New Products Conference Looks to 2013 and Beyond
Keynoting the 30th Prepared Foods’ New Products Conference, held at the Ritz-Carlton in Palm Beach, Fla., Richard Lenny, operating partner with Friedman, Fleischer & Lowe LLC, and former chairman, president and CEO of The Hershey Company, explored “Playing to Win: Turning Insights into Actions.” Comparing the Dow Jones-listed companies in 1990 vs. those on the list today, he noted half of that list remains the same, and today’s Dow-listed companies are primarily consumer-oriented.
These companies have learned and adapted to deliver superior value proposition to multiple stakeholders—all while adhering to factors critical to new product platforms: relevant branding; delivering true innovation across multiple need states and benefits; a broad geographic reach; products that are extendable over time; an insulated competition set, as opposed to a broad competitive environment; and a meaningfulness to their consumers.
Lenny explained a company’s power can grow by enhancing its relevance, extending its reach—thereby enabling growth. As far as enhancing relevance, he noted, “Consumers are more prone to respond to something positive, rather than the lack of something negative,” a notion additional speakers would echo throughout the conference.
Food retailers are a key example of companies extending their reach, as they increasingly view private label as more than an acceptable price alternative. They, in fact, are using private label to create banner/store loyalty, via better-quality, broader offerings and brand-building via promotions.
Private label’s laurels likewise were at the core of a portion of Lynn Dornblaser and David Jago’s presentation, “10 Trends to Keep in Mind When Developing New Products.” The directors of Innovation & Insight at Mintel International explained that U.S. private label products are ramping up innovation. While these may be at a good price point, they are not necessarily the lowest. However, they have other benefits. Looking ahead, the pair cautioned that private label will not simply go away once the recession and economic troubles pass; in fact, private label products actually may afford retailers a unique approach to capitalize on the “local” trend. National brands could well take inspiration from private label offerings, in particular in the tiered approach of good, better and best options at varying price points.
“Economy” is about more than simply price, Dornblaser and Jago cautioned. It is less about the value package and more about resizing at less than $1 per package. This could even extend into formulations with fewer ingredients.
Consumers, they realized, are contradictory and perhaps confused, particularly in the arena of health and nutrition. Fruit and vegetables may have to be smuggled into diets: 63% of Americans fail to eat two servings of vegetables a day; 64% fail to meet that target for fruit servings.
In addition, manufacturers would be well advised to focus more on managing hunger and weight management, as fiber claims have risen 30% from 2008-2011, while high-protein products have enjoyed a 50% rise over that time. They suggested companies look to fat and sugar reduction but emphasize the positive attributes of the resulting product. Consumers regard “natural” as “healthy,” so Dornblaser and Jago suggested companies omit the “fake.”
Clean labeling equals natural, which equates to pure and premium. “Green” is not just recycling, they noted; it is the whole supply chain, though it mainly is about the packaging. The message to consumers should be one of simplicity: Simplify the message, simplify the product. Consumers will try new, but only within limits, influenced by restaurants, friends and relatives. Look at foodservice, niche markets, even other countries as inspiration, they recommended.
Foodservice, put simply, has evolved from suppliers repackaging items in larger quantities. This was noted by Dr. Scott Edgett, CEO and co-founder of the Product Development Institute and Stage-Gate International, and Devon Gerchar, director of member value at International Foodservice Manufacturers Association. It now has emerged as an area to innovate and educate the consumer. But, to do so requires a team and a process. Vendors and restaurants must realize they are competing not just with each other, but also with the potential for consumers to prepare meals at home.
Taking a restaurant concept into the retail market obviously requires far more than simply adding the restaurant name to the label. As Kevin Higar, director of operator product development at Technomic, asked, “Any restaurant can go into retail, but should they?” He explained the three steps involved: First, identify the candidate; which menu items represent the restaurant? Which items or ingredient components best capture this? Can it be recreated in retail form, and will the consumer be able to replicate it in an acceptable prep time and with an appropriate value perception?
Second, the company has to target the consumer and, third, capture their attention. Higar cited four examples of varying degrees of success. Starbucks excelled on all fronts and captured consumers looking for quick, on-the-go, small, affordable indulgences. Marie Callender’s is a chain of fewer than 90 units but has emerged into a nationwide retail presence—based almost entirely on a realization and appreciation of comfort foods and quality needs.
Less successful restaurant-to-retail translations included Chuck E. Cheese snack meals: Busy parents are indeed looking for convenient meals and snacks for their children, but in this range, there was a message disconnect. Chuck E. Cheese is an experience and simply is not about the food product. The retail effort failed both in flavor and nutrition expectations.
