*

Smaller brands like Duke's and Mike's Amazing gain market

share

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Consumers shift to smaller brands due to price and value

concerns

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Unilever ( UL ) CEO was pushed out amid worries about slow

turnaround

By Jessica DiNapoli, Svea Herbst-Bayliss, Siddharth Cavale,

Abigail Summerville

NEW YORK, March 3 (Reuters) - Big Food's worst nightmare

is unfolding across U.S. 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 ( UL ).

Consider Hellmann's mayonnaise, one of Unilever's ( UL ) biggest

brands globally. The condiment is losing market share to

less-well-known rivals such as Duke's Mayo, which was founded in

the U.S. south, and Mike's Amazing mayo, which is gaining

traction in the U.S. 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 ( KHC ) and Unilever brands.

The rival products' success shows the challenges facing global

consumer product and food marketers such as London-based

Unilever ( UL ), 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 ( UL ) 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 ( UL ) has aggressively marketed

Hellmann's, and launched new flavors of the condiment, but in

recent years, the brand's hold has weakened in the U.S. 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 ( UL ) 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 ( UL ) chief

financial officer, said last month. Fernandez replaced

Schumacher as CEO on March 1.

Fernandez said Hellmann's and Knorr performed better than

Unilever's ( UL ) other food brands.

'SHOWN THE DOOR'

Volume sales of packaged food in the United States, Unilever's ( UL )

biggest market, have been pressured due to price hikes.

The makers of household staples, ranging from condiments like

Hellmann's to Procter & Gamble's ( PG ) Luvs diapers, have seen

some shoppers drift away from their products due to steep prices

and fewer innovative products that shoppers would pay more for.

About two weeks before announcing Schumacher's departure,

Unilever ( UL ) reported lackluster full-year earnings and said it has

had a slower start to 2025, sending its shares crashing.

The board declined to detail how Schumacher lost directors'

support but a source familiar with its thinking said the

decision to dismiss the 53-year-old

executive was unanimous

.

Unilever ( UL ) hired Schumacher as CEO in 2023 from Dutch dairy

cooperative FrieslandCampina with the backing of Nelson Peltz, a

billionaire U.S. hedge fund manager who first invested in

Unilever ( UL ) in 2022 and joined the board several months later.

A representative for Peltz declined to comment.

In his 18 months on the job, Schumacher announced plans to sell

some of Unilever's ( UL ) smaller food brands, worked to spin out its

ice cream business and cut thousands of jobs. Shares had been up

about 9% in his tenure.

Rival Nestle, the world's biggest food maker, has

also endured turmoil at the top. In August, it fired CEO Mark

Schneider, tapping insider Laurent Freixe to replace him.

A Nestle spokesperson said its U.S. brands, which include

Lean Cuisine and Coffeemate, are either in the top spot or

second position in 13 categories, including instant coffee and

frozen meals.

"Underperforming CEOs are more exposed than ever to the risk

of being shown the door," said Matteo Tonello, head of

benchmarking and analytics at research group The Conference

Board. Consumer products CEOs must deftly manage not only

changing consumer habits but also supply chain disruptions and

high commodity prices, he said.

Four investors and bankers who spoke with Reuters said the

talent pool to run a consumer goods company is limited, partly

because executives choose other fields, like tech. The people

said joining the ranks of diaper, detergent and canned food

makers was not considered sexy two decades ago when executives

who should now be in line for the CEO job were graduating from

business school.

This has forced several consumer companies, including

Nestle and Unilever ( UL ), to pick an insider for the top spot instead

of finding an outsider to take over.

RISE OF 'INSURGENT' PRODUCTS

Part of the problems facing companies like Unilever ( UL ), Kraft Heinz ( KHC )

and Nestle are smaller, fast-growing independent brands like

Duke's, according to four industry consultants. Procter & Gamble ( PG )

lost its footing in value-priced diapers, while Kraft Heinz's ( KHC )

boxed macaroni and cheese is under threat from Gooder Foods'

Goodles.

A Procter & Gamble ( PG ) spokesperson said it upgraded its Luvs

diapers and added new Pampers products to serve all consumers.

Kraft Heinz ( KHC ) 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 ( DEO ), Unilever ( UL ), P&G and Moet Hennessy to incubate new

brands or pitch products.

To drive sales volume, Unilever ( UL ) 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 U.S.

mayo market last year from 50.6% in 2022, Euromonitor found.

Four consumer industry bankers said Unilever ( UL ) 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 ( UL ) 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.

(Writing by Jessica DiNapoli with additional reporting by Svea

Herbst-Bayliss, Siddharth Cavale, Abigail Summerville and

Arriana McLymore in New York. Editing by Vanessa O'Connell and

Claudia Parsons)