Fast Moving Food companies’ New Recipes to Find Flavour with Consumers and Favour with Investors

During the past six decades, convenience has been the overarching customer need that the processed/frozen foods industry focused on. It would not be an exaggeration to say that many from Gens X and Y (and some GenZers too) grew up on “convenience foods” such as Macaroni and Cheese and various brands of TV dinners. This extended period of high growth was fuelled by several factors: microwave ovens becoming more mainstream starting the 1960s, constant innovations in food-grade packaging, the creation of artificial flavourings and textures and of course, strong brands.

Consumer needs and expectations are changing

Over the past few years, food companies are increasingly feeling the effects of changing customer expectations. There is a clear and growing preference towards healthier, freshly-made food that is tagged as “natural”, “fresh”, “organic”, “no preservatives”, “sugar-free”, “low sodium” etc. There is also greater environmental consciousness leading to minimization of intensive single-use plastic and styrofoam packaging.

Various start-ups use digital technologies are working with specialist delivery service providers (e.g. Uber Eats) to offer convenience of a different kind- consumers can order a wide variety of food online and get it delivered when and where they want. This allows consumers to satisfy their desire for fresh and healthy food without compromising on the convenience aspect.

Grocery chains have introduced “kits” (e.g. Kroger’s “Home Chef” and Walmart’s “Blue Apron”) that contain all necessary ingredients for specific recipes, freeing consumers from being limited by the ingredients they have at home. This makes it easier for customers to try new recipes and gives them the satisfaction of cooking a meal at home while also saving time relative to doing it all from scratch.

Another shift is the push by independent restaurants and fast food chains to beef up their delivery capabilities, allowing them to deliver fresh, restaurant-cooked food to the homes/offices of consumers (based on online orders placed with the restaurant). This provides customers with a wider choice of cuisine combined with customization (avoiding allergens or dietary preferences) and convenience.

How the CPG food industry has generally responded thus far

As with other industries facing intense disruption, the CPG foods industry too has begun rapid consolidation. Well-known brands and even entire companies are changing hands. Hershey’s has acquired Krave beef jerky, while Pacific Foods organic group was purchased by Campbell Soup and Conagra did the same with Pinnacle Foods. Warren Buffett’s Berkshire Hathaway teamed up with Brazilian-American investment firm 3G Capital to acquire H J Heinz in 2013; two years later, they merged the company with Kraft. Conagra acquired Frontera Foods in 2016 to expand its product portfolio.

Aggressive cost-cutting is another strategy that CPG food companies have adopted. For example, after Heinz and Kraft were merged, marketing costs have been significantly trimmed; budgets are approved only after rigorous analysis and justification of proposed spends and their expected ROI.

What can food companies do?

M&A and cost-cutting offer a temporary reprieve at best. What packaged food companies really need to focus on are on three strategic imperatives:

  • Rationalize existing portfolios;
  • Develop new products; and
  • Ensure that their merchandise gets enough visibility both in grocery stores and on online retail sites.

The first priority is to ensure that product lines that do not contribute much to top or bottom-lines are discontinued. Also, the number of SKUs needs to be cut down, as manufacturing multiple pack sizes and variants adds to costs- possibly without commensurate returns.

The second is to develop new offerings that address the customer’s need for healthy food made from natural products and with fewer chemicals and preservatives. Conagra, for example, has incorporated healthy ingredients such as kale to breathe new life into its frozen food brands such as Healthy Choice and Marie Callender’s. But the real success of this strategy will be visible when more healthy and tasty options are created for breakfasts, lunches dinners and in-between snacking.

The third imperative is critical too. On the one hand, manufactures must tie up with e-commerce retailers to ensure that their SKUs are available and visible prominently. They must do the same with brick-and-mortar grocery chains and convenience stores. The threat from private label in-store brands is real- and growing. Kirkland’s Signature is Costco’s house brand, and is less than 30 years old. And yet, it is reported that in 2018, consumers spent 50 percent more on Kirkland products than on equivalent Kraft Heinz products (whose brands are a century old)[1].

It is noteworthy that between 2013 and 2018, US$17 Billion worth of CPG food product sales moved from large to small players[2]. This shows that more agile and innovative businesses are taking market share away from traditional leaders whose brands ruled store shelves for decades.

Investing in an extended innovation network is key

In-house R&D efforts have resource limitations (financial, time as well as mindsets). That is why companies such as Kraft Heinz are incubating start-ups. This is similar to how large technology companies incubate start-ups to broad-base and accelerate innovations that are then potentially absorbed into their own offerings (although this is not mandatory).

Under Kraft Heinz’s three-year old Springboard program, the company selects a group of start-ups and provides them with funding, infrastructure access and mentorship. The selected start-ups typically work in one of the four areas that Kraft Heinz believes will shape the future of the food: Natural & Organic, Specialty & Craft, Health & Performance and Experiential brands[3]. Two cohorts of start-ups are already being incubated, and the company has opened up the applications process for the next batch.

Food companies also need to listen better to their consumers, who now communicate their feelings (both positive and negative) freely over social media. In fact, the launch of Kraft Heinz’s mayochup (mayonnaise and ketchup mixed) in the UK is believed to have been the result of “social listening”, which allowed them to figure out using a Twitter poll that there was interest in the product that was available only in the Middle East. The success of Mayochup has prompted the company to launch Mayomust (mayonnaise and mustard) and Mayocue (mayonnaise and barbecue sauce) as well.

