Blog: Innovation - it does work...
Dean Best | 10 March 2008
Innovation, innovation, innovation. It’s an issue that goes right to the heart of any successful business, not just those within the food industry.
But innovation is hardly an exact science, is it? Trying to get it right must consume many of your working hours. In today’s economic climate, getting it right can seem as perilous as ever. Only a small proportion of new products last on supermarket shelves after a few months – and with consumer spending shaky and the financial outlook somewhat uncertain, can your business afford to waste thousands of pounds on a product that won’t last past the summer?
For some, taking that risk is a necessary part of business. Big or small, it pays to be ahead of the game when it comes to NPD and investment into niche segments or emerging markets.
Last week, innovation was the central theme running through our news pages. In the US, two of the country’s biggest brands joined forces in a bid to tap into one of the fastest-growing segments in the food sector – premium chocolate. As demand for upmarket chocolate continues to grow, Starbucks and Hershey have decided to launch a range of “artisan-style” products to try and carve their own niche in the category.
Hershey is playing catch-up to the likes of Mars and Lindt, who have stolen a march in high-end chocolate. On the face of it, the alliance with Starbucks looks a wise move. However, there will be no let up in the competition, with Cadbury Schweppes set to launch its organic chocolate Green & Black’s in the US this year.
Another US firm betting big on innovation is Hormel Foods, the sausage-to-spam group. The company is aiming to achieve US$2bn in sales from products created this decade by 2012. It might seem an ambitious target but Hormel would beg to differ; the company said it had met its previous goal two years early. Last month, Hormel also opened an innovation centre in China in a bid to develop products to appeal to consumers in that market. The meat maker, it seems, is banking on NPD to bring home the, er, bacon.
Innovation that has justified a heap of faith and investment was lauded last week in a league table of the top new products sold Stateside in 2007. According to industry analysts IRI, Campbell's reduced-sodium soup topped the list of the best-selling new food and beverage brands last year with sales of US$101m. Products from General Mills and Sara Lee also made the list and beat what IRI labelled the “abysmally low” odds of success for a new product.
This week, we’ll be talking to IRI to ask why it believes low-sodium soup and functional bread were winners in the US last year and for its forecast for the NPD trends to watch in 2008. It will make for interesting reading…
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