Frito-Lay, Pepsi among 1998's Top New Products
According to IRI's Pacesetters 1999 study, Frito-Lay's WOW Chips was the number one new product introduced last year, netting Frito-Lay $347 million in sales. In addition, this year's top 10 included two other food products and seven non-food products.
1998's TOP 10 NEW PRODUCTS
|
Rank |
Product/Manufacturer |
1998 Sales (millions) |
|
1 |
Frito-Lay Wow Chips |
$347 |
|
2 |
Downy care |
$176 |
|
3 |
Colgate Total |
$152 |
|
4 |
Polariod Platinum |
$149 |
|
5 |
Gillette Mach 3 |
$147 |
|
6 |
Thermasilk (Helene Curtis) |
$120 |
|
7 |
Febreze (P&G) |
$107 |
|
8 |
Frito-Lay's Deli Style Chips |
$103 |
|
9 |
Kodak Max |
$101 |
|
10 |
Pepsi One |
$89 |
"With the annual Pacesetters study, we assess the revenue impact new products have for manufacturers. New products continue to be the main source of growth for CPG brands, categories and companies," said Howard Cohn, IRI's executive VP for Marketing Solutions.
"This year, not unlike previous years, we found that new products can represent 20% or more of a company's dollar sales."
Cohn co-presented IRI's Pacesetters findings at the FMI Show with Lynn Dornblaser, editorial director of the New Product News. Using the four years of historical data analyzed by the Pacesetters 1999 study, IRI and New Product News teamed up to make product trend predictions for 1999:
•As they age, baby boomers will continue to drive new product introductions. Currently, 20% of the U.S. population is over the age of 55, a number that will grow to 33% by 2030. More and more, this group focuses on wellness and nutritional concerns when making purchasing decisions. Mineral supplements are emerging as a significant trend as individuals become concerned about their health and aging. Kellogg's Smart Start and L'Oreal Vitavive are examples of products augmented with supplements.
"The baby boomers' product expectations continue to rise each year and they are becoming increasingly critical and gravitating toward natural products that are healthy, convenient and increase their quality of life," said Cohn.
•Dollars for snacks and dinners are growing while beverage and breakfast products are decreasing. The Pacesetter study again saw consumers seeking products that are better for you, without sacrificing taste. Offering low-fat products is no longer enough to satisfy many customers. This year's top product, Frito Wow Chips, illustrates the trend toward better-for-you, full-flavor products.
"Consumers are returning to the snack category as manufacturers recognize the demand for healthy, flavorful products," said Cohn. "This year's Pacesetters confirm that consumers want traditional salty snacks—they have simply been limiting their purchases until healthier and more flavorful options were available."
•This year's study found that the most successful new products included true innovation—whether a new product or an update or refinement of an existing product. These new products featured a combination of improved technology, design and effectiveness. Cohn offered Frito Lay as an example of how new product innovations grow companies. On the strength of FDA approval of the fat-free cooking oil Olestra, Wow Chips was the number one new product of the year, garnering $347 million sales in 1998.
Why new products work
This year's study found that companies introduced the fewest new products since 1994, and continued to receive a smaller return on those products in terms of sales. Most of the new products that achieved at least 30% distribution in the U.S. reached less than $10 million in sales. The average sales in a launch year dropped nearly 11% from $27.7 million in 1997 to $24.9 million in 1998.
Despite these challenges, new products grow brands. An analysis of the largest 1,500 brands showed that 69% of growth was attributed to new product introductions—either line extensions or entirely new brands—while 31% was a result of changes in trade support, pricing, advertising, packaging or consumer promotion.
"Clearly, new products are critical to the future of the packaged goods industry, whether you are a retailer, manufacturer or distributor, " added Cohn. "The issue facing the industry is how do we better predict what new products the consumer wants. Creating value and better understanding why consumers choose, and how they use products, are keys to success in the consumer packaged goods industry."
The 1999 IRI Pacesetters study defined new products as those that achieved at least 30% national distribution or more in their first year of sales. Sales data was tracked for 52 weeks using IRI's InfoScan database of 266 different product types. Only new products that achieved at least $7.5 million in sales were used in trend analysis. Pacesetters methodology included entirely new brands—new names to the consumer—and new line extensions, but excluded new flavor/package size introductions and add-on or promotional items.