The Death of Packaged Food

The Death of Packaged Food

The past few decades have witnessed a growing preference for healthier products, and it is reshaping the food and beverage industry. In a severe public health fight, consumers demand natural, organic, and healthy food products, and those healthy habits are eating into the packaged foods industry.

Packaged goods companies have always played in the middle of the supermarket. The trend toward wholesome eating is shifting shoppers to the perimeter of the store, where the fruits, the vegetables and the protein sit. Consumers want to eat healthy and are shopping fresh. America’s largest packaged foods companies are running up against their shelf life.

As the demand for natural foods has grown, it is hurting packaged-goods companies that do not have a presence in the outer aisles of the store. In response, the bigger packaged-goods companies are moving their products as much as possible to the perimeter of the store by buying out smaller, natural food companies. For example, a few years ago, in a world where consumers were shunning canned soup, Campbell’s acquired Boathouse, Boathouse sells bottled juices but they actually sit in the perimeter of the store. Therefore, Campbell’s can have a presence in this hot area with consumers. The company’s management is quickly making moves to adapt to a difficult environment, and reshaping itself as consumers change their eating patterns.

While Campbell’s outlook was disappointing, surprisingly enough, Campbell’s revenue and profit both surpassed analysts’ expectations for the quarter, leading to the stock to rise on Friday, May 22, 2015. However, some of the company’s products are falling worldwide, and Campbell’s is challenged to cook up new products that will make up for the falling interest in canned soups.

The companies have faced many problems recently, including a strong dollar that has made their products more expensive, but those are temporary challenges they have overcome before. Their real problem is much tougher and permanent: eating habits are changing, and they are having a hard time keeping up. An evolution will occur both from a retail perspective in the supermarket, and also with these big legacy companies. These companies are aware that this is not a fad and rather a real shift in consumer habits, and they are going to remake their portfolios and their products.

http://www.usatoday.com/videos/money/business/2015/05/21/27703587/