PART 6 INNOVATION LESSONS FROM THE GREAT ......2020/06/12 · Innovation During the Great Recession...

June 12, 2020

PART 6 – INNOVATION LESSONS FROM THE GREAT RECESSION TO APPLY TODAY

Special COVID-19 Series:

Recession-Proof Your Business

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 2

The Latest Recession-Focused Reports from IRI (click to see full report)

CLICK HERE TO ACCESS

THE 2019 NEW PRODUCT

PACESETTERS REPORT

https://www.iriworldwide.com/IRI/media/Library/IRI-New-Product-Pacesetters-Report-20.pdf


https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-3-Brand-Performance-5-21-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-2-Maintaining-Pricing-Discipline-5-7-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-I-4-29-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-4-Private-Label-5-28-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-5-Building-Brands-6-3-2020.pdf


Executive SummaryContext

Every recession varies in scope and duration, but

COVID-19 is ushering in unique behavioral changes, including

heightened awareness of personal health and safety.

The impact of these changes will be best reflected in CPG

innovation that meets changing consumer needs and wants.

IRI has been tracking New Product Pacesetters* for 25

years. Even top-selling products need continued marketing

support and innovation to sustain long-term contributions to

manufacturer and retailer growth. This report features learnings from 2008-2010 New Product

Pacesetters and offers strategies on how to approach innovation as

we emerge from the pandemic.HOW CAN

IRI HELP?

Innovation Requires Sophisticated

Strategies: IRI New Product Pacesetters,

Brand Optimization Engine, Brand

Landscape, Assortment Optimization

• The IRI COVID-19 Impacts

• The COVID-19 Dashboard

• IRI CPG Demand Index™

• IRI Inflation Tracker™

LESSONS FROM

THE GREAT RECESSION

EMERGING TRENDS

IN THE 2020 RECESSION

• Sales of the Top 10 food and beverage products during the Great Recession were lower than pre-recession levels as consumers stuck with tried and true products and hunted for value.

• Particularly in non-food categories, Pacesetter products promoted multi-functional benefits and co-branding.

• Among a few products, continued focus on brand building with well-timed advertising and promotions drove year-2 sales to further propel brand health.

• Successful Pacesetters products focused on:

− Premiumization− More value by focused occasions− Brand extendibility− Package size innovation− Private label expansion

• Big companies continue to be well-positioned for innovation.

• In-home professional services will be a key opportunity as consumers shift from salon-style services, restaurant going or medical and dental practices due to health and financial stress; however, bifurcated income means many are willing to pay a premium.

• Given channel shifts (e.g., greater adoption of e-commerce, value and grocery), as well as new shopping behaviors (e.g., shoppers spending less time in stores), manufacturers should follow five principles:

− Focus on attributes that really matter− Develop clear and more impactful positioning − Define and execute against the RIGHT distribution− Promote in Year 1 and beyond− Set realistic sales expectations

• Trusted brand status, endorsements and price promotions are vital for building awareness of products.

*Criteria for New Product Pacesetters and data used for this report can be found in the Appendix

https://www.iriworldwide.com/en-US/Insights/Publications/coronavirus-impact-to-CPG-and-retail

https://advantage.iriworldwide.com/Engineering/covid19/

https://advantage.iriworldwide.com/Engineering/covid19/index.html



Innovation During the Great Recession

• Sales of the Top 10 Pacesetters during the 2008-2010 recession were cumulatively lower than pre-recession levels.

• Smaller manufacturers had fewer products in the New Product Pacesetter ranks, but were more successful than large and medium manufacturers.

− PepsiCo, General Mills, and Kraft were the top 3 manufacturers with thegreatest total food and beverage New Product Pacesetter sales in 2008-2010. However, the incrementality and sustainability rate forPacesetters among the largest innovators was lower than average.

− Procter & Gamble, Johnson & Johnson and L’Oréal were the top 3 non-food manufacturers with the greatest total Pacesetter sales 2008-2010.

− Popular, high-penetration categories exhibited a lower incrementality rate with innovation, while high-growth categories (e.g., energy drinks, yogurt, snacks nuts/seeds/corn nuts) had more success.

• High-growth food categories included energy drinks, yogurt, and snack nuts / seeds / corn nuts. Among non-food departments, Beauty and Health were the highest innovating departments.

• Themes that emerged during the recession included professional quality for at-home use, premium pet products, multi-serving, multifunctional, and on-the-go consumption.


