1. Photographer: David Paul Morris

    consumer

    Shelly Banjo

    Shelly Banjo is a Bloomberg Gadfly columnist covering retail and consumer goods. She previously was a reporter at Quartz and the Wall Street Journal.

    For most consumers, "better for you" is good enough. 

    Kraft Heinz revealed on Monday that, three months ago, it quietly stripped its signature Mac & Cheese dinners of the artificial flavors,  preservatives and dyes that had forged the essence of the gooey, neon noodles since 1937. It substituted ingredients such as Yellow #5 with spices such as paprika, turmeric, and annatto. But without a big marketing push or packaging changes, virtually no one noticed, the company said -- it sold 50 million boxes of Mac & Cheese in the three-month period, as usual.

    The reason the company went into stealth mode was to combat consumer perceptions that tinkering with the recipe would hurt the taste. That worry first boiled over in April, when the company announced it would reformulate the product, said Greg Guidotti, VP of meals at Kraft Heinz. And several previous attempts to rejigger iconic products, such as Coca Cola's New Coke, Kool-Aid with natural colorings, and reduced-sodium cans of soup from Campbell Soup, went memorably sour. Guidotti told Gadfly he hopes "the nation's biggest blind taste test" will convince "lapsed Mac & Cheese lovers" turned off by the idea of a recipe change to give the noodles another try.

    Kraft Heinz's move is notable because it highlights an important nuance in the ongoing fight for grocery shoppers' dollars. Many fear the days of Big Food are numbered, as consumers increasingly want to eat totally healthy foods such as kale and broccoli instead of packaged snacks and sodas. But the truth is that the key for packaged food and beverage makers is to simply find a way to make their unhealthy stuff slightly less awful than before. 

    In other words, by using, say, more natural ingredients or fewer preservatives, these companies can give people an excuse to eat what they want to eat, without feeling bad about it.

    Packaged Up
    North American packaged food market
     
    Source: Bloomberg DataConnect

    Perhaps the best indication of this practice is the number of "better for you" claims popping up on packaged foods in recent years. For instance, 20 percent of new packaged food and beverage products contained labels claiming no additives or preservatives last year, up from 13 percent in 2011, according to research firm Mintel, which has been tracking new product introductions since 1964. Likewise, nearly 30 percent of new products contained some sort of allergen claim, such as soy-free or dairy-free, up from 11 percent in 2011. 

    Fine Print
    Label claims on new food and drink products in the U.S.
     
    Source: Mintel

    But it's not all about label claims.

    Coca Cola

    Take Coca-Cola's introduction of smaller-sized bottles and mini-cans of Coke. While sales of its 2-liter bottles are declining, its smaller bottles are growing by 15 percent a year. "It's a perfect way for a product slammed by people for health reasons to offer something to consumers that is a permissible indulgence," said Lynn Dornblaser, director of innovation and insight at Mintel.

    Not to mention that the bottles are pricier per ounce -- so when people buy more of them, Coca Cola makes more money. 

    So Big Food isn't doomed. Companies are adapting, embracing their roots as pure marketing companies rather than food manufacturers. As Coke sells off its bottling plants and becomes a slimmer company, it's focusing its dollars on marketing with new ads extolling all the many options soda-drinkers have under the same umbrella. Want real sugar? Diet? Smaller bottles? Coke can offer it all. 

    One example is Hormel, which is placing more emphasis on marketing and becoming a true consumer products goods company, rather than just a meat manufacturer.

    "At our core, we all want a level of indulgence something like bacon can give us," Hormel CEO Jeff Ettinger told Gadfly recently, explaining why products such as bacon and Spam can fly off the shelves in the midst of a consumer shift to healthier foods. "Just look at Ben & Jerry's -- it's not a health food item," but its environmentally friendly packaging and commitment to "wholesome ingredients" made consumers feel better about indulging in ice cream, he said. 

    Because, in the end, packaged food companies don't need to stop selling chips and dips in favor of nuts and berries. They just need to make consumers feel like their products are slightly better for them than the competition's offerings.

    This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

    To contact the author of this story:
    Shelly Banjo in New York at sbanjo@bloomberg.net

    To contact the editor responsible for this story:
    Mark Gongloff at mgongloff1@bloomberg.net