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Future Innovations in Food and Drinks to 2015: NPD, trend convergence and emerging growth opportunities

Business Insights
January 4, 2010
152 Pages - SKU: RET2539885

Abstract Table of Contents Search inside this report Related Reports

This report outlines the main market drivers influencing innovation in the global food and drink sectors and also analyses the latest trends in product innovation and looks at what has been changing in the product life-cycle. Meanwhile, using results from a survey conducted by Business Insights, this report analyses global new product development and asks the crucial question, ‘What is new in innovation?’

Finally, the effect of the economic downturn on product innovation is discussed as well as the most important drivers influencing consumer demand and what this means for future product launches.

Finally, the thorny issue of regulation and repositioning products on a healthy basis is analysed followed by a look at the problems surrounding global food supply.

Key features of this report

Analysis of how the product lifecycle model is changing
The report looks at the three major trends impacting on new product development in the global food and drinks sector - health, indulgence and convenience
The analyzes the evolution of product launches in the global food and drinks market
Case studies are included illustrating how the innovation environment within the global food and drinks industry is changing fast

Scope of this report

Understand the key innovations in the food & drink industry and what the major trends will be over the next five years
Understand crucial areas such as the growing trend for functional foods which is encouraging food companies and pharmaceutical firms to co-operate.
Evaluate whether you should be looking to refresh your product portfolio in order to take advantage of emerging trends

Key Market Issues

Over the last decade there has been a massive shift by many of the largest food and foodservice operators to reformulate and re-position products as the health debate has gained ground
A disconnection exists between the acknowledgement of the need for “breakthrough innovation” and the recognition of the importance of external sources (be it suppliers, retailers or competitors) to be able to achieve that goal
In many emerging markets multinational operators are facing increasing competition from local players that have started to develop their own premium and even super-premium brands with high quality products, packaging and promotions.

Key findings from this report

A high level of innovative activity in the soft drinks sector can be attributed to an explosion in new combinations, flavour and tastes driven by indulgence and premiumization trends as well as a shift to new functional, nutraceutical and natural soft drinks lines
The economic downturn has thrown up some new opportunities for traditional food categories. The shelf stable (canned and packaged) sector, long seen as the dowdy neighbor to more exciting categories such as frozen, chilled and fresh, has witnessed somewhat of a revitalization as consumers downgraded their spending patterns
Consumers increasingly believe that own label brands are on a par with their branded counterparts.

Key questions answered

What are the major trends in innovation in the food & drinks market?
Which regions are seeing the most product innovation?
What are the best strategies to maximize the efficiency of the product development process?
What are the most innovative companies in the food & drink sector?
What does the industry consider to be the most important driver for new product development ?

