Forgotten and unloved brands get a reboot as Big Food looks for untapped growth
Hormel, Campbell Soup and Conagra are among the companies that are innovating and expanding the reach of iconic products — some of which haven't been updated in years.
When executives at Hormel Foods combed through product data in 2009, they noticed a troubling sign in one of the company's oldest and most beloved brands: Sales at its iconic Dinty Moore were struggling.
The product, introduced during the height of the Great Depression in 1935, was losing its edge. And while it dominated the stew category — controlling roughly 80% of sales — the space as a whole has declined 20% during the past decade, with Dinty Moore facing the brunt of this decline as the market leader.
"Dinty Moore definitely was in need of a refresher," Sarah Johnson, the product's brand manager, told Food Dive. "When we ask consumers about why they stepped away from purchasing Dinty Moore beef stew the majority of them responded that they just sort of forgot about us. The fact of the matter is there are so many options nowadays for consumers."
For much of its 83-year history, Dinty Moore cultivated an image as a product loaded with filling ingredients such as meat, potatoes, gravy and carrots. Hormel officials were reluctant to abandon this long-held perception, and in fact doubled-down on this image by running a lighthearted ad campaign in 2016 focusing on lumberjacking as a way to underscore the brand's perception as a hard-working, hearty meal.
Throughout the refresh, Johnson said Hormel embraced the mantra of "if it isn't broke, don't fix it" mentality — limiting Dinty Moore to only two major products and essentially maintaining the same ingredients list. But the company, aware of the rapid shift in how and where shoppers consume their food, knew some changes needed to be made.
It branched Dinty Moore out beyond its traditional can to include microwavable trays and bowls to cater to the on-the-go consumer, as well as single people or individuals who don't like having leftovers.
"Dinty Moore definitely was in need of a refresher. ... The fact of the matter is there are so many options nowadays for consumers so they just forgot about us when we stopped communicating."
Brand manager at Dinty Moore
In an effort to court millennials who are commanding an ever-growing share of buying power in food, the company advertised on ESPN, eBay, Spotify and Pandora. Hormel also decided to tout the product's attributes that were being closely watched by shoppers, such as its protein and calorie content, along with the absence of gluten and preservatives.
"It's important that you speak to your core consumer, you don't step away from that, you celebrate the fact that you got some nostalgia with the brand and the fact that you are hard working, but at the same time you need to educate new consumers as they move into new different life stages," Johnson said.
Jim Snee, Hormel's CEO, told Food Dive at the Consumer Analyst Group of New York conference in February that there is a delicate balance in managing the long-term visibility of a brand. "It's this never-end quest to stay up to date with what the consumer is looking for," he said.
Standing the test of time
With more than 20,000 food and beverage products making their way to the marketplace each year, failure is inevitable. Data analytics company Nielsen estimated in a 2014 study that only 15% of consumer packaged goods launched in the U.S. are still around two years later. Even fewer have the longevity of a brand like Dinty Moore.
For those products that stand the test of time, there is a risk that growth levels off and product popularity fades, resulting in steady but unspectacular sales. Other products may fall out of favor with current trends, prompting revenue for the product to quickly or gradually decline over time. It can then foster a self-fulfilling prophecy: With sales falling, food companies devote more of their attention toward investing and promoting faster-growing brands, contributing to a further slide in the struggling product.
Food companies attending CAGNY, both in public comments and during exclusive interviews with Food Dive, identified efforts they have made to revive brands throughout their expansive portfolios — some of them iconic products that have fallen on hard times.
This "will continue to be a strategy that brands will pursue," Jennifer Frazier, senior vice president of Nielsen's Innovation practice, told Food Dive. "Getting it right is the hard part."
But for companies that have a struggling brand, it can be a challenge to decide whether it's worth the financial and personnel resources to invest in fixing it — a decision that varies from product to product, according to those involved in the food industry. Food makers not only need to consider whether the product refreshment will resonate with consumers, but if it's worth making changes that can impact the company's supply chain, ranging from additional manufacturing expenses to how the brand is carried and displayed on the retail level.
