BOCA RATON, Florida/LONDON- Major consumer companies including Kraft Heinz Co and Conagra Brands Inc are culling product lines to combat sky-high costs and falling consumer demand, their executives said this week.
Many companies started slimming their offerings during the pandemic and are aggressively renewing those efforts, eliminating less-popular items to focus on products on which they can more easily raise prices amid prolonged inflation on food items.
Executives at Nestle SA and Unilever Plc said they have seen billions in savings after ditching the laggards in their product portfolios.
Conagra recently discontinued a Marie Callender’s chocolate chip cookie dough cream pie to make room for what the US food company hopes will be a faster-selling no sugar added apple pie.
“No one will have a perfect batting average,” said Chief Executive Sean Connolly in an interview. “The key is to have more winners than losers.”
Eliminating less popular products is part of a “decomplexity program” underway at Kraft Heinz, its executives said at the Consumer Analyst Group of New York Conference this week. It recently discontinued Heinz Real Mayonnaise.
Mondelez International Inc CEO Dirk Van de Put told Wall Street analysts at the conference that the Oreo maker had clear rules on replacing old products with new ones – “one in, one out.”
Martin Renaud, a top marketing executive at Mondelez, 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,” Renaud said. As Mondelez adds products with different price points, it adds complexity, he added. “I am a big advocate of simplicity.”
Companies cull product offerings to make room for new iterations of their most popular items, such as smaller-sized versions for dollar stores or larger ones for warehouse chains like Costco, said Justin Cook, US consumer products research leader at Deloitte. Cash-strapped shoppers are more frequently looking for bargains at both types of retailers.
“It’s more expensive to make a lower-volume product,” Cook said. “If it’s not a high-performing item that people absolutely have to have, companies feel it’s harder to raise price.”
Nestle said cutting products saved 1 billion Swiss francs last year ($1.06 billion), while Unilever said the practice saved $2 billion.
Retailers are also demanding new, fast-selling products to enhance their own faltering sales. Products most likely to get the boot are those with niche or limited popularity.
Heinz Real Mayonnaise has a small share of the global market, according to the research firm Euromonitor. — Reuters