Future Innovations in Food and Drinks to 2014
Executive summary: Drivers of innovation; New approaches to innovation and product lifecycle management; What’s new in innovation?; Global NPD launch patterns; Case studies; Industry opinion survey results; Conclusions
Chapter 1 Drivers of innovation: Summary; Introduction; The impact of private label; Private label is changing the food and drinks marketing landscape; Private label penetration; Younger shoppers are more receptive to private labels; Private label and innovation; By increasing their quality private labels are now a credible source of innovation; Recession has allowed private label to offer an alternative to eating out; Food industry restructuring; M&A activity; Deal activity has declined, but looks set to increase again in the foreseeable future; “Bought in” innovation is part of the rationale for M&A; Recession and innovation; Innovation rates increased during the recession; Recession may actually make it easier to launch products; Some companies are now betting on innovation driving future growth; Consumer drivers of innovation; Two areas are affecting innovation; Purchasing criteria are having the greatest impact; Simplification and transparency are important trends; The health issue and claims regulation; Obesity continues to be a growing problem; Marketing innovation that backs product development is one way to tackle obesity; Regulation of health claims is retarding innovation; Rising innovation costs are reducing the rate of innovation; Re-positioning products as healthy; Global food supply issues
Chapter 2 New approaches to innovation and product lifecycle management: Summary; Introduction; Product lifecycle; Management of product lifecycles is changing dramatically; Time to market in particular is decreasing; However, measuring time to market is not seen as such an important metric; Types of product innovation; The industry believes breakthrough innovation is key however; Resistance to open innovation is harming breakthrough innovation; Examples of innovation; Health breakthroughs; Packaging can also play a strong role in offering new health benefits; Line extensions; Line extensions offer lower risk innovation; Line extensions are not risk free however: is Starbucks risking its brand?; Other industries are extending into the food and drinks space; Varying brands by region can be a powerful tactic; Me-toos; Incremental innovation is the norm in food and drinks; Adopting an open innovation strategy; General Mills G-WIN Worldwide Innovation Network; Other open innovation examples; Consumers’ role in open innovation; Other examples of open innovation; The way ahead for open innovation
Chapter 3 What’s new in innovation?: Summary; Introduction; Health; Functional Foods; Kids’ specific products; Targeting kids with functional foods will increasingly attract scrutiny; Weight management; Digestive health; Beauty-enhancing foods; The future for functional foods; There are risks as well as opportunities when targeting health; Indulgence; Specialty gourmet foods; Variety in flavor is also growing; Ethical retailing; Organic food is still the most important segment; Simplification of products is also a key area to target; Convenience; Microwaveable packaging is a key trend; Packaging and innovation; Offering portion control is important; On-the-go is still an important trend; Packaging can help to target more specific consumer groups; Other areas where packaging innovation can be of benefit
Chapter 4 Global NPD launch patterns: Summary; Introduction; Innovation levels by product market; Breakthrough innovations by market; Breakthrough innovations are becoming rarer, even when innovation rates are up; Soft drinks are the one bright spot of innovation; Breakthrough innovations by region; Europe is the key regions that is cutting back on true innovation; Innovation levels by type; Formulation is the main type of breakthrough innovation; NPD by overall product category; Evolution of NPD by region; Latin America is an increasingly important region; But the industry still sees Asia-Pacific as the most innovative region; Overall NPD trends; Health; Convenience; Indulgence
Chapter 5 Case studies: Summary; Introduction; New partnerships and alliances; Foodservice joins forces with mainstream food; Food meets pharmaceuticals and biotechnology; Global players tackling open innovation; General Mills; Kraft
Chapter 6 Industry opinion survey results: Summary; Introduction; NPD and building competitive advantage; NPD is considered the best mechanism for gaining competitive advantage; Key drivers for future NPD; Emerging markets are seen as the key driver of future growth; Views on scientific and technological advances clash with innovation ambitions; Importance of different types of innovation; Breakthrough innovations are still seen as the most important; Sources of innovation; The industry appears resistant to external sources of innovation; The NPD cycle; The time-to-market for new ideas appears set to fall significantly; Innovation success metrics; Despite reducing time to market being seen as important, measuring it isn’t; Trends in innovation; Most innovative food and drinks companies
Chapter 7 Conclusions: Summary; Introduction; The need for “breakthrough innovation”; Reliance on internal innovation ideas needs overhauling; Reap the rewards of open innovation; Cross-fertilization and innovation; Emerging market growth and innovation; Consumer pressures on innovation; Future NPD trends; Health and wellness will continue to be the leading trend; Indulgent innovation will focus on offering high quality and specialty products; Convenience benefits and innovative packaging will go hand-inhand in the future; Ethical products will be very important in the future
List of Figures: Figure 1.1: Private label growth ($m) in Europe, Asia Pacific and the US, 2002-2012; Figure 1.2: Number of M&A deals (by deal date) in the food and drinks sector, 2007-2009; Figure 2.3: Length of average NPD cycle now and in five years; Figure 2.4: Importance of innovation success metrics; Figure 2.5: Importance of innovation types for food and drink NPD now and in next five years; Figure 2.6: Nutricia Forticare; Figure 2.7: Rising Beverages Activate functional drinks; Figure 2.8: Starbucks Via instant coffee; Figure 2.9: General Mills G-WIN website; Figure 2.10: External contacts made by Cadbury in open innovation program; Figure 2.11: MyStarbucksIdeas website; Figure 2.12: Current and projected share of new products developed using external elements; Figure 2.13: Key sources of product innovation for food and drinks companies in next five years; Figure 3.14: Unilever Amaze kids’ specific brain food; Figure 3.15: Candia Silhoutte Active; Figure 3.16: Campina Optimel Control; Figure 3.17: Kraft LiveActive Chewy Granola Bars; Figure 3.18: Danone Essensis; Figure 3.19: Probi Bravo Friscus; Figure 3.20: Goodbon Maple Chunks; Figure 3.21: Moulin du Calanquet fruit juice; Figure 3.22: Kraft Triscuit; Figure 3.23: Bonduelle Vapeur vegetables; Figure 3.24: La Demi-Calorie Galettine Moment; Figure 3.25: Fleur d’Olive Choc-o-lait; Figure 3.26: The reusable milk jug available in Waitrose and Sainsbury’s in the UK; Figure 3.27: ConAgra Foods Healthy Choice trays; Figure 4.28: Share of global breakthrough innovations launched (% all launches within each market), by selected food and drinks markets, 2006-2009; Figure 4.29: Share of breakthrough food and drinks product launches by region, 2006-2009; Figure 4.30: Innovation by type, 2006-2009 (%); Figure 4.31: New product launches by category (% of overall product launches), 2006-2009; Figure 4.32: New product launches by region (% of overall product launches), 2006-2009; Figure 4.33: Innovation levels of companies in each region in the next five years; Figure 4.34: Importance of selected trends in food and drinks NPD over next five years; Figure 4.35: Importance of health sub-trends in food and drinks NPD in next five years; Figure 4.36: Importance of convenience sub-trends in food and drinks NPD in next five years; Figure 4.37: Importance of indulgence sub-trends in food and drinks NPD in next five years; Figure 5.38: Burger King Krinkz fries; Figure 5.39: BK Fresh Apple Fries; Figure 5.40: General Mills Progresso Light soup; Figure 5.41: Kraft Bagel-fuls; Figure 6.42: Importance of investment areas for competitive advantage in next five years; Figure 6.43: Importance of key NPD drivers over next five years; Figure 6.44: Importance of innovation types for food and drink NPD now and in next five years; Figure 6.45: Relative importance of different sources of product innovation ideas for food and drinks companies over next five years; Figure 6.46: Length of average NPD cycle now and in five years; Figure 6.47: Importance of innovation success metrics; Figure 6.48: Importance of trends for food and drink NPD over next five years
List of Tables: Table 1.1: Total private label penetration in Europe, Asia Pacific and the US, by country, 2002- 2012; Table 4.2: Share of global breakthrough innovations (% of all launches within each market) by selected food and drinks markets, 2006 - 2009; Table 4.3: Number of global breakthrough innovations (actual) by market, 2006-2009; Table 6.4: Respondents’ views on the which are the most innovative companies in global food and drinks

Future Innovations in Food and Drinks to 2015: NPD, trend convergence and emerging growth opportunities

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