Pulse report: New Product Pacesetters - Consumer-Centric Innovation Delivers Results

Larry Levin,
executive vice president, insights practice leader, IRI

Shopper behavior mirrors the economy at large, with consumers feeling more optimistic about the future but still holding on to the frugal mindsets and behaviors they adopted during recent, less robust times, according to IRI's "2012 New Product Pacesetters."

The report explores these seemingly contradictory behaviors by taking an in-depth look at sales trends across grocery, drug and mass merchandise stores, as well as dollar and club channels, Walmart and military commissaries. This expanded environment represents more than $1 trillion in retail sales.

There is no doubt that the past few years have been challenging for CPG marketers and consumers alike. It's no surprise, then, that consumers continue their relentless pursuit of value. But consumers determine value by considering more than simply price. Performance and experience also play a critical role.

Targeted Innovation

According to the report, 30 percent of consumers are "always" looking for new products to try, feeding CPG efforts to keep fresh ideas and product innovation in the pipeline.

Advances in technology and ingredients are spurring more targeted innovation, while significant changes in marketers' access to analytics are allowing them to integrate disparate pools of data, resulting in granular insights about shopper behavior, criteria and attitudes.

Top Products: Food and Non-Food

In food and beverage, marketers are successfully addressing opportunities around a resurgence of at-home eating and entertaining by value-conscious consumers. According to IRI, 43 percent of consumers reported buying treats for at-home consumption to save money versus dine-out options, and 36 percent reported entertaining in the home more often.

On-the-go options were prevalent among top food launches, with many offering multiple benefits, including enhanced and/or more exciting taste, nutrition and convenience. A full 27 percent of food and beverage 2012 Pacesetters offered better-for-you benefits.

"Consumers are looking for options to feed their desire for health and wellness and indulgence, sometimes simultaneously," explains Larry Levin, executive vice president, insights practice leader, IRI.

Beverages accounted for 31 percent of 2012 Food and Beverage Pacesetter brands and offered a variety of benefits, ranging from nutrition and energy to indulgence and flavor excitement.

In non-food, pet-care product innovation picked up, capturing 17 percent of non-food Pacesetter dollars in 2012. In 2012, 15 new pet-care banners achieved IRI New Product Pacesetter status. This is a significant shift from 2011, when six launches were named Pacesetters. Personal hygiene brands accounted for 26 percent of non-food Pacesetter dollars in 2012, with a wide variety of launches that raised the bar on self-care.

Across about two-thirds of non-food Pacesetters, new ingredients or formulations were at the heart of innovation.

"CPG marketers need to pull ideas from both inside and outside the CPG marketplace to deliver consumer-centric innovation that delivers a better, faster, easier and more enjoyable experience for the consumer," concludes Levin.

Average Year-One Sales ($ Millions)

Source: IRI New Product Profiler™, new products that completed their first year in calendar 2012 *"food, drug and mass channels, excluding Walmart"
While line extensions provide a less costly path to innovation, the resulting new products typically produce a smaller sales increase than net new brands, the IRI report says. During the past decade, new food and beverage brands generated 9 percent more in year-one sales on average than new brand extensions. In 2012, however, the difference was exacerbated with new food and beverage brands commanding an average of $54.3 million in sales in multiple outlets, 32 percent more than the $41.0 million new brand extensions generated on average.
CPG marketers brought nearly 1,900 new products to retail shelves in 2012, with the non-food segment outpacing food and beverage by a significant margin. The most powerful launches, IRI New Product Pacesetter brands, captured $7.9 billion in year-one sales across the multi-outlet geography.
2012 New Product Pacesetters: Top 5 Non-Food Brands
Year-One Dollar Sales ($ Mil)
Source: IRI New Product Profiler™, new products that completed their first year in calendar 2012

2012 New Product Pacesetters: Top 5 Food & Beverage Brands
Year-One Dollar Sales ($ Mil)
Source: IRI New Product Profiler™, new products that completed their first year in calendar 2012

TIP: Continually experiment with new ingredients and technologies that may strengthen your value proposition.

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