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Two years ago, with sales declining as more consumers abandoned the center of the grocery store in favor of fresh departments, the Campbell Soup Company made a big decision: It was going to phase out artificial flavors and colors in all its products.
For the 150-year-old manufacturer, that meant digging into every soup, sauce, cookie and salsa that fell under its portfolio of brands — which include Pepperidge Farm, Prego and V8 — and replacing what had been key ingredients up to that point. It was, needless to say, not going to be an easy task.
“To make these transformations without sacrificing taste, quality and affordability, which are paramount, is a tremendous challenge,” Jeff George, Campbell’s head of research and development, told Food Dive. “It’s not good enough to move forward on one and take two steps back on another.”
At the same time the company was reformulating its many products to incorporate what it called a “Real Food Philosophy,” Campbell also released new products that incorporated health and freshness cues and different types of formulations. This included a Prego Farmers’ Market line of pasta sauces made with herbs and tomatoes “picked at their peak,” according to company marketing materials, and a new Well Yes! soup brand that included flavors like sweet potato corn chowder.
Greg Shewchuk, chief commercial and marketing officer at Campbell, told Food Dive the company’s recent moves are “a thoughtful disruption of our core categories.”
Campbell’s renovation is a familiar narrative to many CPG manufacturers trying to bring consumers back to center store. Looking to meet the needs of existing customers while also attracting new ones, they’re trying to strike the right balance between reformulating existing products and developing new ones.
So how, exactly, are manufacturers using reformulation and new product launches as customer retention and acquisition tools? And are companies favoring one approach over the other to generate sales and consumer interest?
To relaunch or reformulate?
Both approaches carry inherent risks and rewards. According to market research firm IRI, more than 10,000 new products make it to retail shelves every year, and 90% fail to achieve the goals they set out to achieve. Less than ten reach $100 million or more in sales each year, according to the firm.
Tracking product reformulations is trickier, since companies often do their tinkering behind the scenes. For the same reason, it’s difficult to track their success rate. However, according to the Consumer Good Forum, a global network of more than 400 retailers and manufacturers, including Ahold Delhaize, General Mills, Target and Campbell, 66% of members reported they reformulated more than 180,000 products last year.
Reducing sodium and sugar were two of the most common reformulation steps reported by CGF members, along with adding vitamins and incorporating whole grains. Companies said they had also taken steps to phase out artificial ingredients.
Barb Stuckey, president of Mattson, a firm that works on new product development, branding and reformulation, said there are two types of reformulations that companies go through: those that change a product’s labeling and ingredients list, and those that don’t.
“With this kind of freedom, you can usually achieve your objective.”
President of Mattson
The first option, she said, is usually undertaken to remove an unpopular ingredient; to improve the eating experience; to save money; or to improve the overall health profile of a product. This can be expensive and labor-intensive, but once companies commit, they have a lot of room to improve the product.
“With this kind of freedom, you can usually achieve your objective,” Stuckey told Food Dive.
The second option involves reformulating within a product’s existing ingredients list and labels. Stuckey said this is often motivated by a need to replace an ingredient that’s gone up in price or is not longer made. Companies may also follow this route to improve the eating experience or to improve overall costs, but she noted that without the “wiggle room” the first option provides, “it’s significantly more difficult to achieve results.”
Around the same time Campbell announced its plans to phase out artificial ingredients and preservatives, General Mills’ cereal division said it would remove artificial flavors and colors from all its products. Last year, the company announced it had successfully phased out artificial ingredients in 75% of its cereals. The company has also reduced sugar in many of its kid-focused cereals like Trix and Lucky Charms.
General Mills, like Campbell and other CPG companies that have removed artificial ingredients from their products or are in the process of doing so, wanted to court health-conscious shoppers without sacrificing its popularity amongst core customers. Dana McNabb, president of U.S. retail cereal for General Mills, told Food Dive that its recent moves have brought back some customers for whom sugar content and artificial ingredients were a barrier. Reports, however, show that the company’s reformulations have had a less-than-dramatic impact on sales.
The company also ran into a few roadblocks. Although it was successfully able to emulate the vibrant colors and flavors of Trix, Golden Grahams, Reese’s Puffs and other cereals using ingredients like turmeric and annatto (though consumers did complain Trix appeared too pale), Lucky Charms have been a real challenge. The problem: all the different marshmallows, which were difficult to recreate using natural ingredients. General Mills has said it hopes to have the line reformulated by the end of this year.
Tom Vierhile, a director at research firm GlobalData, said manufacturers will often leverage reformulations as a way to shore up their customer base or win back those who might have drifted away. But these decisions can’t be taken lightly, since reformulation can often have the opposite effect.
“People really hate when you take a product they grew up with and you mess with it,” Vierhile told Food Dive
“People really hate when you take a product they grew up with and you mess with it”
For General Mills, retaining the taste consumers expect from brands like Trix and Lucky Charms is paramount, and is the most important measurement in any reformulation project, according to McNabb.
At the same time, General Mills needs to be able to penetrate new consumer segments — something its core cereal lineup hasn’t been able to do. That’s why for the first time in 15 years, the cereal company came out with a new cereal brand last year: Tiny Toast.
“We heard from teens and young adults that there just wasn’t a cereal out there for them,” McNabb told Food Dive.
In addition to penetrating new consumer segments, Vierhile noted, new product launches can also penetrate new market opportunities. Snacking, which has seen significant growth as consumers turn to mini-meals and between-meal bites, is becoming more popular for innovations.
“You’ve got a whole new category opening up in snacking, and companies really want to fit new products in to meet that demand,” said Vierhile.
“We don’t believe the center of the store is dead. We believe that we have just not reinvented it yet.”
Chief commercial and marketing officer, Campbell
For Campbell, new product launches like Well Yes! and Prego Farmers Market offer opportunities to reach fresh-focused consumers and bring them to the company’s core grocery categories, according to Shewchuk. The company has struggled in this mission over the past several years, namely with its Campbell’s Fresh division, which has seen acquisitions like Bolthouse Farms and Garden Fresh Gourmet stumble. In the most recent quarter, Campbell’s Fresh sales fell by 6% while the company’s flagship soups and sauces division saw a 2% sales decline.
Nevertheless, noted Shewchuk, the company feels it has the right ideas the right focus with its “Real Food Philosophy,” using reformulation and new product releases to appeal to many fresh-focused consumers. The goal, he said, is no less ambitious than bringing these consumers back to the center of the store — and keeping them coming back.
“We don’t believe the center of the store is dead,” Shewchuk told Food Dive. “We believe that we have just not reinvented it yet.”