Nestlé touts strong innovation pipeline

Food giant Nestlé has highlighted its strong innovation pipeline for 2024 – in the US alone, its Purina pet care brand plans to launch over 100 new products – and stressed that this will be supported by marketing investment.

What’s happening 

• “Compared to ‘23 [innovation] levels, we are particularly strongly spring-loaded for the year ‘24,” CEO Mark Schneider told an earnings call. 
• “To back up our expanded innovation pipeline, we are focused on fuelling growth through increased advertising and marketing investments to support stronger consumer engagement,” he added. 
• “As the effect of marketing and promotional investment builds, we expect our efforts to continue to translate into strengthened market share positions,” Schneider elaborated. 

Why innovation matters

Innovation is necessary to keep consumers interested in categories and brands and to drive differentiation. As Schneider noted, when innovation drops off, that can help private label competition. “It’s important to keep the innovation renovation engine running,” he said.

Where Nestlé is innovating 

• Examples of innovation include introducing Stouffers and Lean Cuisine options into the sandwiches segment (where the advent of the air fryer is “making a big difference”, according to Schneider).
• Launches are also planned for the emergence of new segments tailored to diabetes and GLP-1 consumers and those looking for healthy food options on their weight loss journey.
• In the US vitamins, minerals and supplements business, “a full innovation roster” will include a particular focus on building out new segments by leveraging the company’s expertise in probiotics and healthy aging. 
• During Q1, Nestlé’s ‘billionaire brands’ grew twice as fast as the group’s average. “Brands like Fancy Feast, KitKat and Maggi are at the core of our category strategies and are critical to our success as vehicles for scaling innovation into growth opportunities across geographies,” said Schneider.

Context 

• In 2020 and 2021, new launches already in train were able to continue during the initial period of the Covid pandemic, but by 2022 supply chain constraints meant the focus was on simply maintaining the presence of core products on shelves. 
• That picture began to change over the course of 2023 as post-pandemic normalization settled in.

Sourced from Seeking Alpha

[Image: Nestle]