Product launches fall in US

30 April 2009

CHICAGO: The number of new products launched in the US food and beverage sector fell by 51% on an annual basis to 2,660 in the first quarter of this year, as manufacturers reduced their expenditure on development and marketing in the downturn, Mintel has found.

While companies often slash their outlay on innovation and advertising during financial slowdowns, a number of highly successful brands have also debuted during previous such slumps.

According to Mintel's estimates, the decline in launches in Q1 2009 followed on from a decrease of 32% in the final three months of last year.

Moreover, it said that companies "pinched new product launches even more tightly" in certain categories, as often occurs at the start of recessions.

Areas hit by the slowdown included the non-alcoholic beverages sector, where the number of product introductions fell by 56% year-on-year, with the dairy category also posting a slide of 60%.

The chocolate, sugar and gum confectionary market similarly saw the release of new lines decline by 55%, although Mintel argues this may have been influenced by the fact that Easter fell in Q2.

Lynn Dornblaser, the company's director of consumer package goods insight, suggested the overall malaise was a result of the fact that many companies now "face internal budget cuts that affect everything from new-product ideation to development and marketing."

She added that "low consumer confidence and reduced spending" were also having an impact.

However, while the overall downtrend has been observable since October, the number of launches rose slightly in March, in-keeping with an upturn in consumer sentiment during that month.

As such, Dornblaser suggests now could the right time to bring “products that answer shoppers' desires for value, quality and pleasure" to market.

Data sourced from AdAge/Mintel; additional content by WARC staff