Game Changers at the New Products Conference
The latter also served as one of the topics Laurie Klein, vice president of The Family Room (formerly Just Kid Inc.), discussed in her presentation “Success and Vulnerabilities of Private Label.” Private label has jumped from a 2.1 market share (in dollars) in 2009 to 17.3 today; an increase from 1.9% unit share to 21.9%, according to ACNielsen.
Klein divulged the results from a recent Family Room online survey of 1,000 moms aged 25-54 with at least one 6- to 14-year-old in the home. This particular survey explored the motivations behind private label purchases. For 72% of respondents, the number one reason for switching to private label offerings has been price, with 46% noting they buy “a lot more” or “a little more” store brands than a year ago.
Some 51% say store brand quality has improved, with 46% noting a greater variety of products offered by store brands. Furthermore, this points to the vulnerabilities of name brands: 78% of moms said they “often purchase store brands over name brands if ‘I don’t see a difference in quality.’” However, two key takeaways from the Family Room study had to be the 65% of respondents who noted, “Once I find a store brand that I/my family likes, I don’t usually go back to name brands,” and the only 2% who will buy fewer store brand products when the economy recovers.
A recent Spirit of Innovation Award winner, Wendy Friedmann of RW Delights, has found particular success in the private label arena. In fact, 80% of the company’s business is in the private label arena, with a product that is a single-serve, gourmet-quality and easy-to-make soufflé. The idea was to create a simply prepared dessert that even seasoned chefs can find intimidating to prepare, but Friedmann and her partner at RW Delights had to overcome a series of challenges, some of which they overcame with the help of external resources, including suppliers, Prepared Foods articles and industry organizations. One challenge that she has yet to resolve, however, stems from the company’s desire to remain “natural,” but a new refrigerated mousse product from the company has challenged the company’s goal of “no preservatives.” So, the company is working on an all-natural preservative solution.
The desire for natural and organic has proven a trend with some degree of staying power, and according to Joe Derochowski, executive director with NPD Group, it is one of the behaviors expected to grow more important in coming years, along with restaurant-quality foods prepared in the home, light and low-calorie options, the usage of slow cookers and appetizers to accompany (or even in place of) in-home main meals.
Derochowski also explored some of NPD’s research in meal consumption: lunch, the group has found, is the meal that consumers spend the most time eating (30 minutes), with 46% of these meals eaten in the home, but it is also the meal most likely to be skipped. Leading the pack in in-home consumption, dinner takes consumers an average of 24 minutes, but breakfast has become the quick-consumption meal: it averages 13 minutes per meal, and 75% of the meals are consumed in the home.
While the food industry has taken something of a beating in mainstream media and even films in recent years, Mary Shelman, director of the agribusiness program at Harvard Business School, believes the industry has gotten something of a bad rap. She noted, “There seems to be a call to reject modern high-yield agriculture (big ag, industrial food and multinational corporations) and even science and technology. However, often ignored is one fact that has many ramifications; the world population has doubled since 1960, yet since that time:
* Food is 75% less expensive.
* Overall, diets are better.
* Meat consumption is four times higher.
* Grain production is up 250%, while agricultural land usage is up less than 15%.
Shelman took particular issue with the organic and local trends, noting organic agriculture requires more land; organic and local do not scale up well; not every area can (or should) produce local foodstuffs; and organic and local does not necessarily mean the food is safe.
A related topic was the subject of Lori Colman’s presentation, “How Food Companies are Succeeding (and Failing) at Marketing Sustainability.” Co-CEO of Colman Brohan Davis, she explained what sustainability means to the consumer, noting how environmentally aware and responsible the Millennial generation is. In fact, according to her company’s research, 77% of Generation X and Millennials have noticed more foods and beverages being marketed as green/sustainable. While 60% of respondents “regularly buy ‘green’ foods and beverages,” that number is even more striking when broken down by age demographic: 78% of those aged 18-49 note they regularly buy “green” foods and beverages. Furthermore, some 62% of respondents had taken action to encourage companies to be more sustainable:
* 83% of those 18-34 years old.
* 67% of 35-49 year-olds
* 47% of those between 50 and 64.
However, Colman strongly cautioned developers against marketing sustainability without properly considering several factors:
* Third party validation of the claims.
* Nothing “fluffy” or vague in the marketing; she noted “natural” is becoming white noise and even organic is becoming suspect.
* Do not hype one benefit, not without considering the product’s overall “green” credentials.
* Review the Federal Trade Commission’s (FTC) guidelines for the use of environmental claims.
The FTC and FDA served as topics for Steven Steinborn, partner with Hogan Lovells, during “Recent Updates in Food and Beverage Regulations.” He noted the Obama administration is returning to the form of the 1990s, with an enforcement-minded approach. In March 2010, alone, 17 companies received warning letters, and the FDA is looking even at websites and links off of corporate sites to third parties, while the FTC is paying particular attention to diet and health claims in advertising, as well as ads targeting young people.
These are just a sampling of the more than a dozen presentations during the 2010 New Products Conference. For information on the 2011 New Products Conference, visit newproductsconference.com.
From the October 18, 2010, Prepared Foods E-dition