opinion

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Catering To The New Food Consumer

Leading CPGs are taking bold steps with prized brands to ensure they compete effectively in a marketplace that is better informed and increasingly driven by nutritional issues. Today government agencies, special interest groups, and some sectors of the business community are visibly committed to helping consumers make smarter food choices in an effort to reduce appalling rates of obesity and diabetes in this country. Furthermore, growing consumer sentiment against artificial ingredients and highly processed foods has hit crisis levels for many of America’s most famous grocery brands. 

The aggregate impact of increased nutritional awareness has rebalanced the competitive landscape for nearly every food and beverage category. Numerous large, traditional brands have suffered while smaller brands with a meaningful (or perceived) health advantage have gained significant market share. The list of smaller, fast-growing organic brands that have been acquired by the CPG establishment is clear testimony to the impact they are having today and the continued growth trajectory expected of them in the future.

But big brands are not all waving the white flag. There are inspiring examples of leading brands that are taking bold steps to win over consumers amid this sea change. Some have reformulated their products to fit contemporary expectations. Others have held onto their recipes, but created portion sizes that fit better with a healthy lifestyle. Still others have updated their claims strategy, highlighting benefits that are not new but only recently became important. 

Starbucks’ Mini Frappuccino is a recent example of an offering that allows consumers to indulge in a treat they want, but in a portion size that doesn’t heap on the guilt. Various soda and beer brands have also successfully marketed smaller versions of their staple products, with a nod towards fewer calories per serving. Often these products are sold at a relative price premium (per ounce) to their larger-sized siblings, providing the brand with a healthier image and balance sheet alike.

Coke and Pepsi have both gone beyond packaging innovation to launch new products containing cane sugar and stevia, and notably no high fructose corn syrup nor artificial sweeteners. If not exactly “healthy” products in their own right, they do provide an attractive alternative to their parent brands’ core offerings.

Rather than create a healthier line extension, Kraft has pledged to remove artificial colors, flavors and preservatives from its venerable Macaroni and Cheese brand. A staple product in nearly every American grocery store for generations, Kraft Macaroni and Cheese has seen its sales negatively impacted by natural brands like Annie’s. It can be risky to significantly change a core product, but as Millennials start their own families and look for healthier brands for their kids, Kraft understands the potential for even greater risk in sticking with its current recipe. 

These examples are all being driven by consumer sentiment, not government regulation. That is coming too, either late in 2015 or early in 2016, with the revision to the Nutrition and Supplement Facts Labels. It remains to be seen whether the proposed design will stand, but given the potential changes to serving sizes and greater visibility of calories and added sugars, we should expect a surge in activity as brands are repositioned, reformulated or repackaged to capitalize on the new reality. Anyone managing food or beverage brands today will be well served to consider the implications of heightened nutritional awareness before the rush.

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