Denise Morrison, the former CEO of Campbell Soup who retired Friday, told Food Dive in February that the soup and snack maker regularly looks for ways to take an existing product line and extend it into specific on-trend niches popular with consumers. In 2013, it expanded its Prego brand beyond its iconic tomato flavor to include a white sauce variety, and three years later debuted another clean label farmers market version made with simple ingredients.
Campbell Soup began a similar expansion in V8 after company executives noticed that only 35% of people like tomato-based drinks. It has since added energy-based beverages to the V8 line as well as fruit and vegetable blends.
"You can look at even more mature categories. You can look for the benefit and then introduce innovations that fulfill those benefits," Morrison said. "Instead of just looking at the broad-brush category, there are places within the category that you can say there is a consumer benefit that is not being met."
Frozen foods catch fire
Until recently, few areas in the food industry have been as neglected as frozen foods. Once cast aside as an afterthought with consumers flocking toward fresher, better-for-you alternatives, the space has rebounded as food manufacturers have innovated to take advantage of recent trends — such as low sodium, natural, sustainable and clean label. The growing demand for convenience and dwindling interest in cooking, especially among millennials, has also helped spur the surge in frozen food consumption.
A study by sales and marketing agency Acosta found last year that 26% of U.S. consumers are shopping the frozen foods department more frequently than they did in 2016. All generations reported buying more frozen food, but the increase was driven in large part by millennials, 43% of whom said they bought more frozen foods compared with the prior year.
“It got sluggish not because people stopped appreciating the convenience of frozen," Sean Connolly, president and CEO of Conagra Brands, said at the Consumer Analyst Group of New York conference in February. "It got sluggish because big companies took their eye off the ball and didn’t modernize their brands with changing consumer tastes.”
Connolly confessed to the Wall Street audience that Conagra had been among those who failed to innovate many of its well-known frozen brands such as Banquet, Healthy Choice and Marie Callender's — its biggest brand in terms of sales — leaving them looking bland and outdated. For Conagra, frozen is a major part of its business, contributing roughly a third of its $7.827 billion in sales during its most recent fiscal year ended May 28.
Realizing these frozen food staples still had room to grow, Conagra delegated staff and research dollars to innovating the product lines and widening their reach to new audiences.
Banquet, which Connolly said had "packaging that looked like it was from the 80s," was refreshed, and a new premium "mega" tier for people with big appetites, especially popular among the millennial crowd, was added. It also introduced cheeseburger and hot chicken sliders to cater to the on-the-go consumer craving protein. The strategy paid off — Banquet sales jumped 6% from the prior year.
Conagra found similar success by overhauling Healthy Choice. The brand, which used to be centered around heart health, was promoted more broadly as a product for a healthy lifestyle, and its reach was expanded to tout high-energy power bowls as well as meatless and breakfast options. Its flavor lineup was broadened to include trendy premium-price bowls sporting a clean label and trendy flavor alternatives such as chicken feta and farro, Mediterrian-style lentil and Cuban-inspired pork. Sales responded favorably, jumping 16%.
A top to bottom analysis
Dale Clemiss, president of Conagra's grocery and snacks division, told Food Dive that the popularity of smaller emerging brands spurred bigger food companies like his to innovate by modernizing and premiumizing their brands to keep up with changing consumer tastes and trends.
Last summer, Conagra looked at the majority of its estimated 50 brands during a three-month period to see how competitive they were in the marketplace compared to similar products in terms of flavors, sizes, price, promotions and quality.
"If you actually keep up with where the consumers are moving, and if you actually modernize and contemporize, and not just incrementally, and take big moves, you can actually grow big brands."
President of Conagra's grocery and snacks division
Executives also looked to identify areas within each brand where they could increase the reach of the product, and pockets of untapped growth were discovered in each category, Clemiss noted. The review ultimately led to the introduction of new Chef Boyardee pasta varieties taken from the original recipes that had more cheese, angus beef and simpler ingredients, and Snack Pack pudding flavors such as Dulce de Leche, Cinnamon Twist Churro and Chocolate Cinnamon Spice that cater to the United States' growing Hispanic population.
