•innovate or renovate •– you must do...

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© 2014 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel.

David Jago, Mintel May 2014

•INNOVATE OR RENOVATE•– YOU MUST DO BOTH

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EVERY DAY AT MINTEL…

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.................................................................................................................................................© 2014 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel.

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Explore how successful companies adopt, adapt, and improve Understand innovation and renovation in the context of key market and

consumer trends See where manufacturers and retailers have put their innovation focus Identify what’s working, and not

TODAY'S PRESENTATION.................................................................................................................................................


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GLOBAL NPD SHOWS GROWTH AGAIN…

Global new product introductions, food & drink, 2009-2013

0

10000

20000

30000

40000

50000

60000

70000

OtherHot BeveragesDesserts/ Ice CreamCandy & GumChocolateMealsFish, Meat & EggDairySnacksSauces/ SeasoningsBakery

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PUTTING INNOVATION IN THE CONTEXT OF TRENDS

Global food & drink new product introductions, by claim category

0%

5%

10%

15%

20%

25%

30%

35%

2009 2010 2011 2012 2013

Suitable for

Natural

Convenience

Minus

Functional

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• Genuinely new products make up a shrinking share of total NPD in food & drink

• Increasingly the focus is on new varieties and new packaging

INNOVATION VERSUS RENOVATION

Global food & drink new product introductions

51% 50% 48% 43% 40%

33% 32% 31%33% 35%

12% 14% 17% 18% 19%

4% 4% 4% 5% 6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2010 2011 2012 2013

New Product New Variety New Packaging Other

Other includes reformulations and relaunches

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LARGEST COMPANIES FOCUS ON RENOVATION

Global new product introductions by launch type, 2011-2013

45%38%

27% 26% 28% 25% 32%17%

30% 44%

31% 31%38%

28%29%

22%

19% 14%

31% 36%26%

40% 26%54%

5% 5% 11% 7% 8% 7% 13% 7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

New Product New Variety New Packaging Other

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New product introductions recorded on Mintel’s Global New Products Database since 1998 (across all CPG categories)

ADOPT, ADAPT, IMPROVE

There are few truly new concepts out there . . .

3 million

Are classified as being line extensions, reformulations, repackaged, or relaunches

51%

Of the remaining products, most are not revolutionary or “new to the world” innovation. They adopt, adapt, and improve

But how new are the rest of them?

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Adopt, adapt and improve to make:

SUCCESSFUL NEW PRODUCTS

CATEGORY CREATORS

CATEGORY CHANGERS

CATEGORY SUSTAINERS

Defining new categories or segments

Changing or disrupting the norms

Sustaining or growing the category

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© 2014 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel.© 2014 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel.

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Defining new categories or segments

CATEGORY CREATORS

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Dannon Light & Fit Greek yogurt, USA

• Dannon won top position in the US, for the 2nd year running…

• Light & Fit Greek yogurt was the top-selling new product in the US in 2013, with $145m (IRI's annual poll of best-performing lines)

• Three benefits: 0% fat; 2x protein, low in calories

• In 2012, Dannon Oikos Greek Nonfat Yogurt achieved nearly double that!

• Greek yogurt accounts for estimated 35% of total US yogurt market, up from just 4% in 2008

GREEK YOGURT: A LOOK AT THE US MARKET

The best-seller in the US market

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GREEK YOGURT: A HIT ALSO IN EUROPE

35%31%

46%42%

45%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

France Germany Italy Spain UK

I would like to see more yogurts high in protein

• Spain• Danone Griego Mediterranean

flavour Yogurt, Spain• Sold €7.7m since Feb 2013

• Germany• Müller Ecke Greek-style yogurt• Sold c. €2.5m in first year

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USA, characteristics affecting choice of yogurt

• Not a new segment, but had been dormant in the hands of a few traditional players

• On-trend positioning: low in fat, high in protein, and natural

• Focus on taste and texture

GREEK YOGURT: HOW AND WHY?

Adapting and improving on what “Greek yogurt” means to the consumer

27%

35%

39%

51%

57%

0% 20% 40% 60%

Greek style

All-natural ingredients

Low fat/non-fat

Favorite flavor

Low price

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• Pre-Belvita, breakfast biscuits unknown outside of a few Southern European markets

• Belvita pioneered a new segment of the market and changed consumers’ breakfast habits

• Belvita took a 1.8% share of the US cookie market in its first year (2012), with $66 million in sales

• In the UK, Belvita holds 12% of the cereal, energy, and snack bar market, with 2012 sales of £53 million

CATEGORY CREATOR: BREAKFAST BISCUITS

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THE BRAND EVOLVES

Belvita adapted a concept, improved on it and expanded it geographically, based on its credentials of health + convenience

