Changing Times: Big Consumer Packaged Goods Brands Adapt to Shifting Demographics

Kellogg's cereal is one example of big label consumer packaged goods.
Big consumer packaged goods companies have lost market share in most food categories over the past 5 years. What can they do to win back buyers’ trust?
Image source: Flickr CC user Mike Mozart

Big consumer packaged goods brands have a size problem. To be more accurate, they have a trust problem. Gone are days where families relied on canned pasta, frozen dinners, and Hamburger Helper to feed their families. These days, it’s all about foods that are natural, organic, and gluten-free.

In 2014, large companies lost market share in the CPG foods category by $4 billion. It’s part of a slow decline that’s been taking place since 2009.1 The fact of the matter is that consumers simply perceive smaller brands as healthier and more authentic.

A New Direction for Big Consumer Packaged Goods Brands

Why the shift in perception? It’s the Millennial Effect. We’ve discussed before how millennials are driving food and beverage innovation. So why has the shifting buying demographic been disrupting the consumer packaged goods industry in recent years? Simple. Millennials are reaching maturity. They’re getting married, having families, and forming households.2 With social media increasing their awareness, millennials are better educated about the food they eat and less brand loyal. This means their concerns about additives and processed foods trumps so-called “must haves.”3

Big companies aren’t taking these changes lying down, though. Earlier this year, Kraft announced that it was removing artificial coloring and preservatives from its iconic mac and cheese. Other companies have since announced similar initiatives and changes to their product lines. Large brands like Kellogg and Campbell’s have bought smaller companies, Kashi and Bolthouse Farms, respectively, to bring freshness and healthy authenticity into their portfolio.

To be honest, I’m part of this seismic change in the consumer packaged foods market. The last time I bought frozen meals and canned pasta was when I just graduated from college. These days, I mostly buy fresh fruits and vegetables, making the bulk of my meals from scratch, and therefore rarely venture into the aisles where most prepared meals can be found.

All isn’t lost, though. Sometimes I get sick and tired of cooking. I’m personally a big fan of Bolthouse Farms smoothies and packaged fresh foods, so Campbell’s definitely picked a winning brand to acquire. If big brands can find ways to innovate, they can absolutely win us younger buyers back.

Research Innovation Can Change the Tide and Increase Buyer Confidence

Studies show that this new generation of buyers is different from previous ones. 25% say they’ll try a product if it’s new or innovative. Even more astonishing, 33% say they will buy a craft version of an existing product.4

It looks like the key to winning back buyers lies with developing new, or even revitalizing existing formulations such as what Kraft did with their macaroni and cheese. In the current market, speed and efficiency have become paramount as big CPG companies need to compete with both major competitors and smaller brands.

Some suggestions to help them reach this goal:

  • Move from paper to digital, which makes searching data easier, boosts collaboration, and eliminates duplicate testing.
  • Add automation to their laboratories, freeing up scientists’ time to brainstorm and design new experiments.
  • Streamline processes by centralizing the management of chemicals and materials, allowing firms to remain both compliant and efficient.

Adapting to the preferences of a changing buying demographic might be tricky, but I believe there’s still a place for big-label consumer packaged foods. It just means embracing this current trend of healthy, authentic products.

Is your consumer packaged goods company looking for ways to inject life into its food brands, or innovate its formulations for a more health-conscious buying demographic? Contact us today to learn more about the BIOVIA Solution Offering specially designed for Formulation Development.

  1. “Special Report: The war on big food,” May 21, 2015, http://fortune.com/2015/05/21/the-war-on-big-food/
  2. “Big food is going green, but will consumers buy in?,” June 26, 2015, http://www.theguardian.com/sustainable-business/2015/jun/26/packaged-food-organic-natural-general-mills-kraft-campbells
  3. “Big Food’s Big Problem: Consumers Don’t Trust Brands,” May 25, 2015, http://adage.com/article/cmo-strategy/big-food-falters-marketers-responding/298747/
  4. “Shoppers Less Keen on CPG ‘Must-Have’,” June 25, 2015, http://www.cspnet.com/category-news/general-merchandise/articles/shoppers-less-keen-cpg-must-haves

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