Shoppers turn to smaller food brands, cutting into Unilever, P&G profits

NEW YORK, March 3 (Reuters): 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 (ULVR.L).

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 percent from 6 percent 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 (KHC.O) and Unilever brands.

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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, in part because he failed to turn around its 60.8 billion euro business quickly enough.

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.