Which Do You Pick-Up: Iconic Food Brands, Store Brands, Or Health-Conscious Brands?

Posted August 14, 2017 by
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The dynasty days of iconic food brands owned by large companies like Kellogg’s and Mondelēz International running the grocery stores may be coming to an end. Over the past several years private label products have been unidentifiably leaving their mark – through known store brands such as Target’s “Market Pantry” Brand and Walmart’s “Great Value” Brand – on the food industry, offering consumers more affordable options compared to the larger, incumbent brands. These smaller, nimble brands have been capitalizing on consumer trends quicker than their larger counterparts and beating them into rising, niche markets like organic and gluten free.

At one point in food branding history, consumers purchased brands they trusted, brands they formed a bond with, and brands they had seen in advertisements. They assumed that store brands – “knock-offs” – provided cheaper and lower quality products. However, the 2008 recession drove many consumers to pinch pennies, enticing them to give store brands a shot and slowly began to change their BSYVantagePoint_PrivateLableFoods_InteriorImage_Chobani_CMPperception as they experimented with these lower-cost alternatives. Now, more so than an individual Brand, consumers rely on their loyalty to a particular grocery store chain to move out of the mainstream and purchase store branded products.

In addition to the pressure to compete against store brands on price, big brands are also receiving pressure from a recent shift in consumer prefereBSYVantagePoint_PrivateLabelFood_InteriorImage_KindBars_CMPnce to live a healthy lifestyle. Brands such as KIND Bars and Chobani were introduced to the market in 2004 and 2005 as healthy breakfast or snack alternatives to the big branded bars and yogurts. These larger brands cannot adapt quick enough to deliver a profitable product, and by the time they do, the smaller brands have are ahead of them in the marketplace and have already created a strong following of consumers. These private label products were able to more quickly produce healthy, organic options, meaning consumers were once again faced with similar products at a cheaper price … leaving out the big brands that were a household staple only a few years ago.

Despite these new pressures and a 3% drop in market share since 2012, big brands continue to fill American’s grocery carts with the 25 largest food and beverage companies bringing in over $311 Billion in sales and 63% of all US food and beverage sales in 2016. Big companies such as Kraft Heinz and General Mills have begun changing formulas to revamp classic brands to better align with new consumer trends. Kraft Macaroni & Cheese  removed artificial preservatives and synthetic colors last year replacing them with natural sources. In a similar fashion, General Mills cereals  have been free of artificial flavors and colors since the end of 2016.

As these large companies navigate through these changing trends, they have to remain focused and not lose sight of the Brand’s strategy and what made it successful with consumers for so long. For example, while Kraft Heinz was working on removing the synthetic orange-yellow coloring they needed to make sure their macaroni and cheese looked the same, they ultimately decided that consumers had come to expect that when they pick up that iconic blue box that the product on the inside would be a vibrant cheesy color, and that this isBSYVantagePoint_PrivateLableFood_InterirorImage_Kraft_CMP a component of their Brand they could not forgo.

Same goes for when these larger companies acquire one of the small, niche brands to add to their Brand portfolio in order to capture those health-conscious consumers. Several years ago, General Mills acquired Annie’s – a Brand that offers organic, vegan, and gluten free products in a several different categories, including their original macaroni & cheese – to expand their presence in the organic and natural foods industry. With the purchase General Mills was able maintain the essence of the Brand, what grew Annie’s to a $204 Million Company, and not lose the customers that associate General Mills with unhealthy food options.

Companies adapting to the evolving desires of consumers and changing marketplaces is nothing new. The challenge lies in building brands around their products that are clear, consistent, and compelling so that as the market changes the Brand is able to easily adapt with it.

Tags:

B2B | B2C | Branding | Food

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