This past month saw many large packaged goods food makers cut their forecasts as sales continue to decline. Brands impacted include Kellogg’s, Budweiser, Conagra, Kraft, Coca Cola, Folgers, and Campbell’s Soup.  On the restaurant side, McDonald’s has seen major declines over the last several quarters.

From my perspective, this sea change in consumer behavior is driven by 5 factors:

1. Exposure to better, fresher products both for cooking from scratch and takeout options (the Whole Foods effect) . This trend also extends to our preference for better coffee (fueled by Starbucks originally, but now literally hundreds of excellent options). And then let’s not forget fresh breads, salads e.g. Sweetgreen or Chopt, and cold-pressed juices. Bottom line: once you are exposed to better tasting, fresher products (of any kind), it is hard to go back to processed foods.

2. Exposure to more diverse ethnic foods has introduced us to fresher, more unusual, ingredients including more fresh vegetables. Ethnic foods are also familiarizing our palates with more robust flavors – which then make the typical CPG foods taste bland e.g. ketchup vs. sriracha.

3. Demographics – boomers are laser-focused on remaining active and in good shape and that means eating healthy and avoiding processed foods which are often extremely high in sodium or sugar – not to mention artificial ingredients.

4. A shift away from “diet” foods  – people currently prefer “functional” foods – i.e. fewer ingredients but added protein for satiation rather than simply lower in calories.  This strikes me as being a passing fad but nevertheless affecting many food CPG brands.

5. Overall, greater awareness of what constitutes fresh, healthy eating – so much information is just a click away. Additionally, brands like Chipotle and Whole Foods are raising awareness of ingredient integrity and where our food comes from – and those messages are spreading quickly through social media.  This does not mean that everyone is always eating healthy.  People certainly give in to indulgences and treats but they are more likely to do so with an informed mindset.

UPDATE: My friend, Peter Heshof – founder of BLOOM, the great trend company in the Netherlands, offered this comment on this trend:

Same shift here in Europe.

I would like to add another driver, which is connected to the others.

That is that people distrust big brands and have more sympathy for smaller, local brands.
Because these brands are driven by passion for the product and not passion for profits.

http://www.tobloom.nl/en/people/