Consumers' new eating habits are hurting Big Food's profits

old advertisement for Chef Boyardee
CC BY 2.0 Okkie Pokie - An old advertisement for Chef Boyardee, ca. 1972

This generation of shoppers has new interests and priorities when it comes to choosing what to buy at the grocery store, and Big Food is the antithesis of many of them.

Big food brands are getting nervous. Sales of processed, packaged foods have dropped considerably in recent years, to the point where companies are frantically reorganizing and looking for ways to cut costs.

Campbell Soup lowered its full-year results forecast after only one quarter and is looking for ways to save $200 million a year. Kraft’s profits dropped 62 percent in 2014 – “a difficult and disappointing year,” according to its CEO John Cahill. Kellogg dropped its prediction for long-term annual revenue growth from 3 to 4 percent to 1 to 3 percent; cereal sales were down nearly 6 percent last year. ConAgra also slashed sales projections and fired its CEO.

So what’s going on?

For many of us TreeHugger readers, who are proponents of fresh, homemade, and local food, this is good news – an indication that consumer habits are changing to the point where Big Food is feeling the squeeze.

First, a growing number of shoppers wants to know where their food comes from and how it’s been moved from farm to plate. Processed foods from a supermarket shelf don’t provide the same feel-good story that shopping at a farmers’ market, or even an alternative grocery store, does. Campbell Soup CEO Denise Morrison realizes that this is a serious problem for the industry:

“There has been mounting distrust of so-called Big Food, the large food companies and legacy brands on which millions of consumers have relied so long."

Second, eating habits have changed significantly. Many people want convenience foods such as granola bars and Greek yogurt to eat on the go while commuting to work. Grain-based cereal is less popular than ever. Back in the day when counting calories was all the rage, Special K was a big seller, but now people want fewer carbs and more protein. As Sarah Halzack writes in the Washington Post, “That’s been tough for Special K, which, despite its promise of ’11 essential vitamins and minerals,’ counts rice, wheat, and sugar as its key ingredients.”

Third, younger shoppers don’t care as much about specific brand names as prior generations did. Most generic store brands are cheaper and considered to be just as good as the name-brand versions.

Finally, notions of convenience have changed. Why buy a Chef Boyardee canned pasta dinner when it takes hardly more time to boil pasta and toss it with sauce? It’s not that much more expensive per serving and the result is far more delicious. Many people are more interested in cooking now, whether for health reasons, novelty, or wanting to de-stress, which makes Big Food’s claims of culinary assistance sound archaic:

“Big Food successfully sold a vision of cooking as a necessary inconvenience, to be dispatched with as painlessly as possible – open a soup can for dinner, unleash a squirt of artificial cream onto a boxed cake for dessert – that’s starting to lose its charm,” says Fortune’s Phil Wahba.

Hopefully this means that the sad days of “American cuisine” – little more than “an oxymoron, the punch line to a sad joke,” according to Mother Jones – are drawing to a close.

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