Recessions Prove Challenging for Innovation: Shoppers in a Recession are

More Inclined to Plan Purchases Pre-Shop; Discretionary Spending Curbed

Purchase Decisions During the Great Recession: % of Shoppers, 2007-2009

40%

25% 17%

60%75%

83%

2007 2008 2009

BeforeEntering

Store

Longitudinal Economic Study, IRI AttitudeLink, n=1,000+ shoppers 10/2009: Zero-Moment of Truth: Redefining the Consumer Decision-Making Process. IRI Consulting Analysis / IRI Consumer Survey, Top 2 box 8/2008 / 9/2008

In-Store


*CLICK HERE TO ACCESS THE 2019 NEW PRODUCT PACESETTERS REPORT

Cumulative Sales of the Top F&B New Product Pacesetters Were Down

During the Great Recession; Median Sales Did Not Vary Dramatically

New Product Pacesetter Sales in $B

$4.1

$2.8

$3.5

$2.4$2.7

$2.3

$1.3$0.7 $0.8 $0.8 $1.0

$0.6

$17.5$15.8

$19.3 $19.9 $18.9$16.7

$-

$5.0

$10.0

$15.0

$20.0

$25.0

$-

$1.0

$2.0

$3.0

$4.0

$5.0

2006 2007 2008 2009 2010 2011

Media

n Y

ear

One

Pacesett

ers

in $

M

Total F&B Pacesetters Top-10 Pacesetters Median Launch

$3.2$2.7 $2.7

$2.4 $2.5$2.1

$0.8 $0.9 $1.0$0.6 $0.7 $0.9

$15.3$13.9

$15.7 $15.4$17.1

$13.3

$-

$5.0

$10.0

$15.0

$20.0

$-

$1.0

$2.0

$3.0

$4.0

2006 2007 2008 2009 2010 2011 Media

n Y

ea

r O

ne

Pacesett

ers

in $

M

Total Non-Food Pacesetters Top-10 Pacesetters Median Launch

Source: IRI 2019 New Product Pacesetters Analysis.



While “Value”

Was a Key

Product Attribute

During the Great

Recession, it

Didn’t Mean

“Cheap”

Expansion into Adjacent Categories – Several brands, including Kellogg’s Special K, Dove, Gatorade, Starbucks and Crest, successfully pushed into adjacent categories to tap into pockets of growth.

Focus of Successful New Product Pacesetters 2008-2010

Multi-Function Products – The power of two brands came together to win over consumers drawn to known brands that could deliver multiple benefits, delivering both time and money savings.

Multi-Serving Products – Technology played a role in upgrading the quality of microwaveable products but consumers were also drawn to products that delivered more.

Premiumization – consumers were willing to spend more on DIY services, small indulgences and higher quality entrées, often as a tradeoff for not dining out or scaling back on coffeehouse purchases.

Private Label Expansion – During the Great Recession, retailers invested in tiers of private label products, delivering value and often innovation that was unique to their store banners.


With a Recessionary Response Fueling “Value

for the Money” Creating Better-Life Experiences

Top New Product Pacesetters

delivered IN-HOME PROFESSIONAL

QUALITY at premium prices.

Source: IRI New Product Pacesetters Archived Reports.

An array of at-home DIY SERVICES

including nail care, dental care and skin

care products were an AFFORDABLE

TRADE-OFF to professional services.

Premiumization was a

Key Winner in 2008-2010


Multi-Serving Products Were Not Only Focused on Price Value; Many

Were Led by New Technology to Create a More Premium Experience

Multi-serving products helped consumers see VALUE FOR THE MONEY, but often delivered

a MORE PREMIUM PRODUCT, including Bertolli’s Oven Bake Meals and Stouffer’s Easy

Express. Technology supported advancements in microwaveable fare. Plant-based

dairy alternatives and a new wave of enhanced beverages also emerged.



Dual-Focused Benefits Also Delivered Enhanced Value to U.S. Consumers

CO-BRANDED, MULTI-BENEFIT

PRODUCTS were embraced by

consumers looking to consolidate

purchases during the recession.

DUAL-FUNCTION PRODUCTS

were, and continue to be an

important innovation platform to

fuel consumers’ need for SPEED

AND EFFICIENCY.



Pre-Recession and Post-Recession Innovation

Illustrates Changing Consumer Preferences

Pre-Recession Post-Recession


Pro-quality, use of technology and better for you lead 2006-2007 Pacesetters.

Non-food began to see the conversion from RX to OTC to drive broader adoption. Technology and positioning allow Fusion to shave the competition.

Post-recession saw the continued impact of

K-cups, on-the-go consumption and BFY.

Trends continue, especially in Rx to OTC

and pet foods begin to win with natural

positioning benefits.


Small Manufacturers with Fewer New Product Pacesetters Had

More Incremental Sales Than Large and Medium Manufacturers

Innovation Performance by Manufacturer Size, 2008-2010 New Product Pacesetters

FOOD & BEVERAGE NON-FOOD

Manufacturer Size

Number of Pacesetters Average per

Manufacturer

Number of Pacesetters

with Incr. Share Gain (% of Total Pacesetters

Total Pacesetters Launch Year Sales ($ M)

Incremental Sales ($M) % of Total

Pacesetters Sales

Number of Pacesetters -Average per Manufacturer

Number Of Pacesetters

With Incr. Share Gain (% of Total Pacesetters

Total Pacesetters Launch Year Sales ($ M)

Incremental Sales ($M) % of Total

Pacesetters Sales

Large

(>$5 billion)

N = 7

152

(21.7)

67

(44%)$4,154

1,536

(37%)

234

(10.2)

111

(47%)$5,342

$2,536

(47%)

Medium

($1-5 billion)

N = 21

85

(4.0)

46

(54%)$2,801

1,580

(56%)38 (3.8)

111

(47%)$659

$283

(43%)

Small

(<$1 billion)

N = 40

52

(1.3)

37

(71%)$1,230

919

(75%)35 (1.2)

24

(69%)$620

$336

(54%)

Source: IRI Archived Reports 2008-2010.


