Need to Develop or Improve Products?
30,000 – that’s the estimated number of new food and beverage products launched globally each year. With “success” defined as a product that is still marketed or sold on a company’s website for 18 months or more, Mintel’s® Global New Products Database and company websites estimates 66% per year succeed. Across product categories here is the success ratio breakdown[1]:
- Baby Food 87.5% successful
- Bakery 70.9% successful
- Breakfast Cereals 65.1% successful
- Chocolate Confectionery 78.2% successful
- Dairy 61.5% successful
- Desserts & Ice Cream 57.6% successful
- Fruits & Vegetables 62.2 % successful
- Meals & Meal Centers 57.0% successful
For those of you that believe a 66% success rate is high, you have probably been exposed to other reports and opinions that put that number at between 10% and 30% success. These differences normally are the result of the definition of “success” for new products. Regardless of the success rate, one fact stands clear: tens of thousands of new food products are developed each year, every year. Why is that?
Though there are many reasons as to why companies feel the need to develop new products, the primary reason boils down to improving or maintaining a brand’s competitiveness, which is essential for long term viability and growth. Lately, the following are the 7 most common reasons CPG companies seek to achieve this.
- developing real or perceived healthier versions of the same product (ie., reduced sugar, lower-carb, Non-GMO, organic products)
- products that address specific health concerns (for instance, gluten-free products for people with celiac’s disorder)
- more environmentally conscious products that are sustainable or packaged with more eco-friendly materials
- products that are easier to prepare (instant potatoes) or sold in more convenient and better sized packaging (coffee pods)
- additional flavor options to appeal to a broader and more culturally diverse customer base, extend shelf-space (squeeze out competitive options), and boost overall brand awareness
- improve the perceived quality (flavor, appearance, label statement, etc.) of an existing product.
- leverage a brand name into a new product category (Topo Chico® sparkling waters and now hard seltzers)
A General Process for Developing New Food and Beverage Products
There are many approaches to successfully developing new products. Most involve similar steps, though the order / timing of each step varies. Take care to execute each step in the process diligently and thoroughly. If you are short on resources (time, energy, money, expertise), it may be better to limit your initial market size and/or extend your timeline for completion. As long as you have other sources of sustainability, consider launching your business/new product(s) on a local, more manageable scale and use the time and market feedback to perfect your product, its story, packaging, distribution, etc. before you take greater risks with larger rollouts. That said, the following is a general guide to developing and launching new products.
1. Define Your Consumer Persona with Great Detail
One of the most important steps in the process is to clearly define the ideal consumer of your new product. Demographics such as gender, age, occupation, income, lifestyle, recreational interests, geography, neighborhood, retail locations frequented, social media they follow, venues where they can often be found, perspectives on health & nutrition, etc. are all important and should be used to build your ideal customer “persona”. You should refer to this persona frequently when answering questions about product formulation, packaging size and design, product placement/distribution, marketing/promotion/sales, etc.
2. Develop / Formulate Your New Product
Your product needs to speak to the likes, needs, wants and perhaps dreams of your persona-consumer. It also needs to be microbiologically and functionally stable through a reasonable shelf life; comply with all governing regulations; and organoleptically appealing (color, odor, taste, feel and even auditory in the case of carbonation or crunch), all while being profitable to make and sell. There is a lot to developing a successful food or beverage. If you haven’t done it before or it has been a while since your latest launch, please note the closing section of this blog: Getting Help – You Don’t Have to Go It Alone.
3. Design Your Packaging
Much of the innovation and differentiation of new products is related to advancements in packaging technology. Take some time, perhaps consult with packaging experts, to consider how the latest packaging designs and ideas may set your product apart. In the beginning your product’s package will likely be its most effective advertising tool. Be sure it helps tell your story and communicate the product attributes most important to your consumer persona.
4. Make Small Trial Run(s) for Shelf-Life & Consumer Tests, and Sales Samples
Once you have a solid formulation that you believe satisfies your persona, regulatory compliance, cost and other parameters, it’s time to make a 300-unit test run. To do so you will need a manufacturer or development company that has this capability. If you have done diligence in crafting your product and packaging, your test run should go relatively smoothly, and the finished product will be very close to what you ultimately sell. Unless, you have significant problems with your trial run, you should be able to use these trial units for shelf-life testing*, sales samples and/or consumer testing. Use the feedback from conversations with buyers of retail locations and target consumers to consider changes to your product and package before you invest in a larger production run to fill your sales pipeline. You may choose to make multiple test runs.
Please Note* - Product stability over time is very important. This is of particularly concern if your product has a pH above 4.0. The last thing you want is a product that shows signs of bacterial growth, separation, discoloration, oxidation, or rancidity during your stated shelf-life
5. Find Manufacturer(s) and Distributor(s) that Fit Your Start-Up and Beyond Capacities
You should begin to shop for manufacturing and distribution partners shortly after you have painted your consumer persona and have most of the kinks worked out of your formulation. Most product development partners can help you locate manufacturers, and most manufactures can recommend at least some potential distributors. If you are a start-up company, the challenge will be to find such companies that are willing to work with your smaller volumes at reasonable prices.
6. Determine Where and How to Sell Your Product
Again, the process / plan for marketing and selling your product should begin close to the time you conceive your customer persona and product formulation, especially if you have a tight timeframe - less than 12-months from concept to market. You will need to get a sense of how much you can sell your product for at retail, and the shares of that which be required of retailers, distributors, manufactures, packaging, and ingredient suppliers. Again, if you are a start-up company, until you can build some following for your brand and significant sales volumes, you won’t be very profitable – unless you can do much of the necessary functions yourself (ie. marketing by hitting the road yourself, sales through your own website and e-retailers, and distribution through your own warehouse/garage and van).
7. Getting Help – You Don’t Have to Go It Alone.
If you are a start-up company or have no one in your organization that has much experience with developing a new food or beverage product, it would be wise to start with hiring a professional product development company. They will be knowledgeable on sources of various ingredients and their optimal use levels in your product; will have proper laboratory equipment (ie, a sophisticated lab scale; lab processing equipment; instruments for various product and quality tests, etc.); an understanding of FDA and other government regulations; know product manufacturing companies and possibly distributors, etc. There is a lot to do and you will need significant time, energy, expertise and financial resources to do so on your own.
Fortunately, there are several professional product development companies operating in North America today, and if you need a list of great ones specific to your type of product interests, please request those by email to tgooding@abelei.com. abelei flavors routinely assists with new product development but does not provide the type of concept through commercialization services and direction that other companies offer. If you need help with only a few parts of the development process, many of these companies offer ala carte services that you specify, and they know of companies that provide other expertise. Even if you have experience in developing food and beverage products, depending on your time, energy, budget and expertise, you still may find it worthwhile to bring a professional development house on board for parts or all of the process.
Conclusion
For both established and start-up companies, New Product Development is essential for a brand’s long-term viability and growth. The nature of today’s competitive and regulatory environments make it very challenging to successfully create and market new products. If you would like help with your new product development projects and would like to speak with abelei professionals who have helped companies through the process thousands of times over four decades, please click the “Schedule A Call” button below to start the conversation.
Wishing you much success with your new product development projects!