Downturn Not Hitting Food NPD Activity

New product launch activity is remaining strong despite the economic downturn, according to the latest Innova Market Insights data. New worldwide food NPD launch numbers recorded in the Innova Database (www.innovadatabase.com) between June 08-June 09 were up 7.3% on the previous 12 months, despite the downturn. “In general, companies and markets are bouncing back in 2009 after reaching product launch number lows in the last quarter of 2008,” explained Innova Market Insights Analyst, Natalie Tremellen.

Companies are introducing new products that were in the R&D pipeline before the financial crisis really began to make waves in September 2008, or have entered the next phase with low cost items. Many categories are remaining stable in terms of product launches. For example, in Q2 2007, there were 1,709 new dairy product launches reported, versus 1,787 in Q2 2008. There was only a slight decline in the same quarter in 2009 to 1,696. “In general, companies and markets are bouncing back in 2009 after reaching product launch number lows in the last quarter of 2008,” explained Innova Market Insights Analyst, Natalie Tremellen.

Companies have responded in different ways to combat the economic crisis. Some are focusing on their core products or brands with increased promotional and marketing activities and in severe cases pulling less profitable products from the shelves. Meanwhile, investing in emerging markets has been a savior for some companies’ bottom lines, with sales growth reported in countries such as China, India and the Middle East, Tremellen explained. “Adapting marketing strategies to changing consumer habits, such as increased at-home eating could prove beneficial for companies to negate any further downturn for the remainder of 2009,” she predicted.

The impact on innovation at global giants has varied dramatically, as a look at recent activity at just one global players covered in the new research reveals. Unilever followed a highly productive Q2 2008 (507 new product introductions) with a decline to just 258 in Q1 2009 and a slight increase to 328 in Q2. The main activity area was ice cream, with 77 new product launches tracked by The Innova Database (Apr-Jun 09) from Unilever during this period in the run-up to the summer ice cream season. Unilever recently reported underlying sales growth of 4.3% for ice creams and beverages with “good growth in our indulgence ice cream brands,” with Magnum benefiting from the recent Temptation and Minis ranges and growth also reported from Ben & Jerry’s.

There has been a notable decline in new product innovation at PepsiCo in recent months, however. While there were 99 PepsiCo new product launches tracked in Q2 2008, this number steadily declined in the following 12 months to 50 in Q2 2009. Between April and June, Innova Market Insights tracked 19 new savory snacks from the company, 10 carbonates and 8 iced tea products.

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