New product development can be undertaken for a host of reasons but capitalising on major market trends, such as organic, health and wellness and convenience, has arguably become the key driver for new product development in the food industry. Katy Humphries reports.
In any consumer goods market, investment in new product development (NPD) is vital, and the food industry is no exception. Successful NPD allows companies to increase consumer interest, reinvigorate brands, expand a brand’s franchise, establish new niches and, most crucially perhaps in today’s food market, captitalise on key market trends.
Market trends, such as convenience, health and wellness, and organic, have become key drivers for new product development, according to a new report from just-food, Global Market Review of New Product Development Strategies in the Food and Drink Industry – Forecasts to 2012.
The demand for quick, easy and convenient food products is inspiring a whole host of new products in the convenience sector, such as Heinz’ ready-made beans on toast that can be cooked in the toaster, launched only last week.
The health and wellness trend is also a key driver for NPD in today’s food market. Consumer demand is spurring NPD, but food companies are also modifying and developing new products in response to government education campaigns and legislative reforms, such as initiatives to tackle obesity.
With consumer groups lobbying for action and governmental bodies considering various different methods to tackle obesity globally, food companies are being forced to alter their ingredients lists – lowering salt, fat and sugar content. This is necessary not only to appeal to the health-conscious but also to avoid harsh and vociferous criticism from consumer organisations.
The demand for healthy products goes beyond removing things that are bad for you from foods. Many consumers want foods fortified with ingredients that boast health benefits, such as Omega-3 and healthy oils, vitamins, whole grains, fibre and probiotics.
So rather than seeing the health and wellness trend as a backlash against unhealthy products, it can be viewed as a new product development bonanza, providing countless opportunities for imaginative new product development. Numerous new products that are launched on to the market have some kind of health benefit associated with them and this is a major growth sector for the food industry.
For example, according to global manufacturer Sara Lee, 2006 is the year that wholegrain goes mainstream. The company believes that products such as its new bread and muffin range, will entice consumers who are not ready to move to 100% wholegrain. In mid-2005, Sara Lee launched Soft & Smooth bread which the company says is now the best-selling loaf in the US.
The rapidly expanding organic movement has been one of the most significant trends in the food industry in recent years, spurring the development of a number of new organic products, ranges and brands.
The varieties of organic foods now available in supermarkets have carried the movement from the margins of grocery retail into the mainstream.
An organic label increases consumer confidence and gives food companies an ethical edge in the eyes of shoppers. It also allows food companies to attach a premium price tag to products.
As the organic boom gathers pace, Karen O’Neill, co-founder of RDA Organic, believes that product development within the organic sector will become more important for companies to differentiate their products. “Innovation is key for creating continued long-term interest in brands,” O’Neill told just-food. “Just being ‘organic’ isn’t enough, as the consumer really does want choice. Consumers are demanding fresher, more interesting products, and are willing to pay a little more for healthy, great tasting products.”
NPD can also facilitate a company’s expansion into new markets regionally and ethnically, as new products are designed to cater to cultural taste preferences.
US food companies in particular have increasingly focused on particular ethnic groups: the latest to come under the microscope being consumers of Hispanic origin. According to the US Census Bureau, Hispanics are the youngest, fastest-growing segment of the American population. With young families and growing numbers, Hispanics are among the US food industry’s most coveted customers.
Many food companies are responding quickly to this demand. Kellogg has attempted to appeal to this demographic by featuring “Tony el Tigre” on boxes of Frosted Flakes and advertising in Spanish as well as English. However, Unilever is among those companies who have taken things a step further, creating new products specifically designed to appeal to Hispanic tastes with the development of Hellman’s mayonnaise with lemon.
To achieve profitable growth in the escalating new products race, companies must have strong innovation and new product development capabilities. The key to successful product development is an in-depth understanding of what consumers want.
According to Andy Reynolds of PA Consulting, this is a more complex issue than assessing new product development purely in terms of the end product. “You need to understand across the whole consumer experience – not just trade,” Reynolds observed. “You must think about how consumers will hear about the new product and whether they will actually want to buy it.”
The science of new product development is becoming ever more complex, but the rewards too, in terms of competitive advantage, cannot be underestimated.
For more information on the just-food.com Global Market Review of New Product Development Strategies in the Food and Drink Industry – Forecasts to 2012, go to www.just-food.com/store