Big Foods’ high stakes race to reformulate (19459000)
Big Food reformulation – summary
- Reformulation is the primary catalyst for compliance, which enables cross-market expansion.
- Recipe innovation is driven by consumer demand for healthier ingredients and new flavours and textures.
- The supply chain is volatile, and this forces changes in the recipes to control costs.
- Companies that can quickly adapt to market changes gain more share of the market.
- Consistency, texture, and taste are all execution risks that require rigorous testing.
Big Food has entered full-scale reformulation, with changes that go beyond the individual product line.
What was once a series of incremental changes is now an industry-wide reset. This includes sourcing strategies and technologies for processing, as well as brand positioning on global markets.
What’s the story behind this switch?
What does this mean for food and beverages in the future?
Big Food reformulates
Renee Leber is the food science and technical service manager for the Institute of Food Technologists. She says that “regulatory changes” are the main driver of the reformulation process. Manufacturers are being forced to reconsider everything, from the reduction of sugar, sodium and fat to ingredient substitutes and additions.
Global players such as Nestle, PepsiCo and Unilever have all been reformulating their products to meet tighter nutrition standards and restrictions in key markets.
A major change in consumer preferences is also a factor. Consumers are looking for new and exciting ingredients and putting more emphasis on nutrition and health. They’re also showing an increasing appetite for novelty.
This can be seen with launches like Coca-Cola’s Zero Sugar Reformulations and Nestle’s KitKats that have reduced sugar, as well as PepsiCo’s Doritos with a flavour-forward approach.
In addition, sustainability considerations play an increasing role. In order to minimize environmental impact, reformulations are increasingly being used. This can be done by using lower carbon ingredients, improving the sourcing of products, or by supporting ESG commitments. Unilever, for example, has adapted recipes in its Knorr line to include more sustainably-sourced plant proteins and vegetables. Danone, on the other hand, uses clean-label ranges to improve transparency and traceability.
Reformulation is influenced by the supply chain, from changes in availability of ingredients to cost fluctuations. Companies are responding by modifying recipes in order to reduce risk while maintaining supply. For example, Mars has adjusted formulations for some of its chocolate brands due to fluctuations in cocoa prices, and Kellogg’s is reformulating their cereals so as to maintain shelf life and manage costs and availability.
Winners and losers of reformulation
Reformulation has become more than a simple technical process.
It is a capability which influences the time taken to reach market, performance of a portfolio and its long-term relevancy.
Leber, IFT, says that the current reformulation wave is changing market shares by favoring those companies who can adapt and move more quickly. While many factors affect competitiveness, firms that are able to respond to changing consumer preferences and regulations quickly will be better placed to get products on the market faster.
Companies that are unable to adapt risk being left behind as change speeds up.
It’s also not only about speed, but the ability to identify quickly where adjustments are required. Leber says that this allows for confident portfolio restructuring.
The role of retailers in selecting winners and losers is also growing. Retailer requirements, from stricter nutrition standards on their own labels to sustainability goals and the potential for delisting products, are increasingly influencing how and when new formulations are made, especially in Europe where retailers have a strong influence.
Reformulation is a way for companies to gain a competitive edge by responding quickly to changing consumer demands and regulatory requirements. (Image: Getty/Portishead1)
Competitive edge
Reformulation is a way for companies to gain a competitive edge by responding quickly to changing consumer demands and regulatory requirements.
Brands need to adapt quickly in order to satisfy new consumer demands, without losing the qualities that consumers trust and know.
Some companies have responded by introducing new products, or expanding their portfolios to include additional lines. Most recently, brands and products designed specifically for GLP-1-positive patients were developed.
Leber says that “new brands allow companies to show their commitment to evolving behaviors without disrupting the core product.” In other situations, especially when regulations change, the focus is on reformulating current products.
Moreover, advancements in the field of food technology and science are helping unlock these strategies. The improvements in sensory science, ingredient functionality and formulation tools enable manufacturers to test quicker, predict results more accurately, and accelerate the time to market.
These strategies enable companies to respond more rapidly to changes in consumer expectations, regulations and regulatory requirements, and to evolving health and ingredient standards.
Reformulation challenges
Although reformulation may be important to manufacturers from a strategic standpoint, the success of their products ultimately depends on how they are executed.
Leber says that maintaining consistency in the product is one of the greatest challenges faced by manufacturers when reformulating. Consumers expect the exact same product every time, so companies need to ensure the consistency of the new product.
This isn’t easy. It is possible to have an impact on the flavour, texture, shelf-life, and appearance of a product by making small adjustments in ingredients or production methods.
The Hershey Company exposed this risk very recently and publicly, when changes in the chocolate used in some products caused backlash due to perceived loss of flavour and quality.
The company announced that it would return to using real chocolate.
Communication and labelling add another level of complexity. Consumer perception can be influenced by decisions made about front-of pack claims, clean label positioning, and how to communicate changes in formulation.
To ensure that reformulated product continue to meet or exceed consumer expectations, manufacturers need to carefully balance nutritional improvements or cost reductions with rigorous testing. Leber says that even minor changes can cause dissatisfaction or loss of confidence. Look at Cadbury Fruitier & Nuttier – a HFSS compliant product that failed to impress consumers.
It was eventually discontinued due to low sales.
Reformulation: the future is bright
Food and beverage producers are now able to take advantage of reformulation as a source of ongoing opportunity.
Companies that are able to adapt quickly while maintaining quality and trust in their brand, as regulations and consumer expectations change and the supply chain remains under pressure will be able to open new markets and attract new customers.
Manufacturers have the chance to embed reformulation in their daily decision-making. They can use it to accelerate innovation, enhance portfolios, and meet increasingly fragmented retail, consumer, and regional demands.