Food Brands Feel the Struggle in Grocery Aisles

Larger brands are looking to gain market share amid greater competition from companies that were quick to respond to changing consumer demand.

July 10, 2017

NEW YORK – For more than a century, brands such as Kellogg’s cereal, Campbell’s soup and Aunt Jemima pancake mix were common among American households, and they provided companies with reliable revenue growth, reports the Wall Street Journal. Today, however, these brands are facing strong competition.

“High-end consumers are shifting toward fresher items with fewer processed ingredients while cost-conscious shoppers are buying inexpensive store brands,” writes the Journal, adding that food makers of canned pasta and other shelf-stable meal solutions “failed to spot the threat and didn’t innovate in time.”

Consumer packaged goods companies, notes the news source, have enjoyed strong market positions and sustained revenue, but have been slow to adapt to changes within the market. “A lot of what’s crept into big companies is internal focus, bureaucracy, PowerPoint presentations—the antithesis of agility,” Sean Connolly, CEO of Conagra Brands Inc., told the news source.

Many large brands have also been slow to respond to consumer demand for greater transparency in labels, such as removing processed and artificial ingredients. Private-label products from retailers like Walmart, Costco and regional grocers have also been costing large brands, especially as they continue to add more natural and organic product lines.

However, by the 1990s, changing consumer perceptions as to what healthy meant led a movement to more natural and organic foods.

From 2005 to 2010, new brands such as Amplify Snack Brands Inc.’s SkinnyPop popcorn and Kind LLC’s Kind snack bars hit shelves, rapidly expanding from a few small stores to retail giants such as Costco and Walmart, notes the Journal. Smaller food brands were also making food with natural and simple ingredients, or the “clean label” movement as it’s known today.

As some companies adjust to today’s realities, they’re adding new lines to keep up with consumer trends and preferences. For example, General Mills recently launched a French-style line of yogurt to compete among the Greek yogurt brands, and several big companies are acquiring fast-growing brands, notes the Journal. In 2014, General Mills bought Annie’s Inc., and in 2016, Danone SA purchased WhiteWave Foods Co., which makes Silk soy milk and Horizon organic yogurt.

Last week, Campbell Soup Co. said it plans to buy Oregon-based Pacific Foods, an organic soup and healthy-meal company, for $700 million. According to a press release, Pacific Foods will help accelerate Campbell’s efforts to deliver real food and beverages that meet consumers’ changing tastes and preferences. The acquisition will also further Campbell’s efforts to drive innovation in health and well-being to reinvent the center store, while giving the company more access to natural and organic customers and channels.

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