On today’s Bullseye – it’s about time. As food brands are being squeezed with higher labor, raw ingredients, and transportation costs they are finally shedding the shelves with slow moving products. This will finally change the narrative in the supermarket and frankly send a lot of brand managers who have relied on lame brand extensions packing. Yes, it started with the pandemic as the CEO of Progresso soup announced he was cutting their SKUs in roughly half to ensure that their production capacity could meet the needs of shoppers. He also found that there were over 25 varieties of chicken and noodles in their portfolio. Progresso was not alone as many food companies had to focus on their best sellers and leave the laggards behind. You might think that meant more efficiencies and would prevent what we are now experiencing at the checkout with higher prices. But there is a lot more to it than just efficiencies. Less employees and higher wages coupled with higher transportation costs and higher raw material costs and then came the floods, and droughts, and hurricanes and all the other effects of climate change. For a food company – a perfect storm if you will.
Executives at Nestle and Unilever have been quoted as saying they have seen billions in savings after ditching the laggards in their product portfolios. Nestle said cutting products saved $1.06 billion, while Unilever said the practice saved $2 billion. Unilever is reducing the varieties of ice cream it sells. The company is using artificial intelligence in its 'Polaris' program to help manage its assortment and cut its ice cream products by about 20%. Unilever trimmed about 5,000 types of products in the personal care category. At Kraft Heinz they have initiated a “decomplexity program” (who comes up with these phrases?) they announced at the Consumer Analyst Group Conference. One of the brands that bit the dust was Heinz Real Mayonnaise, which is a shame as it had no artificial flavors, colors or preservatives and for me had a more delicate flavor. And tasted good. It just didn’t have the marketing push to make it a viable alternative to Hellman’s/Best Foods as they focused on selling it in foodservice as pillow packs and the consumer thought that they were getting a second-rate product.
For our UK viewers, you are lucky you can still get it across the pond. It was best said by Martin Renaud, a top marketing executive at Mondelez, who told Reuters the chocolate manufacturer has "too many flavors." "We sometimes have the tendency to launch a lot of things because they are exciting, but we need to be very rigorous," finally someone who understands we don’t need 20+ varieties of Oreos. Kellogg Co discontinued its line of Special K protein shakes and Nestle axed Lean Cuisine paninis, frozen Sweet Earth Benevolent Bacon, and Sweet Earth Vegan Hot Dogs; any one ever thought those were good ideas? I am glad to see that our CPG brands are finally cleaning up their offerings and focusing on those products that most shoppers want. It’s the smaller brands, for example that you’ll find at the Fancy Food Show that can fill in the gaps for the varieties that are being discontinued.
Our major brands simply cannot afford to sell small quantities of products – but these smaller companies are designed to do just that. The outcome shouldn’t be shrinkflation or increased prices to the consumer so that these monolithic brands can make huge profits for their executive suite or shareholders – it should be to pass on the reduced costs to the US consumer who still has sticker shock at the checkout.