The Largest Food & Beverage Innovators Succeeded with a Few

Products, But High-Penetration, Slow-Growth Categories Struggled

Innovation Performance for Top 10 Largest Innovators / 2008-2010 Pacesetters

Source: IRI New Product Pacesetters 2008-2010

Manufacturer Sources of Incremental Share Gain, Incremental Sales Gain and Sustainable Sales Areas of Challenge

Quaker Mini Delights and Lay's Cracker Crisps gained share. Meanwhile, despite failing to grow share, Doritos Collisions and Dewmocracy grew incremental sales. Quaker Mini Delights and Doritos Collisions had strong sustainable sales.

In line with the industry average, 4 of 5 CSDNew Product Pacesetters failed to grow share.

Most successful launches were extensions under the Yoplait line of yogurt. 4 out of 5 gained incremental share, even though only 1 had sustainable sales. New granola bar products also had incremental share, but were less successful in sustaining their sales.

The largest launch was in cold cereal, but the Pacesetters failed to gain incremental share.

Thirteen new products in various categories were able to gain incremental sales and share, but only Jell-O Fruit Passions and Crystal Light Enhanced were able to sustain sales.

New Pacesetters in crackers and cookies failed to gain incremental share and sales.

Gained share and sales with 2 Powerade introductions. Coca-Cola also had successes with Simply Grapefruit and Simply Apple introductions and Nestea Enviga.

All CSD and bottled water Pacesetters struggled to gain share or incremental sales.

While Nestlé was able to gain incremental sales and share in various categories, only Nestlé Good Start Supreme Natural succeeded in sustaining sales.

Pacesetters in frozen dinner were less successful, with only 1 out of 5 managing to gain share.

Out of 24 new products, only All Bran Crackers, Kashi Pizza, and FiberPlus Bars managed to be incremental and sustain sales. 5 other products in crackers and granola bar categories were also incremental, but did not have sustainable sales.

Similar to the industry trend, Pacesetters in cold cereal failed to gain incremental share.

Campbell’s V8 V Fusion and Pepperidge Farm (Goldfish and Deli Flats) innovations drove strong incremental sales and share gain.

4 Pacesetters in the soup category struggled with no incremental sales or share gain.

All 9 introductions in beer/ale/alcoholic cider gained incremental sales, and 4 of those had incremental share and sustainable sales. Bud Light Lime drove the majority of gains.

5 Pacesetters in the same category did not gain incremental share or sustainable sales.

Marie Callender’s Home Style Creations and Healthy Choice All Natural, in the shelf-stable-dinner and frozen-dinner categories, respectively, gained incremental share and sales. 2 introductions in the salty snacks category also achieved the same success.

3 other Healthy Choice Pacesetters failed to contribute incremental sales and share.

Uncle Ben’s Ready Whole Grain Medley succeeded to grow share and sustainable sales. M&M’s Premium and Wrigley’s Extra Fruit Sensation, while incremental, had weak sustainable sales.

All Pacesetters in gum and non-chocolate candy categories did not gain incremental share.


Manufacturer

Mfr. Size ($M)

Number of Pacesetters /

Incr. Sales ($M) Sources of Success

559 1 / 146Agro Farma operates only in the high-growth greek yogurt subcategory (130% growth rate), holding 50% share ofGreek yogurt and 12% of total yogurt category with New Product Pacesetter Chobani.

404 2 / 109Roll Global operates in 9 categories, with the high-growth snack nuts as its biggest category where it introduced Pacesetters Wonderful Pistachios and Everybody’s Nuts.

422 2 / 77Green Mountain released 2 products in the high-growth single-cup coffee subcategory (87% growth rate) with its new Single Cup Coffee product and cross-branding with Newman’s Own brand with Newman’s Own Single Cup Coffee.

521 1 / 46Most of this manufacturer’s business is in the medium-growth baked beans category, where the manufacturer launched 2009 Pacesetter Grillin’ Beans as a premium baked beans product with additional sauces and mixed-in vegetables.

321 1 / 41Blue Diamond mainly manufactures snack nuts and also operates in 8 other nut-related categories. In 2010, itmoved into the milk substitute category with Almond Breeze which was successful due to its health benefits and high growth (79%) in the almond milk subcategory.

849 2 / 36Ocean Spray operates in 16 categories with shelf stable bottled juice as its main business. While the category has high penetration and low growth, its 2 Pacesetters On the Go drink mixes and Cranergy bottled juice were successful due to focus on health benefits and convenience.

154 2 / 33United Foods operates almost exclusively in the low-growth frozen plain vegetables category with 8% category share. In 2009 it released the Pictsweet Steam’ables line, which offers frozen vegetables in convenient steamer bags and are a cheaper alternative to competitor Birds Eye’s Steamfresh Pacesetter product.

289 1 / 27The manufacturer is well known in the margarine/butter, shortening oil and peanut butter categories on top of 10 other smaller categories. In 2010, Smart Balance introduced a Pacesetter in the milk category.

