The food industry’s major players are facing an increasing challenge as shoppers, driven by high prices and a desire for less-processed products, shift their purchasing habits toward smaller, emerging brands. This shift is starting to impact the sales of billion-dollar staples from global conglomerates like Unilever and Procter & Gamble.
One notable example is Hellmann’s mayonnaise, a staple in Unilever’s food portfolio. Once a dominant force in the U.S. market, the brand is losing ground to lesser-known competitors such as Duke’s Mayo and Mike’s Amazing Mayo, which have gained significant traction in certain regions. Duke’s Mayo, founded in the U.S. South, is now one of the fastest-growing mayonnaise brands in the U.S., achieving over $100 million in sales. Its 30-ounce jar is priced lower than Hellmann’s, with Duke’s retailing for less than $5, compared to Hellmann’s $6.49 for the same size.
Duke’s market share has risen from 6% in 2021 to 9%, becoming the fifth-largest mayo brand in the country, according to Joe Tuza, chief growth officer at Sauer Brands, the parent company of Duke’s Mayo. Despite Hellmann’s continued dominance in the category, this shift underscores the growing pressure on Unilever and similar corporations to innovate or risk losing market share.
The struggles of Hellmann’s and other Unilever food brands are compounded by broader challenges facing the company. In February, Unilever unexpectedly replaced CEO Hein Schumacher after just two years at the helm, citing the failure to deliver a quick turnaround for its $60.8 billion business. Unilever declined to comment on this development.
Since acquiring Bestfoods, which owns Hellmann’s, for $24.3 billion in 2000, Unilever has poured considerable resources into marketing its iconic mayo. However, recent data from Euromonitor shows a steady decline in Hellmann’s share of the U.S. mayo market, now at 46.7% compared to 50.6% in 2022.
Rising Competition from Smaller, Independent Brands
While Unilever struggles to maintain dominance, its rivals are also facing pressure. Procter & Gamble’s Luvs diapers, for example, have lost market share to more affordable competitors, and Kraft Heinz is encountering stiff competition from up-and-coming brands like Gooder Foods’ Goodles, which threatens its boxed macaroni and cheese sales.
This trend is not limited to food products. According to Bain & Co., a consulting firm tracking the rise of so-called “insurgent” brands, independent companies are driving 39% of growth in consumer categories like food and personal care. This is a significant increase from just 17% in 2023.
Industry experts argue that the large consumer goods companies are at a disadvantage when it comes to developing new products. Samyr Laine, a former Olympian and now an investor in food startups, highlighted the bureaucratic hurdles within big corporations. “It takes a lot of yeses and presentations to just get going,” Laine said, noting that larger firms struggle to innovate in the agile, smaller-scale way that newer brands do.
In response to the growing competition, Unilever has relied on high-profile marketing campaigns, such as a Super Bowl commercial featuring a humorous scene from the 1989 film When Harry Met Sally. Despite these efforts, Hellmann’s market share continues to decline, as evidenced by Euromonitor data showing its drop in U.S. market share.
Corporate Shifts and Leadership Changes
Unilever’s recent leadership change is part of a broader trend in the consumer goods industry. The departure of Schumacher, who had been brought in with the backing of U.S. hedge fund investor Nelson Peltz, reflects the growing pressure on CEOs in this sector. Peltz, who joined Unilever’s board in 2022 after investing in the company, had supported Schumacher’s appointment, but the board’s unanimous decision to dismiss him shows the difficulty of steering large companies through changing consumer habits and volatile market conditions.
Nestlé, another food giant, has also seen leadership turmoil, with the firing of CEO Mark Schneider in August. The company, however, claims strong performance in key categories, including instant coffee and frozen meals, with its U.S. brands holding top positions in 13 categories.
Looking Ahead: The Future of Consumer Goods
The consumer goods sector faces a challenging road ahead. Matteo Tonello, head of benchmarking at The Conference Board, explained that consumer goods CEOs must navigate not only changing consumer preferences but also supply chain issues and rising commodity prices. The current landscape has made these roles less attractive, with fewer executives entering the field, opting instead for opportunities in technology or other sectors.
As smaller, independent brands continue to take market share, companies like Unilever, Kraft Heinz, and P&G may need to rethink their strategies. For now, these large corporations are focusing on mergers and acquisitions, with Unilever acquiring smaller, high-growth brands such as Sir Kensington’s mayo in 2017. However, Unilever was notably not involved in the bidding for Duke’s Mayo.
In conclusion, the rise of insurgent brands is reshaping the food industry, posing a direct challenge to long-established players. The market’s shifting dynamics require major consumer goods companies to adapt quickly, innovate more effectively, and reconsider their approach to leadership and product development.
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