Driving disruptive innovation and managing incubator/accelerator programs need new types of expertise and experience. This is a great opportunity for companies in the CPG foods industry to attract talent from other industries where managed innovation programs have existed for many years. This is also a good time to bring in new thinking to lead foods businesses. After all, just as fresh ingredients make for better food, fresh thinking is vital to better business growth.




25 thoughts on “Fast Moving Food companies’ New Recipes to Find Flavour with Consumers and Favour with Investors”

  • oqxizn,Are you searching for top class Escort service in Noida and want to enjoy with them, hire sexy girls from top Greater Noida escort service and enjoy full night.

  • I not to mention my guys came following the best advice from the blog and then all of the sudden came up with a terrible feeling I had not expressed respect to the website owner for them. Those young men ended up totally very interested to read them and have in effect seriously been enjoying these things. Many thanks for simply being very helpful and also for going for variety of useful issues most people are really eager to be informed on. My honest regret for not expressing appreciation to you earlier.

  • Thanks a lot for providing individuals with such a superb possiblity to read articles and blog posts from this web site. It’s usually very great plus full of fun for me personally and my office colleagues to visit your site more than thrice weekly to find out the fresh things you will have. And definitely, I am also actually fascinated concerning the superb methods you serve. Certain 1 ideas in this posting are in truth the most beneficial we’ve ever had.

  • Needed to compose you a little bit of note so as to say thanks a lot once again on the remarkable strategies you have featured on this site. This has been really incredibly open-handed with you to present unhampered all that many individuals would have offered for sale for an e-book to get some dough on their own, most notably now that you could possibly have done it if you decided. The creative ideas likewise served to be the fantastic way to be certain that other people have similar eagerness similar to my very own to figure out more and more on the topic of this matter. Certainly there are a lot more fun sessions up front for many who scan through your website.

  • I needed to put you this very little remark just to thank you over again for all the pleasing solutions you’ve documented on this site. It is so shockingly open-handed of people like you to deliver publicly precisely what some people could have offered for sale for an e-book to help with making some bucks for their own end, most importantly considering the fact that you might well have tried it in the event you wanted. The good ideas additionally acted to provide a fantastic way to comprehend most people have similar desire like my very own to know the truth a whole lot more concerning this problem. I think there are a lot more pleasurable periods in the future for people who discover your blog.

  • I happen to be writing to make you be aware of what a wonderful experience my wife’s child gained checking your webblog. She came to understand several issues, including how it is like to possess a very effective helping nature to make many people easily thoroughly grasp a number of specialized subject areas. You actually surpassed readers’ desires. Thank you for offering these productive, healthy, explanatory and as well as cool tips about that topic to Jane.

  • Try limiting baths to 3 to 4 times a week. If you would like to bathe your child every day, cut back on bath time (no more than 10 minutes), and avoid harsh soaps and bubbles, which can be drying when they remain on the skin. Use lukewarm water and a mild, unscented cleanser only in the places that need washing. Your child’s pediatrician or dermatologist can recommend a good brand.

  • Thank you so much for giving everyone a very special opportunity to read in detail from this website. It’s always so cool and as well , jam-packed with a good time for me and my office acquaintances to search your site minimum 3 times weekly to see the latest tips you have got. And lastly, I’m just always satisfied considering the surprising hints served by you. Some 1 facts in this article are without a doubt the best I have ever had.

  • Across town at UCLA, 853 students and seven faculty members might have been exposed to one measles patient, she said. Health officials verified immunization for hundreds, leaving 45 students and one faculty member under quarantine Friday, Ferrer said.

  • Federal health officials say the number of confirmed measles patients in the United States — 626 in 22 states — is on pace to surpass 2014’s record 667 cases. One in 1,000 children who contract the disease will die, according to the CDC.

  • I must express some thanks to the writer for rescuing me from this type of condition. Because of searching throughout the internet and seeing advice that were not powerful, I thought my entire life was gone. Living without the strategies to the problems you’ve sorted out by way of the guide is a crucial case, as well as the ones which could have negatively affected my entire career if I had not encountered your web page. Your actual knowledge and kindness in controlling the whole lot was priceless. I don’t know what I would’ve done if I had not come upon such a subject like this. It’s possible to at this time relish my future. Thank you very much for this skilled and sensible guide. I will not hesitate to suggest the blog to any individual who would need care on this situation.

  • Thank you a lot for giving everyone such a splendid possiblity to read critical reviews from this website. It is often so nice and packed with a good time for me personally and my office co-workers to visit your web site no less than thrice weekly to learn the latest things you will have. Not to mention, I’m also at all times amazed considering the stunning opinions you give. Certain 2 tips in this posting are basically the most efficient I have had.

  • Thanks so much for giving everyone an extremely wonderful opportunity to check tips from this blog. It’s usually very nice and also stuffed with fun for me personally and my office fellow workers to search your blog no less than three times weekly to study the latest stuff you have. And of course, I am actually impressed with the good creative ideas served by you. Certain 4 areas in this posting are completely the simplest we have ever had.

  • A lot of thanks for all your valuable hard work on this site. My aunt takes pleasure in doing investigation and it’s really obvious why. Many of us notice all about the compelling manner you offer worthwhile tactics via the web site and as well increase contribution from people on this article while our own daughter is learning a lot of things. Take pleasure in the rest of the new year. You’re carrying out a useful job.

  • Thank you so much for giving everyone an exceptionally nice chance to read articles and blog posts from this blog. It can be very enjoyable plus full of fun for me and my office co-workers to visit your blog at the least 3 times weekly to see the new secrets you have got. Not to mention, I am also usually contented concerning the special pointers you serve. Certain two areas on this page are definitely the most beneficial we’ve had.

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>