Food companies spent the majority of last year feeding consumers value messages in a slumping economy. This year, things seem to be looking up. But if the latest round of presentations at the Consumer Analyst Group of New York conference are any indication, America's focus on value isn’t going away anytime soon.
That's the consensus among General Mills, ConAgra Foods and Unilever, which are all present in Florida this week at the CAGNY conference, an annual gathering of industry analysts, investors and household, personal care and food companies. According to Denise Morrison, svp and president of the North American soup unit at the Campbell Soup Co.: “Keeping the value proposition with consumers is very important in this [post-recessionary] economy. There have been changes to the shopping behavior.”
Campbell on Wednesday announced changes to its condensed soups, including sodium reduction. The food giant is focused on tweaking its portfolio to keep in line with consumer demand for both “wellness and value,” said Morrison.
Though the economy seems to be improving, consumers are still dining out less, General Mills CEO Ken Powell said, when outlining the key consumer trends affecting the food industry this year. With products like Progresso soup, which has an average price tag of $1.07 per serving, and Cheerios, which costs 26 cents per serving, similarly, Powell said General Mills is well positioned to attract consumers who are still holding onto their wallets. “Value is here to stay. Period,” echoed ConAgra Foods CEO Gary Rodkin in a separate presentation.
In an interview with Brandweek, ConAgra Foods’ CMO Joan Chow said post-recessionary consumers are "still concerned about value, so the habits [they] formed during the last economic recession will stay with [them]." Chow said the downturn has led ConAgra to put more ad dollars behind brands like Banquet. It's the company’s “most important value brand from a retailer’s point of view,” and is its biggest consumer brand, with more than $1 billion in annual retail sales, according to ConAgra's Rodkin. To build on that strategy, ConAgra is currently testing Banquet fruit pies, as it looks to extend the brand into “a new eating occasion,” namely “dessert,” Rodkin said.
But as marketers continue to focus on value to lure consumers away from private label, or retail store brands, some analysts at CAGNY questioned if food makers will have a tough time getting consumers to trade up again.
General Mills’ Ian Friendly said one positive outcome of the recession will be product innovation. “We went back and looked at recessionary periods of the past and a lot of great brands and innovation were launched in those periods,” Friendly said in a meeting with reporters. The goal, he said, is to offer "good quality and innovation, so when you pick up that box of Cheerios, we make sure it’s worth every penny you paid for it."