Similarly falling short was a line for children bearing the name of a celebrity chef. Emeril’s Bam Meals sought to capture parents looking for better-for-you options, but it was a canned product: a simple disconnect, when realizing that Emeril Lagasse’s chef identity centers around “fresh food fast.”
Bigger Ideas, Faster
Lenny noted that 80% of new products fail, but why? He contends, “A company’s initial success often creates a disproportionate level of confidence in its ability to have subsequent successes.”
For its part, General Mills was seeking bigger ideas, faster learning and the ability “to leverage more smart individuals” when it established the General Mills’ Worldwide Innovation Network (G-WIN). Mike Helser, G-WIN associate director, noted the company had to open up and change the “close-to-the-vest” mentality, and begin sharing business strategies and insights.
The company has connected with global talent to spread the word about G-WIN and, in the process, has utilized Indigenous Innovation Tours to explore what is uniquely indigenous about certain markets, namely China and India in 2011. The whole effort has been to connect: examine (get the question right); expand (develop new hypotheses); and explore (make connections)—while building stronger briefs and leveraging existing networks.
A year after winning an Excellence in Innovation Award, Dr. Wayne Geilman, with Mrs. Field’s TCBY Brands, returned to the New Products Conference to address “What a Difference a Year Makes.” He explained that the toughest thing for a developer to do is to sell the product. Geilman recalled that the winning TCBY product was formulated without claims in mind, but with benefits the consumer could discover and research. Just after the 2011 NPC, TCBY added a Greek yogurt variety, and that product is now the chain’s number four flavor. Geilman believes consumers embrace Greek yogurt’s low-carb, high-protein benefits. Furthermore, since the last NPC, TCBY has expanded its line into retail with eight non-fortified flavors at Wal-Mart.
Compelling the consumer to make that decision to purchase can strike at the heart of new product success. After all, a product could be perfectly prepared and realized, but until it prompts the consumer to try it, it will remain on a shelf. Laurie Klein, vice president, and Chris Olesen, director of strategy and innovation with The Family Room, delved into how family members work together and reach consensus on product and brand choices. Incorporating a live panel who had shopped for a variety of foods and beverages in the preceding days, Klein and Olesen found that, while children and adults do differ on their food selections, the reasons for those disparities are not always cut-and-dried.
The first myth to be dispelled was that grocery shopping is solely the mom’s domain: some 39% of dads make a grocery store purchase at least once a week. So, parents are indeed sharing the grocery-buying responsibility, but children are impacting the choices they make.
Klein explained, “54% of parents consider their child to be one of their best friends, which will have implications on discipline, values and opinions.” Today’s new product development is geared primarily to target moms, yet only 23% of moms describe their role as “having the final word.” Some 53% of children have some degree of influence on purchases.
As a result, Klein advised developers to look at their brands through the lens of the family and to engage children. Nevertheless, bear in mind that delighting the child is not enough: Be aware of and target parents’ key drivers, as well.
Diabetes is a huge and still-growing problem in the U.S. and, increasingly, around the world. During his presentation, “A Nutritional Approach to Managing Diabetes,” Bob Jones, CEO of Scientific Nutrition Products Inc., explained that some 23 million diabetics are in the U.S., but only 17 million are aware of it.
Worldwide, there are an estimated 79 million pre-diabetics; projections indicate there will be 366 million diabetics globally by 2030. Recognizing the role of nutrition in managing the condition is key for both those at risk of diabetes and manufacturers alike. Fiber, for instance, can regulate and slow the absorption of glucose, while omega-3s and sterols can help with blood lipids to lower blood cholesterol levels, and antioxidants are a key driver in insulin resistance.
Two issues, Jones continued, are looming: education and persuasion. Even motivated consumers are often baffled. New product successes in the area will have to taste good, be convenient, provide ease of use and deliver it at (what the consumer perceives as) a fair price—while actually adding the medical value and benefits those consumers will need.
Addressing consumer trends and needs is central to the New Products Conference annually, and the next installment will be held at San Diego’s Loews Coronado Bay, September 15-18, 2013.
Sabra Dipping Co. LLC found success with the belief that it could capitalize on the opportunity to become a fresh dip destination, explained Tulin Tuzel, chief technology officer. She saw Sabra’s mission clearly: to create an edge, be a category leader and bring more consumers to this segment of the marketplace.
Dr. Wayne Geilman, with Mrs. Field’s TCBY Brands, explained the winning TCBY product was formulated without claims in mind, but with benefits the consumer could discover and research.
Despite having fewer than 90 units, the Marie Callender’s brand has established a nationwide retail presence, courtesy of an appreciation for comfort foods and quality needs.