583 1 / 27The Wine Group launched Cupcake Vineyards in the high-growth wine category, with this product mostly targetingwomen.

712 1 / 21 Snyders-Lance filled the growing demand for healthy salty snacks with its Multigrain Pretzels and Crackers.

Most Small F&B Manufacturers with Greatest New Product Pacesetter Success

Were Pure-Players Focused on High-Growth Categories, Health-Oriented Products

Innovation Performance for the 10 Most Successful Small-Sized Manufacturers / 2008-2010 Pacesetters



Manufacturer Sources of Incremental Share Gain, Incremental Sales Gain and Sustainable Sales Areas of Challenge

25 new products in various categories gained incremental sales, with most gains in home care under Tide, Mr. Clean, Swiffer and Febreze brands. Similar success in personal care and cosmetics achieved under Cover Girl and Crest products, which also have sustainable sales.

Most introductions in hair care category under Clairol and Pantene brands, along with new products under Gilletterazors didn’t grow share.

Roughly a fourth of L'Oréal‘s 45 brand launches experienced growth in incremental sales. L'Oréal and Maybelline Cosmetics and Garnier Hair Coloring drove incremental gain and sustainable sales.

Most shampoo and conditioner introductions under Garnierand L'Oréal brand failed to gain incremental share.

Out of 22 new products, 9 products were able to gain incremental sales. The most significant gains were seen in KY lubricants, and Aveeno Active Naturals hair care products.

New mouthwash & sanitary napkin products failed to gain incremental share. Zyrtec tablets had incremental share, but weren’t sustainable.

New introductions in Unilever’s Vaseline, Tresemme, and Axe lines experienced incremental sales and share gain. New Dove lines Men Plus Care, Cream Oil and Go Fresh line all achieved tremendous success.

Other Dove lines such as Pro Age, Daily Moisture and Damage Theraphy weren’t as successful.

All introductions in pet food under Friskies were able to gain incremental share and sales while only some of Purina introductions such as Purina Selects and Beneful Playful were as successful.

Purina Cat Chow, Chef Michaels, One Vibrant Maturity and Busy Chewnola did not gain incremental share.

Most of GSK’s Aquafresh and Sensodyne innovations were in the toothpaste category and 4 out of 5 innovations saw increases in incremental sales and share gain. Additionally, GSK’s weight control line, Alli, experienced strong growth in incremental sales and share.

Aquafresh ISO Active toothpaste wasn’t able to gain share or sustain incremental sales

Colgate-Palmolive introduced 15 new products, but only saw gains in share and incremental sales with Irish Spring Body Soap. Colgate dental had better success with sustainable sales.

While able to gain incremental sales, Softsoap soap products struggled to gain share.

Revlon’s Beyond Natural, Colorstay Mineral and Custom Creations facial cosmetics lines, in addition to its Revlon Colorist Women’s Hair Coloring line gained incremental sales.

New introductions under Mitchum deodorant, Revlon Matte line and several other cosmetic products did not gain incremental share.

All four new products introduced by Novartis gained share and incremental sales: Excedrin Back and Body pain reliever, Prevacid 24hr., Alcon Contact lenses, and Zaditor Eye Care.

Incremental share is lowest in internal analgesics category.

Three products in home care department (Purex fabric softener, laundry detergent and Renuzit air freshener) succeeded to gain incremental sales and share.

Personal care products (Dial and Right Guard soap anddeodorants) failed to contribute incrementality.

The Largest Non-Food Innovators Succeeded With a

Few Products, But High-Penetration Categories Struggled

Innovation Performance for the Top 10 Largest Non-Food Manufacturer Innovators / 2008-2010 Pacesetters


http://www.nestle.com/


Most Small Non-Food Manufacturers with the Greatest

New Product Pacesetter Success Were Pure-Players

Innovation Performance for the 10 Most Successful Small-Sized Manufacturers / 2008-2010 Pacesetters


Manufacturer

Number of Pacesetters /

Incr. Sales ($M) Sources of Success

1 / $78Watson’s Next Choice Female contraceptives, the company’s new pregnancy prevention product, generated incremental share in the contraceptives category due to low innovation and competition in the emergency contraceptive subcategory.

4 / $52Under the Nivea brand, Beiersdorf introduced “A Touch of” and “A Kiss of” lines in Soap and Lipcare respectively. It also released a men’s line Nivea For Men to increase the breadth of its consumer segments which originally only had women.

2 / $27Kao Corporation, which is based in Japan, mostly operates in the beauty department, particularly personal care and hair care products. In US, it grew by acquiring well-known beauty companies such as Molton Brown and John Frieda, the latter being regularly featured in the annual Pacesetter list.

1 / $24Thin Care International focuses on weight control products, and innovations were spearheaded by its Jillian Michaels Weight Control supplements.

1 / $24Vogue International focuses on personal care and salon hair care products. It’s introduction of Organix in 2008 provided shampoo, conditioner, and styling product in a variety of scents designed to be healthier for hair due to its organic components.

2 / $21BIC operates in stationary, lighters, and razors. The addition of its Soleil razors and cartridges in 2008 allowed the company to rebrand its product offerings to expand its reach to women.

