to Bernstein Research. Chobani Inc. reached $1 billion in sales its first five years of sales, notes the Journal.

One reason why these companies have been successful in recent years is their ability to work with retailers who are “seeking out upstarts to spice up their aisles.” Kroger’s King Soopers chain in Colorado started selling FlapJacked pancake mix from a small Colorado company in 2013, and now sells the brand in more than 500 stores across the United States.

“Our customers are increasingly telling us that buying local or buying from boutique producers is something they want, and we are working even harder to provide it,” a Kroger spokesman told the Journal.

Bi-Lo Holdings LLC launched two “Shark Tank”-like programs last year in its stores to give local foodmakers a chance win shelf space on its shelves. “The food industry is changing at such a rapid pace, and we want to make sure we’re not just keeping up with it but also driving it,” Nicole Hatfield, a senior manager at Bi-Lo Holdings, told the news source.

Meanwhile, the larger food companies are responding to consumer demand by acquiring the smaller companies, or launching new products to compete with them. Kellogg recently rolled out Origins cereal and granola, and Campbell’s launched a line of organic soups.

“We are well aware of the mounting distrust of Big Food,” Campbell Soup Co. CEO Denise Morrison told the news source. 

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