Food and drink manufacturers have less success with new products than their peers in the consumer goods sector, according to research from SymphonyIRI.
The food and drink industry accounts for over half of product launches but it is, on average, less successful than other sectors. The contribution of new products to total food and drink sales is 2.6%, SymphonyIRI said, compared to 3.5% across the FMCG sphere.
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Analysts researched 3,500 consumer goods products launched in the last two years and concluded that only one in five new lines achieved “faster than average sales”, the report said.
Tim Eales, strategic insight director at SymphonyIRI, said manufacturers rely on new products to “command a price premium” and boost sales but he warned it was “harder than ever” for NPD to be a success.
“Four out of every five new products brought to market fail to achieve a higher level of sales than competitive brands, which means the cost of innovating is rarely covered,” Eales said.
The SymphonyIRI report also claimed that promotions were “key” when a company was drawing up a strategy for its new products. It said 47% of a new product’s volume sales are on promotion.
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By GlobalDataEales also warned that the pressures on manufacturers margins meant new products were being introduced at a slower rate than before.
“The current pressures on FMCG manufacturers are squeezing margins to the point that there had been a slow-down in the rate of new product innovation. This is no surprise given the investment required to innovate and the risks of launching a new product,” he said.
