Food and beverage launches fall in US

29 January 2010

CHICAGO: The number of food and drinks products launched in the US declined by nearly 30% last year compared with 2008, research from Mintel shows.

According to the National Retail Federation, the industry body, total retail sales in America fell by 2.5% in 2009, although the organisation expects an expansion of a similar level in 2010.

Despite these hostile trading conditions, companies like Starbucks and Burger King have recently attempted to establish a presence in grocery stores, with an ice cream range and branded "apple fries" respectively.

Mintel found that firms in food and beverage industry, which houses major corporations like PepsiCo, Coca-Cola and Kraft, reduced their number of original offerings by almost a third in 2009.

Lynn Dornblaser, Mintel's leading new product expert, argued the last decade had only witnessed "small declines in new product introductions for the US market, never a decline as strong as this."

In demonstration of the impact of the downturn on manufacturer thinking, the number of launches making "economy claims", and thus aiming to appeal to price-conscious shoppers, rose by 72%.

Fresh lines in the "side dish" category also posted an uptick of 16%, a trend Mintel attributed to the fact people are eating at home more often, and the desire of brand owners to offer "convenient solutions."

Another feature of last year was that many smaller players, which are typically among the most active in this area, reined in this aspect of their operations.

Moreover, Mintel suggested that some sectors have simply become "over-saturated", leaving little space for innovations to make an impact among either retailers or consumers.

One area attracting heightened attention from brand owners was launches based on strong "ethical and environmental" credentials, with this area generating 17% of introductions in 2009, up from 9% in 2008.

Within this, merchandise with "eco-friendly" packaging took a 9% share of all items bought to market in 2009, compared with just 3% in 2008.

Dornblaser said this was mostly a result of companies "communicating with their consumers and knowing what's important to the people who purchase their products."

By contrast, "all natural" goods contributed 13% of new products in 2009, down from 15% in 2008, with "organic" goods posting a contraction from 12% to 10% over the same period.

"Natural and organic products, which saw large increases in 2008, took a few steps back in 2009 due to their higher price points," said Dornblaser.

Data sourced from Mintel; additional content by Warc staff