1 / $17Only operating in dog food category, Ainsworth leverages its expertise in manufacturing nutritious and healthy dog food. The pacesetter Rachel Ray Nutrish is a joint venture with famous celebrity chef Rachael Ray.

1 / $10This Finnish company’s main business is in the disposable tableware & dinnerware categories. Its pacesetter Chinetdisposable cups are expansions to their tableware & dinnerware products.

1 / $10Elations is a pharmaceutical company specializing in vitamins or supplements that improve joint comfort and osteoarthritis . The new pacesetter Elations Liquid Supplements are new vitamins/supplements offered in a new liquid format.

1 / $9Mostly known for Botox and facial products, its pacesetter product Optive lens/eye care is an addition to their growing eye care business.


Maintaining Media and Merchandising Spend, as Well

as Increasing Offerings Help Grow and Sustain Trial

and Repeat, Resulting in Healthy Sales

Silk Pure Almond Milk Substitute

Source: IRI New Product Profiler / *See Appendix for Additional Case Studies

YEAR 1 –

CURRENT

YEAR 2 –

CURRENT

Total Media $$$ (000) $16,993 $16,788

Add Cum Wghtd Weeks Any Merch 5.33 10.96

Average Items 1.9 3.3

ACV Weighted Distribution 58.3 80.9

% Trial 5.31 10.55

% of Triers Repeating - Cumulative 48.81 55.13

Dollar Sales (53.8% Growth) $61MM $132MM


Even Start-Up Brands with Little Media Support Generated

Excitement Through Merchandising Strategies, Expanded

Distribution and New Products to Try

Chobani Yogurt

YEAR 1 –

CURRENT

YEAR 2 –

CURRENT

Total Media $$$ (000) $0 $207




% Trial 2.88 9.69



Source: IRI New Product Profiler / *See Appendix for Additional Case Studies


Out-Sized Innovation Bucked a Declining Trend of New Product Pacesetter Sales

New Product Pacesetter* Sales in $B

$2.2$2.4 $2.2

$3.3

$0.8 $0.8 $0.8

$1.3

$14.3$14.5 $14.3

$19.3

$-

$5.0

$10.0

$15.0

$20.0

$25.0

$-

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

2016 2017 2018 2019

Media

n Y

ear

One

Pacesett

ers

in $

M

Total F&B Pacesetters Top-10 Pacesetters Median Launch

$2.6 $2.2$2.3

$2.7

$1.1$0.7

$0.9$1.3

$16.9$17.7 $13.8 $13.9

$-

$5.0

$10.0

$15.0

$20.0

$-

$1.0

$2.0

$3.0

2016 2017 2018 2019 Media

n Y

ea

r O

ne

Pacesett

ers

in $

M

Total Non-Food Pacesetters Top-10 Pacesetters Median Launch

Source: IRI 2019 New Product Pacesetters analysis.

*CLICK HERE TO ACCESS THE 2019 NEW PRODUCT PACESETTERS REPORT



Big Manufacturers Continue Capture More of

Total New Product Pacesetters Dollar Sales

While just 24% of New Product Pacesetters, Large

companies in 2019 account for 52% of total Pacesetter

sales dollars. Medium-sized companies represent a

declining share (22%) of total Pacesetter sales dollars.

Small and Extra Small Companies together

account for more than half of New Product Pacesetter

products. Mid-sized companies are contributing

fewer Pacesetters year-on-year.

19% 20% 19% 24%

35% 31%30% 23%

34% 28% 37%30%

12% 15% 14%23%

2016 2017 2018 2019

36%43% 46%

52%

49% 30% 27%22%

11%16% 19% 19%

4% 8% 8% 7%

2016 2017 2018 2019

Source: IRI 2019 New Product Pacesetters Analysis.

% of Total New Product

Pacesetter Dollars

% of Total New Product

Pacesetter Product Count

Extra Small Companies <$100M Small Companies $100M- <$1B Medium Companies $1B - $5.5B Big Companies >$5.5B


2018

2019

2016

2017

Mid-Decade Innovation Momentum and Recent Pre-COVID-19 Focused Innovation

MID-DECADE INNOVATION

Customization / Personalization: make it your own, lifestyle products

Targeted Benefits: needs-based results, performance

Healthy Attributes: prevention, simple indulgence, living well

Niche Appeal: small-company perceptions, targeted products

Nutrient Boost: added nutrition, healthier base ingredients

Lifestyle: high energy, natural

Source: IRI 2018, 2019 New Product Pacesetters Analysis.

Premium: ingredients, positioning, packaging

Self-Care: nutrition, protein-forward, Rx-strength personal care

Indulgence: flavors, decadent treats, textures

Experiential: indulgent, sensorial, exciting

Expectation: results, energy, performance

Simplicity: healthy, convenient, natural

PRE-COVID-19 INNOVATION


Approach to Shopping for New Food / Beverages During Past 2 MonthsAmong those looking for new products, more will look less often in the coming weeks / Base = 1,400

New products are either totally new brands within the marketplace, or new versions (such as flavors, formulations, etc.) of brands that already existed.