70

36

80

5375

49

Breakfast biscuits provide a nourishing start to the day

Belvita sees new formats that add indulgence too…

%France, Belvita Le Tartiné, sold

over €4.6m in its first year

http://www.gnpd.com/sinatra/gnpd/images/newzoom&id=2018601&pic_num=0&destWidth=400&destHeight=400&origWidth=400&origHeight=400

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Changing or disrupting the norms

CATEGORY CHANGERS


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Kraft Foods’ MiO liquid water enhancer, USA

• Simple proposition:• A convenient alternative to ready-to-drink

formats• Add to water “one drop at a time”

• Convenient, affordable format:• 48ml squeezable bottle, highly portable• Retails at $3.99, makes 18-24 drinks

• Customisable:• MiO = mine, “it lets me make my drink my

way”• Already proving successful:

• Some original single flavours sold $10m in just over 6 months

• Just two varieties of the MiO Energy line sold $23m in their first year

INNOVATION THROUGH PACKAGE FORMAT

Format addresses convenience, portability, affordability, and more…


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Mtn Dew Kickstart, USA

• Energizing Sparkling Juice Beverage with 92mg of caffeine per can and 80 calories

• Made with 5% real fruit juice• Described as an alternative to

traditional morning beverages with just the right amount of kick while delivering a great taste

• Launched February 2013, sales of $37m to date

• Two new flavours in January 2014 (black cherry and limeade) have already added $10m sales

MORNING ENERGY, WITH A DIFFERENCE

Category changer: a top seller in the US, improving on what went before

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Granini Die Limo, Germany

• Granini Die Limo, said to have a light, herby bitter sweet note, fruit content at least 18%

• Three varieties: • Orange + Lemongrass• Lime & Lemon• Pink Grapefruit & Cranberry

• Launched April 2013• First year sales €14m

• 26% of German consumers say that sparkling juice drinks are a healthier alternative to fizzy (carbonated) drinks

FRESH, FRUITY, REFRESHING

Adapting and improving: Fruit content + flavour means (adult) added value

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Heineken Dreher Radler Beer with Lemon Juice, Italy

“è tempo di limonare!”.

Adapting: Radlers offer refreshing profile, meet preference for sweeter flavours

• Dreher Lemon Radler

0,0%, launched in April 2014

• Made with Dreher lager beer and lemon juice; “said to be two times refreshing”

• Low alcohol content (2%) drink.

• First year sales €8.6 million

• Radlers/shandys beers aims to appeal to both men and women.

FRESH, FRUITY, REFRESHING

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Tropicana Trop 50, UK

• Trop 50 could be the stevia success in beverages

• Tropicana Trop 50, sweetened with stevia and contains 50% less sugar and calories than regular mixed fruit juice

• Launched in the UK January 2013, sales of £15m by year end

• In the USA Trop 50 is a $200m brand

IS STEVIA (FINALLY) MAKING AN IMPACT?

Adopting a new ingredient, improving the offer to consumers


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Coca-Cola Life: Tested in Argentina and Chile

Pepsi Next: Tested in Australia, released in France and Canada

STEVIA MAKES AN IMPACT IN THE COLA MARKETConsumers show desire for both lower calorie and ingredients they understand and trust

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• A third of UK consumers (now) limit juice drink consumption due to sugar content• Close to a third are interested in natural sweeteners

WHY IS IT WORKING?

46 45

36 3532 3230

36

42 42 40

28

05

101520253035404550

France Germany Italy Poland Spain UK

I limit my consumption of juice drinks due to high sugar contentI'd like to see more reduced-sugar juice drinks with natural sweeteners

%

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Barilla Mulino Bianco Wholemeal Croissants with Sugar Cane, Italy

• Made with wholemeal flour, cane sugar and “accurately selected ingredients”

• Launched May 2013, it became Barilla biggest selling new product

• First year sales €9.7 million

• Health related NPD will continue to be driven on two principal fronts:• what is positive about the ingredients

contained,• a shift to cleaner label products.

Adapting: Leveraging cereal health benefits to improve bakery perceptions

COMBINING HEALTH WITH INDULGENCE

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EVERY DAY AT MINTEL

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Dr Oetker Pizzaburger, Germany

• Consumers don’t necessarily think pizza OR burger

• Easy-to-eat, hand-held product that can be eaten as a pizza or as a burger

• It’s neither one thing or the other… but it’s a highly convenient, indulgent snack or light meal

• Three varieties that focus on key flavour profiles, e.g. Salami, Diavolo

• Launched in Germany August 2013, sales of €17.5m

BLURRING THE CATEGORY DEFINITIONS

Adopting cross-category ideas, adapting product formats…

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• Close to a third of German consumers are interested in pizza recipes influenced by other cuisines

• A quarter want more exciting flavours, rising to 30% among 16-24 year-olds

WHY IS IT WORKING?

