Big Food Companies Evolve As American Taste buds Change

There was a time when having a big name in food was everything: Kraft, Campbell’s, McDonald’s.

Now, it seems the American consumer has moved onto greener pastures … literally.

In the past 10 years, taste buds in the U.S. have shifted and people have begun placing a higher value on clean, natural eating.

Words like preservatives, high-fructose corn syrup, genetically modified and growth hormones now cause many American shoppers to raise and eyebrow, and instead reach for foods that proclaim words like organic, natural and pesticide free.

In fact, since 2009 the top 25 U.S. food and beverage companies have lost an equivalent of $18 billion in the market, according to an analysis by Moscow. It’s a shift that has many big food companies scrambling to make changes to their products.

For example, Wendy’s Co. spent the last three years on a search involving more than 30 growers in order to procure enough blackberries for one new salad to add its menu next summer.

McDonald’s Corp. has begun advertising that its Egg McMuffins are made with freshly cracked eggs and it has started testing breakfast bowls and salads made with kale.

The change isn’t limited to fast food, though. General Mills bought organic pasta, meals and snacks company Annie’s Homegrown last year, and Campbell’s launched an organic soup line in February as well as acquired an organic baby food company last year.

Many of these changes in the market come from a change the target demographic. By 2020, millenials over the age of 25 are expected to make up about 19% of the U.S. population, a significant rise from 2010 when they made up about 5% of this population, according to the U.S. Census Bureau.

Studies have shown the millennial generation consistently prefers locally grown, healthy foods. At the same time, baby boomers have become more discriminating about their diet, opting for foods that increase brain, health and physical activity.

Both trends have now come together changing the demands and expectations of the typical American eater.

Consumers in general ranked the addition of more produce as the most important dietary change they were making last year, according to a survey of more than 1,000 people by consulting firm AlixPartners LLP. This change was ranked more important than consuming less sugar, salt or fat.

As big food companies battle for their place in the market once again, they are facing two great obstacles: consumer perception and supply chain issues.

For many consumers, it doesn’t matter if General Mills converts most of its products to organic; they are skeptical of larger food providers. Campbell’s CEO Denise Morrison said this is a huge hurdle for companies like hers in her presentation earlier this year at the Consumer Analyst Group of New York meeting in New York City.

“There is a mounting distrust of so-called ‘big food,’ the large food companies and legacy brands on which millions of consumers have relied on for so long,” she said.

But even if perceptions changed, big packaged food companies would still have to overcome a larger problem: access to ingredients. Just as Wendy’s Co. discovered in its search for blackberries to add one salad to its menu, other big food companies have found there just may not be enough organic ingredients to go around.

When Campbell’s set out to procure enough ingredients for its line of organic soups, the company had to secure long-term contracts so as not to jeopardize the product in the future. It’s a big commitment for some farmers, as it means dedicating their entire crop only to one company.

As American priorities and taste buds evolve, big companies will continue to expand their product to accommodate a new demographic of eaters.

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