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Tuesday, 10 November 2015

A Seismic Shift in How People Eat

IT’S easy to make fun of people in big cities for their obsession with gluten, or chia seeds, or cleanses.

But urbanites are not the only ones turning away from the products created by big food companies. Eating habits are changing across the country and food companies are struggling to keep up.

General Mills will drop all artificial colors and flavors from its cereals. Perdue, Tyson and Foster Farm have begun to limit the use of antibiotics in their chicken. Kraft declared it was dropping artificial dyes from its macaroni and cheese. Hershey’s will begin to move away from ingredients such as the emulsifier polyglycerol polyricinoleate to “simple and easy-to-understand ingredients” like “fresh milk from local farms, roasted California almonds, cocoa beans and sugar.”

Those announcements reflect a new reality: Consumers are walking away from America’s most iconic food brands. Big food manufacturers are reacting by cleaning up their ingredient labels, acquiring healthier brands and coming out with a prodigious array of new products. Last year, General Mills purchased the organic pasta maker Annie’s Homegrown for $820 million — a price that was over four times the company’s revenues, likening it to valuations more often seen in Silicon Valley. The company also introduced more than 200 new products, ranging from Cheerios Protein to Betty Crocker gluten-free cookie mix, to capitalize on the latest consumer fads.

Food companies are moving in the right direction, but it won’t be enough to save them. If they are to survive changes in eating habits, they need a fundamental shift in their approach.

The food movement over the past couple of decades has substantially altered consumer behavior and reshaped the competitive landscape. Chains like Sweetgreen, a salad purveyor, are grabbing market share from traditional fast food companies. Brands such as Amy’s Kitchen, with its organic products, and Kind bars are taking some of the space on shelves once consumed by Nestlé’s Lean Cuisine and Mars.

For the large established food companies, this is having disastrous consequences. Per capita soda sales are down 25 percent since 1998, mostly replaced by water. Orange juice, a drink once seen as an important part of a healthy breakfast, has seen per capita consumption drop 45 percent in the same period. It is now more correctly considered a serious carrier of free sugar, stripped of its natural fibers. Sales of packaged cereals, also heavily sugar-laden, are down over 25 percent since 2000, with yogurt and granola taking their place. Frozen dinner sales are down nearly 12 percent from 2007 to 2013. Sales per outlet at McDonald’s have been on a downward spiral for nearly three years, with no end in sight.

To survive, the food industry will need more than its current bag of tricks. There is a consumer shift at play that calls into question the reason packaged foods exist. There was a time when consumers used to walk through every aisle of the grocery store, but today much of their time is being spent in the perimeter of the store with its vast collection of fresh products — raw produce, meats, bakery items and fresh prepared foods. Sales of fresh prepared foods have grown nearly 30 percent since 2009, while sales of center-of-store packaged goods have started to fall. Sales of raw fruits and vegetables are also growing — among children and young adults, per capita consumption of vegetables is up 10 percent over the past five years.

The outlook for the center of the store is so glum that industry insiders have begun to refer to that space as the morgue. For consumers today, packaged goods conjure up the image of foods stripped of their nutrition and loaded with sugar. Also, decades of deceptive marketing, corporate-sponsored research and government lobbying have left large food companies with brands that are fast becoming liabilities. According to one recent survey, 42 percent of millennial consumers, ages 20 to 37, don’t trust large food companies, compared with 18 percent of non-millennial consumers who feel that way.

Food companies can’t merely tinker. Nor will acquisition-driven strategies prove sufficient, because most acquisitions are too small to shift fortunes quickly. Acquired brands such as Annie’s Homegrown, Happy Baby and Honest Tea account for 1 percent or less of their buyers’ revenues. Moreover, these brands, along with their missions and culture, tend to get quickly lost in the sales and marketing machine of big food companies. It is easy for them to get orphaned.

For legacy food companies to have any hope of survival, they will have to make bold changes in their core product offerings. Companies will have to drastically cut sugar; process less; go local and organic; use more fruits, vegetables and other whole foods; and develop fresh offerings. General Mills needs to do more than just drop the artificial ingredients from Trix. It needs to drop the sugar substantially, move to 100 percent whole grains, and increase ingredient diversity by expanding to other grains besides corn.

Instead of throwing good money after bad for its lagging frozen products, Nestlé, which is investing in a new $50 million frozen research and development facility, should introduce a range of healthy, fresh prepared meals for deli counters across the country.

McDonalds needs to do more than use antibiotic-free chicken. The back of the house for its 36,000 restaurants currently looks like a mini-factory serving fried frozen patties and french fries. It needs to look more like a kitchen serving freshly prepared meals with locally sourced vegetables and grains — and it still needs to taste great and be affordable.

These changes would require a complete overhaul of their supply chains, major organizational restructuring and billions of dollars of investment, but these corporations have the resources. It may be their last chance.

http://www.nytimes.com/

Graham

19 comments:

Plowing Through Life (Martha) said...

