Recession Slows the Pace of New Food Products
Mintel International Group’s Global New Products Database (GNPD) shows just 2,660 food & beverage products were introduced January through March of this year, a 51 percent decline from the same period of 2008.
The first-quarter activity also was a 32 percent decline from new product introductions in the last quarter of 2008. Manufacturers typically release fewer new products during the first quarter of a year, but 2009’s reduction is higher than in recent years, reports Mintel.
“Faced with low consumer confidence and reduced spending, many food and beverage manufacturers cut back on product development and new product launches,” says Lynn Dornblaser, director of consumer packaged goods research at Mintel. “Many companies face internal budget cuts that affect everything from new product ideation to development and marketing.”
Certain categories have been more affected than others. Compared to the first quarter of 2008, higher-than-average declines occurred in chocolate (off 64 percent), dairy products (-60 percent). non-alcoholic beverages (-56 percent) and sugar and gum confectionery (-55 percent). Mintel notes, however, that chocolate and confectionery launches could have been impacted because Easter fell in the second quarter of this year.
Dornblaser expresses optimism, however. She notes that Mintel has tracked new products through three major recessions, consistently observing that product launches decline somewhat in the beginning of a recession, then quickly increase once the economy begins to recover.
Pointing to monthly data from Mintel GNPD, she notes that while food and drink introductions declined steadily from October 2008 to February 2009, they increased in March. “Consumer confidence has leveled off for the time being, which marks an opportunity for manufacturers. Now is the time for ideation and innovation for products that answer shoppers’ desires for value, quality, and pleasure.”