Millennials are driving an $18 billion food revolution
$18 billion. That’s the market share lost by the top 25 U.S. food and beverage companies in the last five years.
Fortune senior writer Beth Kowitt used that startling number to kick off a panel discussion on “The New Food Revolution” at the Most Powerful Women summit on Tuesday.
So what (or who) is responsible for this radical shift? Millennials with a desire for transparency, said Lifeway Foods (LWAY) CEO Julie Smolyansky.
“Millennials are driving a disruption in the food industry,” she said. “I think we’ll see the food industry turned on its head.”
Smolyansky said consumers are shopping with their smartphones and have a wealth of information available about the food they buy: “You can now make smarter choices on the spot.”
But while consumers now have access to more information than ever before, they still need a better understanding of what they’re eating. Denise Morrison, president and CEO of Campbell Soup Co. (CPB), said the food industry is responsible for leading the education effort.
“I believe consumers have a right to know what’s in their food, how it’s made, and where it’s grown,” she said. “As a company, we’re working on it, and we have a lot more work to do.”
Morrison told Fortune in May about some of that work. She knew she had to “shift the center of gravity at Campbell” when she took over the company in 2011. Over the past decade, industry tracker NPD Group has recorded an 18% decline in canned-soup consumption at dinner and a 7% decline at lunch. So Campbell went on an acquisition spree—buying Bolthouse Farms, Plum Organics, Kelsen Group, and Garden Fresh Gourmet.
“At Campbell’s, we talk about being the biggest small company,” Morrison said at Tuesday’s gathering. “We kept all the founders at the four companies we acquired because they brought us great adrenaline.”
Smolyansky said the future of the food industry is entirely in the hands of smaller companies and that big companies are just not as nimble. Lifeway Foods, the largest U.S. manufacturer of the dairy drink kefir, has annual revenues of about $130 million.
“Consumers look to us to innovate,” Smolyansky Said. “We can make changes really, really fast. Retailers are coming to us asking, ‘What’s going to be the next big thing in food?’”
So what is the next big thing? Expect even further fragmentation in the food industry. The panelists said that health is being redefined—it’s not about fat and calories anymore. It’s about supplementing your diet and not making cuts.
“Low-fat was big a few years ago, and that’s gone away now,” said Tracy Massey, president of Mars Chocolate North America. “We need to make sure we label our products and be very transparent about what’s in them. You can’t dictate what people eat, but you can make sure they’re very clear on what they’re putting into their bodies.”