What a great post! This is all good news. I was beginning to think that eating habits would never change. But I'm happy to see that consumers are shifting the market. We have been consuming food-like items for far too long! My 18-year-old daughter is one of these individuals in the upcoming generation desiring better choices. When she moved into her university residence, I was concerned about how she'd handle her food shopping. But she surprised me! She's eating healthy and making great choices. All those years of trying to impress upon her the importance of this did in fact sink in :)

Galina L. said...

A healthy eating (a self-cooked food from fewer ingredients, no snacking and no drinking something more substantial than an unsweetened tea between meals) is so far from what is good for an economy, that I can't feel good about food companies. A human nature, on another hand, will always provide a push for a convenience.

Galina L. said...

@Plowing Through Life
I had a similarly pleasant experience with my son when he went to a college, his desire to eat healthy was reinforced by the university rule which required all first year students to eat at their cafeteria. The difference was very significant. He also had increased eczema and started to catch seasonal viruses. I am sure, our children will not feed their future kids convenient food-like items.

chris c said...

Fascinating! I hadn't realised that even in America customers ould have such an effect on corporations, there's hope (not in the sense of Warshaw) for us yet.

Tescos tried to buy into our town to build a Superstore. One of their Unique Selling Points was that they would be supplying local foods from local suppliers. Thousands of people pointed out that we could ALREADY buy local foods from local suppliers in our local shops. Tescos went away. Victory is sweet.

Anonymous said...

No to Tescos? Bring back the good old fashioned English shopping parade then...but wait! If you lot had your way the bakers would be boarded up as would the the sweetshop of course,the greengrocer would have a hard time surviving selling just leafy greens,avacadoes,peppers and swedes, the fish and chip shop would just be selling fish. That would leave just a butcher and fishmonger,not good news for those on ketogenic diets with all that protein in the windows.

Rue said...

I'm so glad they're starting to pay attention. I've been fighting this fight for over 6 years.

The Happy Whisk said...

And I still won't eat their foods. Because nothing beats what I make in my own kitchen. Besides that, trusting Kraft or McDonalds? No thank you.

chris c said...

Who let the eejit in? We have not one but two butchers and not one but two greengrocers, all doing a lot of business, and the only reason the fish shop closed was that the owner was in his seventies and wanted to retire, One of my neighbours lived to be 108. This is not a coincidence.

Anonymous said...

That's because you don't live in Lowcarbington Mr C, If you did you would have a shopping parade of one - a Saturatedfatmonger, there would be plenty of room in his shop's corner for the permitted veg, oh and I'm sure he could squeeze in some eggs as well.

Lowcarb team member said...

"chris c said...
Who let the eejit in?"

That be me Chris. As you can see the anon has offered up a highly accomplished comment today, which I have also authorised. So many underestimate how intelligent the low carb antis are.

Eddie

chris c said...

I thought that might be the case! Obviously a Tescos shareholder, as you know they back the carbs4life website

http://www.nhs.uk/change4life/Pages/change-for-life.aspx

and all the Usual Suspects. Buy cheap, sell expensive and put their competitors out of business. Coke is getting a good kicking of late, expect all such companies to finance a fight back against Real Food.

Anonymous said...

Hey Eddie, wouldn't touch Tescos with a barge pole either, have you seen their gluten free Christmas TV ad yet? Talk about jumping on bandwagons,yes everything you need for a gluten free Christmas mass TV ad... hope the 1% who it actually concerns are watching, looks like meat industry backed fibbers like Nina T. are finally getting through to the Tesco's marketing department. Chris C has a point though, how come my original comment slipped passed you and Graham? Were you busy out on that cherry farm again?

Lowcarb team member said...

Anonymous said...
Chris C has a point though, how come my original comment slipped passed you and Graham? Were you busy out on that cherry farm again?

Does this answer your query

The lowcarb team value your comments. Thank you for taking the time to contribute to our blog. Please note! negative comments and insults from anonymous idiots, with nothing to add to the debate will not be authorised. However, we welcome constructive criticism.

Kind regards
Graham

chris c said...

This is what happens when you snort Orlistat

Anonymous said...

As I suspected out on the cherry farm again, picking. That post about overcooking spuds and toast was a real stonker, no mention of doing the same to meat having even more dire consequences, and what an enlightened bunch of commenters you have,not one of them bought it up either.

Lowcarb team member said...

Thank you anon for your most informative comment, it's people like you who are changing the world. Tell me why do negative people like you always skulk in the shadows in fear?

Eddie

Anonymous said...

So far I've been called an eejit, a shadow skulker, had my intelligence questioned, an Orlistat sniffer and worst of all a Tesco shareholder! That's the thing about anonymity Eddie, none of the aforementioned matters one hoot, you might just as well have a punch up with a fog bank.

Lowcarb team member said...

Anon

You come over here acting like a dork, then complain when you get treated like a dork. If you have a truly sound argument to make, make it. Nothing I like more than a sound and robust debate. Over to you.

Eddie

chris c said...

Nothing worse than a battle of wits with an unarmed opponent . . .