Mintel: F&B Launches Dropped Nearly 30% In '09
The number of new food and beverage products launched in the U.S. last year plummeted by an unprecedented 29%, according to the latest analysis of Mintel's Global New Product Database (GNPD).
"In the last decade, Mintel GNPD has only tracked occasional, small declines in new product introductions for the U.S. market -- never a decline as strong as this," observed Lynn Dornblaser, leading new product expert for the research firm.
The total U.S. F&B product launch count for 2009 was 15,675, versus 21,555 in 2008. Prior to the recession's onset, in 2007, the count was 22,241.
The lingering economic downturn clearly caused smaller companies, which typically introduce a wide range of new products, to slow or cease launch activity last year. This was particularly apparent in a category like snacks -- where sales are growing, but product launches dropped 34% last year to 1,568. "Smaller, specialty companies are particularly active in the snack category, and they've been hardest-hit by the economy," notes Mintel senior analyst Krista Faron.
Launch declines also reflect large companies' growing inclination to "streamline their portfolios and be much more strategic about product development and assortment strategies," Faron points out. "Companies can no longer afford to be the third- or fourth-tier brand in a category. They're focusing on their leading, highest-volume, highest-margin products" and retreating from the "unbridled" product development that routinely spawned multiple flavor/product assortment launches within a single line, she says.
Those strategies are, of course, also a necessary response to increasing pressure from retailers. Overwhelmed by display and inventory issues as a result of the mushrooming number of products on shelves in recent years (up about 50% over the last decade, by some estimates), grocery retailers were cutting back on SKUs even before the recession.
"The recession has caused retailers to focus even more on the highest-margin, highest-volume product assortments," confirms Faron. "And in a growing number of cases, third- and fourth-tier national brands are being cut in favor of private-label brands that are more profitable for the retailer. Private label is a major dynamic."
All but a handful of categories showed double-digit percentage declines in their number of launches last year, as compared to 2008. In addition to snacks, categories showing the largest percentage drops included sugar/gum/confectionary (-44%, down to 691 launches in '09); dairy (-43%, 748 launches); baby food (-43%, 125 launches); chocolate confectionary (-37%, 960 launches); savory spreads (-36%, 170 launches); and non-alcoholic beverages (-34%, 2,083 launches). Even alcoholic beverage launches were down 16% (to 552).
The categories that saw launch growth or small declines were mainly pantry staples and foods offering nutrition at economical price points. Side dish launches rose 16%, to 584. "Rice, beans and other side dishes are extremely economical, in part because they're often meatless," notes Faron. PB&J and other sandwiches drove a 12% increase (336 launches) in new jams/jellies (aka sweet spreads), and soup launches rose 1% (to 341).
Dessert/ice cream launches held their own (-1%, 869 launches), as did sweeteners and sugar launches (flat, at 76) -- although the latter reflected innovation in the form of new, stevia-based sweeteners, Faron points out.
Looking at launches by product claims, double-digit percentage declines were also the norm -- more reflecting consumers' inability to afford specialized products than declining interest in these, says Faron.
For example, launches claiming added calcium and fiber were down 55% and 32%, respectively. Launches of products claiming "low/no/reduced" -- as in calories, sodium, sugar, fat, transfat, cholesterol, carbs, glycemic count and allergens -- were also down by double digits.
Budget-consciousness has also slowed organic and all-natural launches, at least a bit (down 36% and 34%, to 1,610 and 2,112 launches, respectively).
What launch claims saw growth? New products with explicitly economy-oriented claims on their packaging (such as "economy-priced" or "value size") grew 72% (410 launches). Products claiming environmentally friendly packaging grew a whopping 103% (1,447 launches) -- although those claiming that the products themselves are environmentally friendly declined 6% (254 launches).
Other claims on the launch upswing included gluten-free (up 6%, to 1,246); ease of use (up 5%, to 966); ethical/charity (up 7%, to 324); convenient packaging (up 8%, to 798); high protein (up 25%, to 310); vegan (up 2%, to 323) and weight control (up 3%, to 232).