Kraft Foods Group has said it is improving its product development after admitting its track-record on innovation had not matched its competitors.
The US grocery company, created last year when Kraft Foods split in two, said today (19 February) it has changed the way it launches products.
Speaking at the Consumer Analyst Group of New York annual investor conference, Barry Calpino, vice president for breakthrough innovation at Kraft Foods Group, said the company was looking at “fewer, bigger, better” new products.
Calpino said the company was “early in the journey” of innovation. The group’s past record, he indicated, had not been strong.
“A big part of becoming really good at innovation has been facing the brutal facts and getting better. We were worst at innovation by almost any measure, qualitative, quantitative, outsider, insider, any way we looked at it. We benchmarked ourselves near our peer set in 2008 and we were near the bottom. Nearly everything we launched was considered a failure,” he said.
Calpino pointed to poor execution, too many small launches, a lack of focus and low investment. Only three of 19 products launched in 2009 received more than US$10m in A&C support.
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Since its formation last autumn, Kraft Foods Group has said it would look to improve its product development. Last year, ahead of the split, Tony Vernon, the company’s CEO, said it would look to revitalise its product development, which had stagnated as part of the larger Kraft Foods.
Calpino told CAGNY Kraft Foods Group’s innovation needed to be “consistently best in class”. He said Kraft had changed the way it approached innovation. Kraft would continue to support products after they were launched. “A lot of people look at innovation like a funnel that ends at launch. We will look at year one and two as equally important,” he said.
Calpino said Kraft Foods Group, which owns brands including Planters nuts and Oscar Mayer meats, would launch into the “hottest channels” and also better target Hispanic consumers, a fast-growing demographic in the US.
“We’ll become excellent at leveraging the Hispanic voice early in our development. Everyone talks about the Hispanic consumer, but there is not much going on in innovation to get that voice way up front.”
Last month, Kraft Foods Group unveiled plans to launch more than 40 products, marking the first swathe of NPD since the split.
New products include extensions to some of Kraft Foods Group’s best-known brands, such as Miracle Whip, Philadelphia, Planters, A1 and the Kraft and Polly-O String Cheese brands.
“Every one of these projects has a business unit team behind it,” Calpino told CAGNY. “We are excited that the energy and spirit inside Kraft is burning to get better. That fire is still red hot. Innovation was one of our biggest weaknesses as a company and today it is one of our biggest [achievements] but we have only just scratched the surface.
“What’s next for us is to take that playbook we put in place and build on it and build on a next level of innovation. Great marketing and great innovation are going to be the pillars of our success at the new Kraft.”