Major consumer companies, including Kraft Heinz Co. and Conagra Brands Inc., are discarding product lines to fight sky-high costs and decreasing consumer demand.
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.
Nestle and Unilever have experienced billions in savings after ditching the slackers in their product portfolios. Conagra recently discontinued Marie Callender’s chocolate chip cookie dough cream pie to make way for what it hopes will be a faster-selling no sugar added apple pie.
So, the key is to have more winners than losers and eliminate less popular products, which will be part of a “decomplexify program.” Kraft has recently discontinued Heinz Real Mayonnaise, and Mondelez has clear rules on replacing old products with new ones: “one in, one out.” For example, a chocolate manufacturer may have “too many flavours,” as a company may have a tendency to launch a lot of things because they are exciting, but they must be very rigorous.
Companies cull their 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 the U.S. 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, and if it’s not a high-performing item that people absolutely have to have, companies feel it’s harder to raise the 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 a niche or limited popularity. Heinz Real Mayonnaise has a small share of the global market, according to the research firm Euromonitor.
Kellogg Co. ditched its line of Special K protein shakes, and Nestle axed Lean Cuisine paninis, frozen Sweet Earth Benevolent Bacon, and Sweet Earth Vegan Hot Dogs, spokespeople for the companies confirmed. In some cases, suppliers are bowing to retailer plans to reduce inventory, hoping that cutting product lines will make stores more efficient and less costly to run and stock.
Walmart told Reuters it was seeking more data from suppliers to justify pricing and pushing for more creative ways to defray costs and cushion price hikes for consumers. It recognizes that price concerns are more elevated at this point in time.
Unilever, which makes Magnum and Ben & Jerry’s, is slimming the variety of ice cream it sells; the company has for over two years using artificial intelligence in its ‘Polaris’ program to help manage its assortment. It credited Polaris with cutting its variety of products by about 20%. Unilever also trimmed about 5,000 types of products in the personal care category.Food makers tend to cull products without much fanfare. At the consumer products conference, they highlighted new offerings, many of them increasingly popular handheld foods that people can eat while scrolling on phones. That does not mean consumers don’t notice when a beloved item disappears from the shelf.