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

Date: January 22, 2010
Pages: 152
US$ 2,875.00
Publisher: Business Insights
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: F36A2E095B3EN

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

1. What are the major trends in innovation in the food & drinks market?
2. Which regions are seeing the most product innovation?
3. What are the best strategies to maximize the efficiency of the product development process?
4. What are the most innovative companies in the food & drink sector?
5. What does the industry consider to be the most important driver for new product development ?
Future Innovations in Food and Drinks to 2015
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


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


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
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


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
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
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


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


New partnerships and alliances
Foodservice joins forces with mainstream food
Food meets pharmaceuticals and biotechnology
Global players tackling open innovation
General Mills


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


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


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


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
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