The last several years have seen a seismic shift in food industry trends. Where consumers were once highly loyal to big name brands, they are now more choosy than ever about where they spend their food dollars and tend to favor smaller brands and less processed foods over old-school favorites. The largest food and beverage brands saw their market share fall from 49.4% to 45.1% between 2009 and 2014—the equivalent of $18 billion in market share. And, unfortunately for brands who have yet to adapt to changing consumer values, it doesn't look like these patterns will be changing anytime soon.
While consumers have developed a general disinclination toward the idea of food “processing,” the fact is that nearly all foods are processed to some degree: Grains are milled into flour. Nuts and seeds are shelled and hulled. Vegetables are mechanically harvested and sorted. Even in the past, techniques like salting or pickling assured that foods were preserved safely. But consumers today have only a nebulous grasp of what processing actually entails, and brands with popular shelf-stable staples tend to be tarred with the same brush in grocery shoppers’ drive toward freshness, authenticity, sustainability and healthfulness. Big brands just aren't as well trusted as they were in the past.
What will the food landscape look like when the dust settles?
A number of manufacturers are listening to consumer opinion and revamping their products to better fit with modern tastes and priorities.
Kraft recently announced that they would remove artificial colors and preservatives from their flagship Macaroni & Cheese.
General Mills recently removed the artificial sweetener aspartame from its Yoplait Light yogurt.
Children's cereals Trix and Lucky Charms are each getting an artificial-color-free makeover, resulting in a narrower range of hues in these colorful brands.
General Mills has removed GMOs from Cheerios.
Tyson has pledged to eliminate the use of antibiotics that are given to humans from the chickens it raises for meat.
With consumers becoming more health conscious, anything deemed processed or artificial is likely to continue to lose fans. By adapting to this, brands may be able to win back some of the customers lost in recent years. We'll see this among the more powerful food industry trends as ingredients are updated or eliminated to meet current tastes.
Small Brands with Big Owners
If big brands are going to continue to rule, it may not be through their flagship offerings. When a brand can't adjust its own reputation, there's another choice: buy a smaller brand that has the desired cache.
Organic packaged food brand Annie's Naturals was purchased by General Mills in 2014.
Coca Cola purchased a 40% stake in Honest Tea in 2008.
Kellogg has added all-natural, snack food brand Bear Naked to its portfolio.
Campbell Soup purchased Bolthouse Farms, gaining the smaller company's in the acquisition.
However, the halo effect is not automatic. Big brands need to be aware that, when they buy independent brands, they often open their new subsidiaries to deeper scrutiny. Kashi, for instance, was recently the focus of serious backlash amid revelations that their offerings were the products of factory farms and contained both non-organic ingredients and GMOs. To retain the trust of customers, big brands will need to maintain or adopt the sustainable practices that consumers say they want.
Chances are good that the food landscape will never look quite the same, but big brands can continue to compete by staying up to date on consumer tastes and food industry trends. By giving customers what they say they want, companies can continue to earn consumers' trust and their business.