Shoppers are increasingly shunning the center of grocery stores and hugging the perimeter as they trade packaged food for fresh food. That's bad news for an industry that's already struggling.
For years, nutritionists have been urging Americans to swap out processed foods for fresh options like fruits and vegetables. People now seem to be listening, and deflation among fresh food products has made eating healthier a more affordable option.
Consumers' quest for fresh is compounded by competition from private-label brands, demands to lower prices and Amazon's impending purchase of Whole Foods — which is seen accelerating both price pressure and the shift to fresher food.
The result? Packaged food sales have declined, and earnings have disappointed. Some companies have cut jobs and shuttered factories.
Wall Street has not been forgiving. The S&P 500 has increased nearly 14 percent over the last 12 months, while packaged foods and meats companies in the index are down more than 11 percent over the same time period. Kellogg, General Mills, Campbell Soup and J.M. Smucker all hit 52-week lows Tuesday.
Despite mounting pressure, legacy brands are not giving up. They recognize the challenges the industry faces, but some companies may not be able to overcome them easily.