"If you actually keep up with where the consumers are moving, and if you actually modernize and contemporize, and not just incrementally, and take big moves, you can actually grow big brands," Clemiss said. "Innovation becomes the best defense against slow growth and emerging competitors."
Erin Lash, a director of consumer equity research at Morningstar, told Food Dive that Conagra's decision to innovate and prioritize higher prices and better quality while sacrificing volume in its Banquet brand, for example, was a "prudent" move.
But the effort is not without risks for a brand. It's uncertain whether the core consumer will be willing to pay up for a product long associated with a specific price point, and whether attempts to attract millennials through these changes will alienate long-time devotees.
"It’s not just enough to market behind these brands but to do so in a way that you again don't alienate that core consumer group for that particular brand," Lash said.
Mixed record of success
Companies that have tried to reignite fading brands have had a "mixed" record of success, she said. Kraft Heinz, for example, has tried on multiple occasions to overhaul its Jell-O brand, but each time it failed to gain meaningful traction — potentially because it's not associated with trends in the food space such as health, wellness or convenience, Lash said.
For brands whose sales have sputtered, their owners are faced with the decision of whether to spend money to try to revive the product, or sell it and invest the proceeds in faster-growing businesses such as natural and organic. Lash said the more attractive option now for food companies desperate to reverse flagging sales is to unload the brand.
”There are merits to doing so (keeping the brand and giving it new life,) and it’s not out of the question that that could be successful," she said. "But we have seen over the last five to 10 years that there has been more of an openness to selectively offloading some of their less core brands."
Nestlé, the world's largest food company, has set a margin target and pledged to offload assets representing about 10% of its portolfio as it works to position itself as a provider of healthy food and drinks. As part of that effort, Nestle recently sold its U.S. confectionary business, which includes Butterfinger, Baby Ruth and 100 Grand, to Ferrero Group for $2.8 billion.
Nestlé "regularly evaluates its businesses for strategic fit," a Nestlé spokesperson told Food Dive when it announced last year it was looking to divest the unit. "We have now come to the conclusion that rather than making the significant investment needed to become a leader in U.S. confectionery, it is the right time for us to focus on other growth opportunities."
From trash to treasure
Few companies have been as aggressive in buying many unloved brands as B&G Foods.
During the past few years, the food conglomerate has purchased Pirates Booty, Snackwells and Victoria's sauces to complement its well-known lineup of staples like Ortega and Cream of Wheat — an acquisition frenzy that has doubled the size of the company. Once the purchased brand has been folded into the company, B&G identifies ways to freshen the product.
After purchasing Green Giant in 2015 from General Mills for $765 million, B&G added several innovative products — including veggie tots and riced veggies — that have turned the brand into one of B&G's most consistent money makers.
B&G Foods traces its roots to the Bloch and Guggenheimer families; immigrants who came to America and in 1889 started selling pickles in Manhattan. In 1996, New York investors formed B&G Foods to acquire Bloch & Guggenheimer, and the strategy to grow by purchasing other brands began.
“We’ve always been a highly acquisitive company,” Bruce Wacha, B&G's CFO, recently told Food Dive. “Our early roots in private equity ownership laid the foundation for how we manage as a public company. We have an enduring commitment to de-levering and then with that, a disciplined acquisition strategy.”
Food and beverage companies across the industry have each struggled recently with a few floundering brands in their portfolio. It could be that they've become so enamored with the new, fast-growing product they've acquired or come to know the original item too well that it actually hinders their ability to find new avenues for growth.
Regardless of who owns the brand on the market, food companies such as B&G, Hormel, Conagra and Cambpell Soup remain under more pressure than ever to keep their brands relevant, especially with changing consumer tastes and the impact of social media, Sophie Ann Terrisse, a senior adviser with brand management firm 26FIVE, told Food Dive.
“There are more changes than there ever were because of the consumer driving the change,” Terrisse said. "The pressure is on to permanently reinvent and there is nothing better to reinvent then by taking something that … already has value, has some proven success and bringing it back to life.”
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