During the Pandemic, Consumers are Focused on Speeding Up Their

Time In-Store, and Are Less Interested in New Product Discovery

Source: IRI Survey 2020, IRI Consumer Network™ Panel representing Total U.S. Primary Grocery Shoppers, 5/22-5/24/20.

35%I haven't been looking for new products as much because I was

focused on just getting the basics

25%I haven't been looking for new products as

much because I have been rushing to spend

as little time in the store as possible

24%I haven’t noticed

many new products offered in the store

21%I've only been looking for new products to try

if my usual product was unavailable


Plans to Look for New Food / Beverages in the Next 4 WeeksAmong those looking for new products, more will look less often in the coming weeks / Base = 1,400

New products are either totally new brands within the marketplace, or new versions (such as flavors, formulations, etc.) of brands that already existed.

New Products Still Make the Basket, but More Consumers Report

They’ll Look Less Than Those Who Will Search More for New Products

9%Will look for new products

more often than I did in the past 4 weeks

73%Will look for new products about the same amount as I did in the past 4 weeks

18%Will look for new products less often than I did in the

past 4 weeks

Source: IRI Survey 2020, IRI Consumer Network™ Panel representing Total U.S. Primary Grocery Shoppers, 5/22 – 5/24/2020. / *IRI New Trier Database

Among shoppers who purchase new products, one third “felt like trying something new.”*


Shopping Behaviors on

Last Regular In-Store Trip for Groceries

Q. Which of the following, if any, did you do during your last regular grocery shopping trip to a store?

Shoppers are Focused on Limiting Their Time in Store; Marketers

Will Need to Provide Pre-Shopping Incentives to Scout New Products

Change in Time Spent Grocery Shopping

vs. Similar Store Trip Prior to COVID-19

Q. How much time did you spend shopping on this latest grocery trip, compared to how long you would have shopped on a similar trip prior to COVID-19?

Base = Those Who Have Shopped for

Groceries In-Store in the Past Month = 1,226

Base = Those Who Have Shopped for

Groceries In-Store in the Past Month = 1,226

Source: IRI Survey 2020, IRI Consumer Network™ Panel representing Total U.S. Primary Grocery Shoppers, May 22 – 24, 2020.

56%Went straight to the usual

location for the items I wanted; didn't usually look

at displays (end of aisle or other special displays

around the store)

42%Spent less time shopping

than I did for a similar type

of trip before COVID-19

35%Skipped a lot of aisles / sections to limit my time

in the store


Looking For New Grocery Products Online vs. In-Store Base = Those Who Have Shopped for Groceries Online in the Past 2 Months = 518

Q. How likely are you to look for new products while shopping online for groceries vs. while shopping inside a store? New products may be totally new brands within the marketplace,

or new versions (such as flavors, formulations, etc.) of brands that already existed.

Omni-Channel Presence is Critical in Post-COVID-19 World;

Shoppers Seek New Products Both Online and In-Store

Source: IRI Survey 2020, IRI Consumer Network™ Panel representing Total U.S. Primary Grocery Shoppers, May 2020.

25%I'm more likely to

look at new products to try when

shopping online

25%I look at new products

about the same whether I'm shopping

online or in-store

29%I'm more likely to look at new products when

shopping in-store

22%Does not apply, I rarely look for

new products either online or in stores


Pre-COVID-19Base = 4,121 Total 2020 Respondents

Q. For each of the following categories, please select the statement that best reflects the approach you take

to new consumer packaged goods products.

Despite More In-Home Consumption, Fewer Consumers

Are Seeking New Products than Pre-COVID-19

CurrentBase = 1,400 Total Respondents, 5/22 – 5/24

Q. Please select the statement that best reflects the approach you currently take for each of the following

categories. Select one answer for each category.

Categories Description on Approach – Food

Sources: IRI 2020 New Product Survey, January 2020; IRI Consumer Network™ Panel representing Total U.S. Primary Grocery Shoppers, May 2020.

12%I generally don't

purchase new

products in this

category

20%I generally don't

purchase new

products in this

category

Current Approach to New Products – Food


41%Item price

23%Shopper loyalty card discounts

48%Previous usage / trust of brand

22%Coupons

from home

Influence of Source of Awareness – Top Box SummaryBase = 4,121

Q. How does each of the following sources influence your awareness of new products?

Trusted Brand Status, Endorsements and Price Promotions are Vital for Building

Awareness of New Products, Especially During a Financially Stressful Time

Source: IRI 2020 New Product Survey, January 2020. / *IRI New Tier Database

18%Mentioned /

recommended by family / friend

Pre-COVID-19, displays drove just 13% of new product awareness among new product triers, but the importance of displays will likely increase as consumers consciously control their time in store.*


• Innovate on the attributes that matter to consumers. Create

products that include benefits that consumers are willing to

pay more for, e.g., antibiotic- and gluten-free.

• Ensure clear and impactful positioning. Consumers need to

know what your product delivers and how it meets their needs

• Be distributed perfectly, not perfectly distributed. Maintain

distribution to build trial and repeat; if shoppers can’t obtain a

product, there’s no chance of a repeat purchase.

• Commit to and support well-timed promotions in year-one

and beyond.

