Why are food brands reformulating summary
- Commodity price volatility for cocoa, coffee and sugar drives major reformulation
- Global tariffs increase ingredient costs, making procurement innovation essential
- GLP-1 weight-loss drugs boost demand for smaller nutrient-dense food portions
- Health-conscious consumers push brands to reduce sugar, salt and fat content
- Regulatory actions like sugar levies and dye bans force widespread product changes
Over the past year, the food industry has faced challenges on all sides. Regulation, volatile commodity prices, and swerving consumer trends all play a part.
These challenges often present opportunities. Changes to the composition of a product – in other words, reformulation – is integral to how said product is received by consumers and regulators.
Reformulation can be an integral part of brands’ response to these challenges.
Commodity shocks
One of the primary reasons that brands are reformulating is the wave of commodity shocks that have hit the food industry in recent years.
Over the past two years, commodity price volatility has been a significant threat to industry, as key commodities such as cocoa, coffee and sugar have seen prices skyrocketing. While this has calmed down somewhat since its worst days, the future is still uncertain and manufacturers want to be prepared.
The effects of this have been seen on the market. For example, reduced cocoa content in UK snack bars Penguin and Club, substituted with palm and shea oil, have meant that the McVitie’s owned brands could no longer call themselves ‘chocolate’.
Alternatives for cocoa, coffee and palm oil have seen significant demand, as the food industry realises it can no longer rely on the steady supplies of raw materials it once put faith in.
Tariffs
A volatile global trade situation has seen tariff barriers erected by global superpowers such as the US and China. This makes sourcing ingredients globally far more expensive.
“The current situation with tariffs, alongside other ongoing trade developments, is reflective of a rapidly shifting political climate that has increased the importance of cost management and procurement innovations”, says Erica Reiner, SVP and regional general manager for North America at ingredients company IFF.
Reformulation, in this context, is a “strategic lever” to allow brands to stay resilient and agile, helping them cope with volatility.
Nevertheless, tariffs are often “secondary to other pressures” such as rising commodity prices, for many manufacturers.
GLP-1s
The popularity of GLP-1 weight-loss drugs is changing the way consumers eat. By increasing satiety (feelings of fullness), the drugs have transformed what many consumers want from food.
Those taking the drugs want smaller portions, but more nutrient-dense food as well, because they need the same amount of nutrients from much less food.
This is where reformulation comes in. GLP-1 use is creating demand for nutrient-dense food, most prominently food high in protein.
The GLP-1 trend has been a “major driver of innovation”, says IFF’s Reiner, which is “creating opportunities across all sectors”.
Consumer behaviour even among those who don’t take GLP-1s is being influenced by the ‘GLP-1 halo effect’, driving demand for smaller portions and nutrient-dense food.
Better-for-you trend
Of course, demands from increasingly health-conscious consumers have seen many brands reformulating to make their products healthier. Reformulation for this reason involves both taking ingredients out of products, and putting them in.
The former consists of removing ingredients, such as salt, fat, and sugar, from products to make them healthier.
“One of the key trends in the health-conscious post-pandemic years has been a rise in demand for snacks that give consumers permission to indulge“, says IFF’s Reiner.
“Unsurprisingly, fat and salt – which enhance flavour and offer indulgence but also come with health issues – pose the biggest challenges in the creation of healthy snacks."
Critics of ultra-processed foods have said that such reformulation is not enough to counter the negative effects of ultra-processing.
Because of the backlash against ultra-processed foods and the demand for clean label options, brands have also been aiming to reduce their ingredients lists. For example, UK supermarket retailer Marks & Spencer has created a range focusing on short ingredients lists.
On the other hand, many brands are reformulating products by putting ingredients in; not just protein but fibre, probiotics, minerals like magnesium and zinc, and numerous other functional ingredients are being added to products, aiming to satisfy consumers’ insatiable appetite for functionality in food.
Regulation
Of course, brands don’t always reformulate entirely by choice – sometimes regulators provide the impetus.
For example, the UK’s soft drinks levy has made it more costly for brands to produce drinks with high quantities of sugar. Drinks with between 4.5g and 7.9g of sugar per 100ml are taxed £1.94 (€2.24) per 10 litres. Drinks with 8g or more are charged £2.59 (€2.99) per 10 litres. Sugary drinks with milk have recently been added to the scope of the levy.
This has led to reformulation. One piece of research after the levy was introduced suggested that it had led to the reduction of 6,500 calories in soft drinks per UK resident per year.
Sometimes, outright bans will make reformulation necessary. For example, in the US many states have banned artificial food dyes. The government itself has also pushed back against dyes, with a focus on those used in products served to children.
This has led to widespread reformulation as well, with many major food brands adding natural dyes to their products in place of the banned dyes.
The future of reformulation
Some of these pressures are not what they once were. Commodity prices have fallen from their heights, and tariff barriers are, following last year’s chaos, no longer being introduced quite so frequently. But there’s no telling when the next price spike, or the next wave of tariffs, might hit.
Meanwhile, demand for healthy products shows no signs of letting up, nor does the popularity of GLP-1s. In regulation, the only constant is change.
How, and why, will brands reformulate in the future? Only time will tell.
