For decades millions of Americans kept their pantries stocked with plenty of established names like Campbell’s soup and Hamburger Helper. Consumers trusted these brands to provide their families with reliably tasty meals in a short amount of time. But Big Food’s dominance could be coming to a close as America’s eating habits change. After all, many modern consumers are eliminating processed foods from their diets while others don’t seem to care about buying name brand items.
Just visit your local grocery store’s macaroni and cheese section to see this concept in action. Along with organic varieties that use upscale ingredients, customers can also find inexpensive store brands to satisfy their needs. Somewhere sandwiched between all these products will be Kraft’s famed blue-and-yellow boxes, once the industry standard but now simply another name among many. Although the company recently removed all artificial dyes from its mac and cheese, Kraft might have acted too late to convince customers to come back. As a result, the company has lost 2 percent market share in mac and cheese since 2012.
That might not seem like much, but even a small shift in an industry as big as packaged foods can cause businesses to lose billions. In 2016 the top 25 food and beverage producers accounted for 63 percent of the industry’s $495 billion in sales, a three percent drop from 2012. And while large companies have seen sales grow by 2 percent over the last five years, their smaller competitors have grown sales by 6 percent. Experts say that most big brands acted like Kraft and waited too long to eliminate artificial ingredients from their foods. Meanwhile, many cost-conscious customers got used to buying generic brands during the recession and haven’t stopped since. What’s more, store brands can stay cheap since they don’t need to rely on massive marketing campaigns like their big name rivals. Faced with this competition, the large food companies will try to keep up by making their products both cheaper and tastier.
Questions:
- Why have many customers turned away from once-dominant food brands like Hamburger Helper and Kraft mac and cheese?
- Do you think major food companies can succeed in making their products both cheaper and tastier?
Source: Annie Gasparro and Saabira Chaudhuri, “So Long, Hamburger Helper: America’s Venerable Food Brands Are Struggling,” The Wall Street Journal, July 6, 2017. Photo by Lyzadanger and Diliff.