• Anticipate realistic total and incremental sales. Manufacturer

forecast factors include distribution targets, advertising, trial

and repeat. Retailers will need to know how products fit their

portfolio and how they will drive incremental category volume.

2020: Innovation Principles for the Next Normal


What Innovation Can Look Like in 2020 and Beyond

Private Label

High quality private brands are an important innovation platform as retailers enhance their

commitment to shoppers.

Emerging categories include plant-based meats and dairy alternatives, as

well as CBD products.

Pack Size Innovation

Package innovation can be just as important in a recession as brand new products. Estimate the demand for multi-pack, multi-serving or larger

sizes as a way to answer consumer demand. Beer and cereal are just two

examples of recent large pack innovation shifts

that feed a need to “pantry stock.”

Brand Expandability

Leverage brand equity to expand into adjacent

categories and make the most of growth pockets.

Alcohol has been identified as a category

ripe for innovation. Traditional spirit brands can adapt to at-home cocktail machines a la Keurig Drinkworks, or

develop branded frozen slushy concoctions.

More is More

Multi-serve food products satisfied a financial need with high quality food and

indulgent products. Products trending now include multi-serving

premium chocolates and non-chocolate candy.

Multi-function laundry and home care with sanitizing properties and perceived convenience will become increasingly important in

the coming months.

Premiumization

The Great Recession saw a new product evolution that brought professional services home, including

restaurant-branded frozen entrées and

teeth whitening.

For the current recession, premiumization will take the form of restaurant-quality meals for home

consumption and personalized DIY kits for services including

hair treatments, nail care and color.


IRI Offers a Variety of Solutions and Services to

Help Brands Best Manage Growth in a Downturn

• Provides feedback on what consumers are saying about your brand online

• Determines which functional and emotive attributes you “own” and which are “table stakes”

• Builds improved messaging campaigns and identifies opportunities for brand growth

• Grows both top and bottom line while also driving market share

• Applies augmented decision making to prioritize growth opportunities based on size, demographics and execution difficulty

• Assesses source of volume and incrementality to brand or category

• Aids in choice of the right media spend, distribution and price to capture most switchers

• Gives broad multi-category brand views with cross-category cultural attributes to identify and activate brand strategy initiatives

• Easily identifies competitive set, explores specific structure segments or walking attributes to assess business performance

• Updates dynamic structures with new products, most recent size and trend POS data plus demographic and panel measures monthly

Brand Optimization

Engine

Social Intelligence Analytics & Brand

Value Analysis

Brand

Landscape

ACTION and IMPACT

• Identifies macro changes to consumer demand as they happen

• Continually aligns brand portfolios against future shopper needs

ACTION and IMPACT

• Doubles the odds of new product success while cutting the cost of innovation dramatically

• Continually identifies and activates against growth opportunities

ACTION and IMPACT

• >10% growth in sales

• Increases brand value

• Enables more effective media campaigns


Insights and Strategic

Guidance for Better Decisions

IRI’s Online Resources Include Real-Time

Updates and Weekly Reports Which Track

the Impact of the Virus on CPG and Retail

The IRI COVID-19 lmpact

Includes COVID-19 impact analyses, dashboards

and the latest thought leadership on supply chain,

consumer behavior, channel shifts for the U.S.

AND international markets

IRI CPG Economic Indicators Including the

IRI CPG Demand Index™, IRI CPG Supply

Index™ and IRI CPG Inflation Tracker™

Accessible through the insights portal

to track the daily impact of COVID-19.

This includes top selling and out-of-stock

categories across the country and

consumer sentiment on social media

https://www.iriworldwide.com/en-US/Insights/Publications/coronavirus-impact-to-CPG-and-retail

https://bit.ly/IRI-COVID-19-Reports



The Latest COVID-19 Reports and Insights from IRI (click to see full report)

IRI COVID-19 IMPACT ASSESSMENT REPORTS LESSONS FROM THE GREAT RECESSIONTHE CHANGING SHAPE OF THE CPG DEMAND CURVE

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Impact-Assessment-Millennials-Meat-5-15-20.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-3-Brand-Performance-5-21-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-2-Maintaining-Pricing-Discipline-5-7-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-I-4-29-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-COVID-19-Impact-Assessment-4-24-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19_IRI.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Thought-Leadership.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Thought-Leadership-3-25-2020.pdf




https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-4-Private-Label-5-28-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-5-Building-Brands-6-3-2020.pdf


IRI CPG Demand Index™

The IRI CPG Demand Index™ provides a

standard metric for tracking changes in

spending on consumer packaged goods. It

measures weekly changes in consumer

purchases, by dollar sales, against the year-

ago period across departments including fixed

and random weight products, grocery aisles

and retail formats. The IRI CPG Demand

Index™ is available for eight U.S. regions and

all U.S. states.

CLICK HERE FOR MORE!



The IRI CPG Inflation Tracker™ provides the

well-known price per unit metric for tracking

changes in pricing of consumer packaged

goods. It provides weekly changes in

consumer prices, price per unit against the

year-ago period across departments including

fixed and random weight products, grocery

aisles and retail formats. The IRI CPG

Inflation Tracker™ is available for eight U.S.

regions and all U.S. states.


