By Susan Viamari and Larry Levin
Healthier-for-you products, niche products positioned to meet needs of discrete shopper segments and products that excite consumers with new flavors and scents represent three of the critical paths to CPG growth as identified in IRI’s 2016 New Product Pacesetters™ (NPP) report. These 3Ps – prevention, personalization and pizzazz – were themes that dominated last year’s most successful new product launches.
Among the 100 food and beverage products that earned NPP status in 2016, 47 leveraged healthier-for-you attributes, claiming 67 percent of food and beverage Pacesetter dollars. This healthy innovation is translating to healthy growth; 57 percent of food and beverage categories that introduced healthier Pacesetter brands grew faster than the sector average, with some outperforming by a significant margin.
Bombarded by up to 5,000 messages per day, shoppers have, by necessity, become experts in filtering out information that isn’t personalized to their specific needs. The power of finely targeted messaging is reflected in the NPP winners. In the food and beverage aisle, customization can be illustrated by Not Your Father’s Root Beer, an innovative root beer-flavored beer. Among non-foods, solutions such as Garnier SkinActive offer a range of products that simplify skin care, no matter the skin type, and Garnier’s interactive website and skin care tutorial help people develop the ideal skin care regimen to their own unique needs and wants.
Enticing shoppers with sensory experiences rose to the top as a successful strategy for products introduced last year. Sixteen of the 100 largest non-food product launches provide some type of olfactory experience, with a focus on bringing stimulation and relaxation to everyday tasks.
Many large CPG manufacturers continued to turn to acquisitions to remain agile and competitive in this new landscape. In food and beverage, within the past few years Campbell Soup Company acquired Garden Fresh Gourmet, Plum Organics, Kelsen Group and Bolthouse Farms. In non-food, Unilever acquired Seventh Generation and Dollar Shave Club. Manufacturers have been finding success in this more niche-market approach to business.
IRI has identified several other trends emerging and evolving, as well. Transparency, which focuses on openness around a product’s ingredients, reducing the number of ingredients overall, and using natural, organic and non-GMO ingredients, is increasingly important to consumers. Understanding how shoppers balance healthy and indulgent eating has also emerged as an important manufacturer success factor. OREO Thins, for example, offers a new twist on a favorite indulgence, powerful enough to achieve over $100 million in year one sales. This is a win for a new product’s first year by most standards and rather remarkable in today’s market.
CPGs must temper year-one sales expectations, as only 4 to 5 percent of NPP winners hit the $100 milestone in the first year on the market—a standard that we have seen consistently since 2010. In fact, there is a continued downward trend in first-year revenue with this year’s Pacesetters as 67% saw their first-year revenue top out at $20 million. This comes on the heels of nearly half of the 2015 winners coming in under $20 million. The trend of niche targeting plays directly with the trend of lower-in-first-year dollars.
The good news for manufacturers navigating shoppers’ continuously changing wants and needs? Data and analytics are now fast and powerful enough to help CPG marketers understand these wants and needs, and to address them more rapidly and effectively than ever before.
We anticipate that the wave of the future will be manufacturers continuing to hit lots of singles to supplement the occasional home run in their new product development.
Want to know more about what it takes to achieve outstanding new product innovation? Contact IRI@IRIworldwide.com.