Big Food's worst nightmare is unfolding across US supermarket aisles.
Shoppers, weary of high prices and highly-processed packaged food, are increasingly buying from smaller food brands, threatening the growth of billion-dollar products from conglomerates such as Unilever.
Consider Hellmann's mayonnaise, one of Unilever's biggest brands globally. The condiment is losing market share to less-well-known rivals such as Duke’s Mayo, which was founded in the US south, and Mike’s Amazing mayo, which is gaining traction in the US northeast, where it says it is the fastest growing condiments brand. Both are often priced for less than Hellmann's.
A 30-ounce jar of Duke's, for example, is priced below $5 versus Hellmann's $6.49 for the same size. It is now one of the country's fastest growing brands of mayo with more than $100 million in sales, according to the buyout firm that acquired its parent company, Sauer Brands, for about $1.5 billion in January.
Duke's market share grew to 9% from 6% in 2021, said Joe Tuza, Sauer Brands chief growth officer. The sugar-free mayo is the country's fifth-largest by market share, Tuza said, behind Hellmann's and other Kraft Heinz and Unilever brands.
The rival products' success shows the challenges facing global consumer product and food marketers such as London-based Unilever, which in February surprised retailers, investors and employees when it replaced its second CEO in two years, Hein Schumacher.
Unilever declined to comment for this story.
The company paid $24.3 billion, including the assumption of debt, to acquire Hellmann's owner Bestfoods in 2000, expanding its presence in food. Unilever has aggressively marketed Hellmann's, and launched new flavours of the condiment, but in recent years, the brand's hold has weakened in the US mayo category, according to Euromonitor data tracking brick-and-mortar and online retailers.
Adam Theo, 45, of Arlington, Virginia, said he switched to Duke's after a friend introduced him to the condiment about three years ago. "Before that, I never thought much about my choice of mayonnaise,” he said.
Unilever's food business, dominated by Hellmann’s and Knorr seasonings, saw sales volume remain roughly flat last year, while prices rose, Fernando Fernandez, who was Unilever's chief financial officer, said last month. Fernandez replaced Schumacher as CEO on 1 March.
Fernandez said Hellmann's and Knorr performed better than Unilever's other food brands.
Rise Of 'Insurgent' Products
Part of the problems facing companies like Unilever, Kraft Heinz and Nestlé are smaller, fast-growing independent brands like Duke’s, according to four industry consultants.
Procter & Gamble lost its footing in value-priced diapers, while Kraft Heinz's boxed macaroni and cheese is under threat from Gooder Foods' Goodles.
A Procter & Gamble spokesperson said it upgraded its Luvs diapers and added new Pampers products to serve all consumers.
Kraft Heinz did not respond to a request for comment.
Consumer goods makers delayed developing new products during the pandemic and immediately after, leaving an opening for newer brands.
Bain & Co tracks fast-growing, independently-owned consumer brands, which it calls "insurgents." The consulting firm found that these brands, a list which has included Chobani yogurt and Fatty jerky, accounted for 39% of growth in 2024 in their categories, such as food or personal care. That's up from 17% in 2023, Bain said.
Former Olympian Samyr Laine, now an investor in food start-ups including electrolyte drink maker Berri Organics, said bureaucracy and red tape are the largest hurdles for big food makers.
"It takes a lot of yeses and lots of presentations to just get going, and their infrastructure isn't built to do smaller things and incubate and test in smaller communities," said Laine, who has met with executives at firms such as Diageo, Unilever, P&G and Moet Hennessy to incubate new brands or pitch products.
To drive sales volume, Unilever ran its fifth consecutive Super Bowl ad this year, featuring a tongue-in-cheek visit to a New York deli with the lead actors from the 1989 romantic comedy hit 'When Harry Met Sally'.
But Hellmann's has seen its share fall to 46.7% of the US mayo market last year from 50.6% in 2022, Euromonitor found.
Four consumer industry bankers said Unilever can be slow to make M&A decisions.
The conglomerate has sold some of its businesses to private equity firms in the last decade including its spreads business, tea business and a group of personal care brands called Elida Beauty.
Unilever has acquired a few fast-growing start-up brands, including high-end mayo brand Sir Kensington's in 2017 - though they were not among the bidders for Duke's, according to a source close to the deal.
Read More: Private Labels Consolidate Position Across Europe With Nearly 40% Market Share, Notes Circana
