Axios Markets – July 12, 2019 – Axios

Axios’ Courtenay Brown writes: From Oscar Mayer and Campbell’s to Clairol and CoverGirl, some of America’s most famous supermarket and drug store brands are losing market share as consumers’ tastes and shopping habits change.

Why it matters: The challenges facing well-loved brands reflect shifts that aren’t likely to swing back in their favor. As older companies scramble to keep up with upstart competitors, they are introducing more modern product lines, like ones with plant-based ingredients.

Driving the news: Legacy brands are concentrated within a handful of huge corporations that are losing money on various business lines as their products fade in relevance and popularity.

  • Kraft Heinz said this year that the value of its Oscar Mayer and Kraft brands — with products like Oscar Mayer hot dogs, Jell-O and Kraft Mac & Cheese — were worth $15 billion less than it had previously stated.
  • Coty, which purchased the Clairol and CoverGirl brands from Procter & Gamble 3 years ago, recently wrote down the value of those brands by $3 billion, following a previous writedown of $965 million.
  • Sales of Campbell’s namesake soups have fallen in 8 out of the past 10 fiscal years, per the Wall Street Journal.

These companies’ “standard prescriptions for defending” their brands “no longer seem to be yielding results,” Carol Phillips, founder the Brand Amplitude consulting firm — which counted Campbell’s Soup as a client — tells Axios.

  • “The tough thing about these products is they are really hard to improve on,” she says.
  • “About the only thing you can do to it is change the package.”

What’s happening: Consumers are piling into nouveau and generic brands — like Kylie Jenner’s Kylie Cosmetics and Brandless — some of which aren’t even sold in physical stores.

  • Newer brands captured 31% of revenue share growth within the last four years — an increase from 27% in prior years, according to a recent Bain & Co. report.

Between the lines: The companies that once used to set the trends are now the followers. Desperate to remain relevant, old-line companies — already late — often jump into the fad of the moment.

  • Coty is reportedly in talks to take a stake in Kylie Cosmetics.
  • General Mills, struggling to lift sales of its cereals, yogurts and snacks, purchased Blue Buffalo, buying into the high-end organic pet food craze.

These strategies are “a total crapshoot,” says Robert Passikoff, founder of the consultancy Brand Keys.

Source: https://www.axios.com/newsletters/axios-markets-9655717e-fc7a-4b4b-800b-e56d36921750.html

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