%

29

25

23

24

25

26

27

28

29

30

Pizza recipes influenced by other types of cuisine interest me

There are not enough exciting flavours available

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Sustaining or growing the category

CATEGORY SUSTAINERS

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Milk Lu chocolate, Germany

• Milka chocolate topped with Lu sweet biscuits and Tuc crackers, launched in Germany October 2012

• Each variant sold c. €6.7m in the first year

• Sales and distribution are growing

• Incidentally…• Milka & Oreo sold €10.6m in its first

year in Germany

GERMANY: TOP SELLING NEW PRODUCT

Adopting the power brand to create a major category sustainer


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Müller De Luxe with Marc de Champagne

• Launched in Germany February 2012

• 6 flavour variants• RRP €0.69 (120g)• Generated €11m in first year

• Launched in UK April 2013• 4 flavour variants• RRP £1.00 (2x130g)• £10m + sales since launch

AFFORDABLE LUXURY: A WINNING STRATEGY

Müller adapts its positioning to meet need for everyday luxury

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WHY IS IT WORKING?

Affordable, indulgent

52

62

72

61

76

56

70 73 7277

0

10

20

30

40

50

60

70

80

90


A thick texture makes a yogurt feel more indulgentYogurts make for a good guilt-free snack

81% of women in the UK say that yogurts make for a good guilt-free snack

%

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Mentos NOWmints, Italy

• Stylish and modern metal steel packaging aims to revitalise the category

• New pack adapt to todays’ consumer lifestyles: suitable for pocket, bag or cars

• Flavours available: eucalyptus and menthol, sweet mint, strawberry

• RPP: €1.29 (18g).

• Cumulative sales of €2.6 million for 3 SKUs since launch in November 2013

PACKAGING REINFORCES NOVELTY FACTOR

Adoption of new package format creates a winner for PVM

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EVERY DAY AT MINTEL

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Red Bull Blue / Red / Silver

• Red Bull Blue (blueberry), Red (cranberry), Silver (lime)

• In Germany the three variants had combined first year sales of €21 million

• UK launch January 2013, sales of c. £6m, reaching 90% distribution

• In France, sales of about €8m in first year

• Launched in the USA in Feb 2013, cumulative sales $48m

INNOVATION? OR JUST A LINE EXTENSION?

Improve the offer with new flavour variants to attract and maintain interest




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WHY IS IT WORKING?

It’s all about the flavour

17

46

34

29

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0

5

10

15

20

25

30

35

40

45

50


I don’t like the taste %

“I don’t like the taste” is the 2nd most important reason after “I don’t feel I need them”

Reasons for not drinking energy drinks

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Ferrero Duplo White, Germany

• Ferrero Duplo White

• Launched as a limited edition

• Sold €12m in its first year (in two cycles)

LIMITED EDITIONS CAN PLAY A KEY ROLE

Designed to add temporary excitement, but can do more…

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Galbani Santa Lucia Processed Mozzarella Cheese Slices, Italy

• European consumers continue switching to convenient foods

• Cooking provides a new avenue for innovation, expanding cheese beyond traditional usage occasions and boosting consumption

• Success of Galbani brand as a cooking ingredients relies on making meal creations easy

• €2.7 million since launch in September 2013

SIMPLICITY RULES

Galbani adapts products to increase usage occasions

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76% of UK consumers find it cheaper to entertain at home, rather than go out to eat.

22% of Italian consumers state to treat themselves to more premium

foods, instead of going out.

Some 80% of UK consumers say they like to make a big effort when entertaining at home.

WHY IS IT WORKING?Consumers cooking at home continue to step up quality of offerings

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© 2014 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel.© 2014 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel.

.................................................................................................................................................IN CONCLUSION…

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• It’s renovation, extension, reinvention – or the adoption and adaption of existing ideas, even for Category Creators• Greek yogurt, a niche traditional food, reinvented to become something healthy

& trendy• Belvita, a baked snack brand reinvented as a breakfast biscuit, extended to

new geographies

• Breakthrough innovation rarely makes best-sellers, and successful new food and drink products are (usually) not truly innovative

• We don’t need more innovation, we need smarter NPD…

• Multiple touch points lead to success• Don’t under-estimate the familiar• Simplicity rules

MUCH OF WHAT THE CONSUMER SEES IS NOT “REAL” INNOVATION

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• is naturalSimple

• is easy-to-understandSimple

• is convenientSimple

• is good for the environmentSimple

• is inclusiveSimple

• is affordableSimple

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Although consumer desires and needs may be different from country to country, products exist in every market that can be suitable for your local market

Adopt: Identify products that have elements that answer the needs of your consumersAdapt: Incorporate those product values and messages that your consumers are looking forImprove: Modify the concepts so that they perfectly fit the needs of the local consumer

Inspiration is everywhere

Adopt, adapt, improve

CLOSING THOUGHTS

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© 2014 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel

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Katya WithamDirector of Innovation & InsightDavid Jago

•innovate or renovate •– you must do...

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