IRI CPG Inflation Tracker™



The IRI CPG Supply Index™ provides a

standard metric for tracking changes in

product availability (i.e. in-stock rates) in

stores for consumer packaged goods. It

measures weekly changes in product

availability against the baseline across

departments and retail formats. The IRI

CPG Supply Index™ is available for eight

U.S. regions and all U.S. states.


IRI CPG Supply Index™



Want to Be the First to Know?

Registered Users Get New

Thought Leadership from IRI’s

Research, Data & Analytics Experts

www.iriworldwide.com/en-US/Insights/Subscribe

http://www.iriworldwide.com/en-US/Insights/Subscribe

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 38© 2020 Information Resources Inc. (IRI).

Confidential and Proprietary. 38

CONTACT US FOR MORE

INFORMATION

IRI Global Headquarters

150 North Clinton Street

Chicago, IL 60661-1416

[email protected]

+1 312.726.1221

Follow IRI on Twitter: @IRIworldwide

https://bit.ly/IRI-COVID-19-Reports


Measures of Innovation Success Used in This Report

Notes: 1) Other typical measures of new product success include metrics around total new product sales, such as launch year sales and % of sales from new products.2) Incremental share and sales to the brand is also analyzed, but this report focuses on the ultimate goal of driving gains for the manufacturer. 3) In cases where a pacesetter spans multiple

categories or a manufacturer introduces multiple products in the same category during the same time period, incremental sales are calculated separately and share gain is weighted by product size.

Source: IRI New Product Pacesetters 2008-2010.

What Makes a New Product Pacesetter?• Completed a full year of sales in calendar-year

• Begin tracking year-one sales after 30% ACV weighted distribution achieved across multioutlet geography; must have 30% ACV or higher at date

of year-one completion.

• New Product Pacesetters are the Top 100 new banners (for each, f&b, and non-food) based on year-one sales across multi-outlet geography.

• MULO/multi-outlet = supermarkets, drugstores, mass market retailers, military commissaries, and select club and dollar retail chains.

Measure – Incremental manufacturer sales

Objective – Assess magnitude of New Product Pacesetter sales that contribute to dollar growth for the manufacturer

Method – Compare the manufacturer’s sales in the associated category during the 52 weeks pre-launch to the launch year or later years

Key Analyses

• Incremental sales % of total New Product Pacesetter sales (launch year) measures the efficiency of new products by calculating the portion of the Pacesetter sales that are incremental to the manufacturer.

• Manufacturer % sales growth from incremental sales (launch year) assesses what percent growth the New Product Pacesetter(s) contributed to total manufacturer growth in thecategory.

• % of incremental sales sustained (year 2 and beyond) evaluates the portion of incremental sales that the New Product Pacesetter is able to maintain after the launch year. This is measured by comparing subsequent year sales to the pre-launch and launch year sales. Sales from new Pacesetters introduced by themanufacturer in the same category in subsequent years are subtracted to isolate the ongoing value from the original product.

Measure – Incremental manufacturer share

Objective – Determine ability of New Product Pacesetter to drive share gain for the manufacturer

Method – Compare the manufacturer’s share in the associated category during the 52 weeks pre-launch vs. 52 weeks post-launch

Key Analyses

• Incremental share points gained (launch year) indicates the share growth gained by the manufacturer in the category due to the New Product Pacesetter.

• % of products with share gain (launch year) provides the success rate of manufacturers with multiple Pacesetter launches.


Strong Media Spending Drove Adoption for

Many Brands, But Others Relied Upon

Word-of-Mouth to Achieve Success

Bertolli Oven Bake Meals – Multi Serve Frozen Dinners / Entrees

YEAR 1 –

CURRENT

YEAR 2 –

CURRENT

Total Media $$$ (000) $32,134 $9,575




% Trial 4.01 6.53



Source: IRI New Product Profiler





Dunkin’ Donuts Ground Coffee

YEAR 1 –

CURRENT

YEAR 2 –

CURRENT

Total Media $$$ (000) $16,125 $15,345




% Trial 4.88 8.54


Dollar Sales $84MM $104MM






Freschetta PizzAmore – Frozen Pizza

YEAR 1 –

CURRENT

YEAR 2 –

CURRENT

Total Media $$$ (000) $15,368 $8,816




% Trial 4.38 8.03








Green Giant Valley Fresh Steamers – Frozen Prepared Vegetables

YEAR 1 –

CURRENT

YEAR 2 –

CURRENT

Total Media $$$ (000) $0 $1,260




% Trial 11.15 19.68





Strong Media Spending Drove Adoption

for Many Brands, But Others Relied Upon


Hormel Compleats – Shelf Stable Dinners

YEAR 1 –

CURRENT

YEAR 2 –

CURRENT

Total Media $$$ (000) $3,197 $2,301




% Trial 7.11 13.06




PART 6 INNOVATION LESSONS FROM THE GREAT ......2020/06/12 · Innovation During the Great Recession...

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Transcript of PART 6 INNOVATION LESSONS FROM THE GREAT ......2020/06/12 · Innovation During the Great Recession...