5 Reasons for a New Products Pipeline

We’ve heard the saying, “nothing lasts forever”. This is probably true of just about anything, and it is certainly true for food and beverage products. The chart below shows the 4 basic stages of a food or beverage product life cycle.

Understanding these stages is important to knowing why a new product pipeline is critical to continued market success. Let’s break down the stages.

Introduction Stage

This includes the time for conceiving the product idea, formulating it, designing the packaging, label statement, clearing the regulatory hurdles, manufacturing, distributing and initially promoting the launch of a new product. It represents about 1-5% of the lifetime of a product and is very resource / investment intensive.

Growth Stage

A growing number of consumers begin to try and judge whether it may be worth consuming repeatedly. In this phase investment in the manufacturing, distribution and promotional infrastructures begins to show an accelerating rate of return. This is also the time when tweaks in a products formulation, packaging, distribution systems, etc. should be considered. The Growth stage normally represents about 10-15% of the product’s total life cycle.

Maturity Stage

This is when the product’s sales peak, plateau and begin to decline. The time that a product remains in this stage varies greatly and depends on many factors: market size and saturation, number and strength of competitors, changes, or additions to products within the category, availability of new technology to enhance a product or improve manufacturing / distribution efficiencies. Serious thought should be given to what can be done to successfully confront these factors and extend your product’s life cycle. On average a successful product spends about 75-85% of its time in the Maturity phase.

Decline Stage

In this stage sales start to show a consistent falling pattern and efforts to reverse such show diminishing returns. Here the strategy often changes to lowering costs and prices to retain as many of its most loyal customers for as long as possible, or until company management decides other products or investments offer significantly greater returns. A product is in this stage for about 10-15% of its total life cycle.

The length of a food or beverage product’s life cycle is nearly impossible to predict from the onset. However, as time goes and markets evolve, you should be able to judge where your product, and its category, are by tracking their sales growth/decline. While many things can be done to try to extend a product’s life cycle – opening new markets, domestic or global; advertising new product benefits; introducing new and improved versions/flavors; finding new uses for your product - pets love it too - like most lives its end is inevitable, and ultimately your focus should turn to new product ideas.

5 Reasons for The Need of New Product Development (NPD)

Strategically, two of the keys to a successful and sustainable food or beverage company are to manage / maximize current product life cycles and to develop and launch successful new products. In the previous section we touched on basic ways to extend / maximize a product’s life cycle. Here we will discuss 5 reasons why New Product Development (NPD) is a critical component.

1. New Products Can Grow Your Customer Base
   
   New product development is considered the cornerstone for building a successful business. Well-conceived, professionally formulated and skillfully executed new products can help a company capture new consumers or enter new market segments without cannibalizing sales of existing products.
   
   
2. New Products & Line Extensions Can Draw Fresh Attention & Customer Consideration to Your Existing Brand/Products
   
   We’ve seen many instances where adding a flavor to a beverage line ignites a new phase of growth for the original flavors as well. Therefore, many retail chains will insist that you have a cache of line extensions that can be launched periodically to keep the image of your brand fresh in the minds of consumers whose attentions are easily diverted.
   
   
3. New Products Serve as Competitive Defense Mechanisms
   
   Maintaining and adding new products to a healthy family of successful products can push existing competitive products off the shelf or prevent new competitors from taking your slots.
   
   
4. New Products Can Open New Market Segments for Brand Growth
   
   The best recent example of this may be the Topo Chico® brand. Though the brand of sparkling water has been around for a long time in Mexico, in was introduced in 2017 in the U.S. market. Then, based on its success and that of the emerging hard seltzer segment, the brand was applied to a line of hard seltzer (5% ABV) products in the spring of 2021. It appears that the double use of the brand name benefits both products. Could the introduction of a Topo Chico Agua Fresca or Tequila be next? It’s certainly possible.
   
   
5. New Product Introductions Have Also Been Ways to Reposition Products or Brands
   
   Sometime miscalculations are made as to what consumers desire, or how those desires can be satisfied. It could be that the timing of your launch is off for some reason. Maybe an external circumstance, like a global pandemic, diverts consumer attentions or rearranges their priorities. When the fundamentals of your product are sound, but sales are slower than expected, you may want to consider adjusting and relaunching your product. You may decide to change your key selling points, make the product Gluten Free and Organic, replace the Sunrise Citrus flavor with a Michigan Mixed Berry flavor, or move from aluminum to glass packaging. A new and improved product relaunch could be your next best move.

Conclusion

Due to the reality of product life cycles and other business concerns, the importance of developing new products is difficult to understate. In fact, the idea of having a stash of new product formulas ready to launch has become more widely embraced in the past decade. abelei can help with your new product development efforts. Our 4+ decades of experiences in NPD are often seen as a valuable well of wisdom and know-how. Best of all such, consultations are offered as a free service. If greater levels of a particular expertise are required during the process, abelei has a database of established, well-connected, trusted business partners with varying expertise to whom you can be referred. If you would like to speak with an abelei professional, please click the “Schedule A Call” button below to start the conversation.

Wishing you much success with your new product development projects!