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Even as sales for the century-old Café Bustelo were heating up, J.M. Smucker executives worried the fast-growing brand was in danger of falling behind a major shift in drinking habits.
The CPG giant watched as more coffee consumers turned to on-the-go iced varieties on their way to the office, while running an errand, or as a caffeinated pick-me-up in the afternoon.
With cold brews growing in popularity among millennials and Gen Z consumers, Café Bustelo couldn’t afford to miss out. The category is forecast to top $3 billion by 2030.
Café Bustelo, which will top $300 million in net sales in its 2025 fiscal year and has posted 22 straight quarters of growth, moved quickly to launch an iced coffee in 2024.
This brought the popular coffee beyond its customary shelf-stable aisle into the refrigerated space, opening the brand to an entirely new section of the retail landscape and increasing the opportunities when a consumer might see Café Bustelo in the store.
“We took a step back and said, ‘Okay, where is the opportunity?’ ” said Emily Lucci, vice president of marketing and coffee at J.M. Smucker. “Then as we looked at our portfolio with Cafe Bustelo, we saw a huge opportunity with that brand, given where it sits today, ... to make that even bigger.”
A box of Stouffer’s Supreme Shells & Cheese.
Powerful brand extensions 'make you stop in your tracks’
With up to 90% of food products failing within a year after launch, companies that take an existing brand into a new space have an immediate advantage. It’s also a financially savvy move, enabling businesses to generate higher returns on their investment as the extension typically costs less money to promote than if they started a new brand from scratch.
“Folks still want to explore with food and beverages and so sometimes when you see a beloved brand in a sort of an unexpected place, it does make you stop in your tracks,” said Mike Van Houten, vice president of commercial excellence at Nestlé. “It’s [an]... unexpected break from the norm. It’s really, really powerful.”
Brand recognition can help a product stand out, with 80% of consumers telling Nestlé that if they have used a trusted brand before, seeing it in a different part of the store is “going to make them ... take notice,” he said.
Nestlé, for example, brought its 40-year-old coffee brewing platform Nespresso into the ready-to-drink coffee sector last year to tap into demand for on-the-go drinks. The Switzerland-based company also took its Coffee mate brand into cold foam to help consumers replicate the coffeehouse experience at home.
One of Nestlé’s biggest launches in 2024 came after its frozen meal brand, Stouffer’s, entered the shelf-stable food realm with macaroni and cheese. The product helped Nestlé compete in a segment with almost $3 billion in sales and allowed it to take advantage of consumer interest in both shelf-stable and frozen versions of the food.
“Folks still want to explore with food and beverages and so sometimes when you see a beloved brand in a sort of an unexpected place, it does make you stop in your tracks.”
Mike Van Housten
Vice president of commercial excellence, Nestlé
Tiffany Grube, qualitative research director with Curion, said before companies can take a brand into a new category, they must assess the health of the core product and how it is performing. A struggling brand is likely to face the same headwinds in its new space with the new offering creating additional distractions.
Grube noted companies also must understand why consumers like the brand, as well as what they look for when they purchase it and whether bringing it into a new category fits with what shoppers want and need. In addition, businesses need to determine who they want to attract to the brand and assess whether equity in one part of the grocery store can extend to another category with different consumers, trends and buying habits.
”The benefit of brand extension can be huge. For some brands, it’s the only way to grow,” Grube said. “But you have to make sure it’s done well. When it’s done poorly, you can risk not only losing out on the target that you’re setting out to gain but you can leave your core customer feeling betrayed, or they might stop being loyal.”
A container of Philadelphia's first-ever refrigerated cream cheese frosting in the U.S.
Choosing extensions that fit
The food space is littered with brand extensions that failed after struggling to resonate with consumers.
Life Savers made a run in the 1980s at soda served in a cylindrical bottle decorated with the same red, yellow, green and orange stripes as its signature candy wrapper. The product fared well in taste tests, but it failed to catch on with consumers who thought it was too sweet.
Women’s lifestyle magazineCosmopolitan rolled out a line of yogurt in 1999, but it was discontinued after 18 months. Baby food brand Gerber launched a line of pureed meals called Gerber Singles aimed at adults in the 1970s. The extension failed after older consumers balked at eating what essentially was baby food in flavors such as pureed beef burgundy and blueberry delight despite the convenience of the single-serve containers.
“It’s easy to have a temptation to start to think, ‘You know, I’ve got a brand that is growing. I see other categories that are growing. How might we quickly take our brand into that category?’” said Smucker's Lucci. “We are trying to be much more strategic and focused to say, ‘Where are the right pockets?’”
Lucci added that entering a space that doesn’t fit with the perception consumers have of a product risks sowing confusion and damaging the overall health of the brand. Smucker carefully evaluates whether it makes sense for a brand to show up in a new category, how consumers may respond and whether the new product fits with the company’s long-term vision.
“We are really putting it through that filter consistently,” she said. “This is what we focus on to ensure we don’t take our brand to new places that don’t make sense from a consumer lens, or that we don’t go there too fast and don’t have the opportunity to bring the consumer along.”
Kraft Heinz, with $26 billion in net sales in 2024, said it’s constantly looking for new places to extend its brands. A product extension that may not have worked a few years or decades earlier may suddenly have evolved into a lucrative opportunity today as consumer trends evolve.
The opportunity to bring some of its brands — likeA.1. steak sauce into butter or Crystal Light drink powders into ready-to-drink alcohol — is key to helping the food and beverage manufacturer generate $2 billion in incremental net sales by 2027.
Last year, Kraft Heinz introduced Philadelphia Cream Cheese frosting after noticing the flavor was among the top three most popular in America. This insight was buoyed by the fact that there wasn’t a similar product on the market free from artificial flavors and dyes, or that didn’t require multiple steps to make from scratch. Philadelphia also is virtually synonymous with cream cheese, so a frosting version of the dairy product was a logical next step.
“We aim to grow with your fans and bring new and unique opportunities that help them keep our brands top of mind, and this includes [thinking] outside the tried-and-true format,” a Kraft Heinz spokesperson said.
