About a year ago, every Greek yogurt company unveiled, with much fanfare, a separate compartment for such mix-ins as fruits and cookie crumbles. Wow! A huge candy company miniaturized some of its leading chocolate bars and put them, unwrapped, in a small bag. Audacious!
Are these examples of groundbreaking new product development?
The 100-year history and billion-dollar sales of the parent products seem to assure at least a modicum of success for these brand extensions. But will these ever grow into billion-dollar brands?
“Gone are the days when the big companies can create a big, sustainable success with a line extension,” says Leslie Herzog, a former Unilever product developer now in a consulting role. A longtime member of our Editorial Advisory Board, he’s now vice president of operations & research services for The Understanding & Insight Group, a strategy and business development firm for the consumer packaged goods industry, with the emphasis on consumer understanding.
“The big stores and their private label partners can knock off such a product quickly. For simple products, someone can always do it faster and cheaper. The big companies, the real food & beverage industry leaders, need to make technological breakthroughs and create real innovation, so they’re first to the marketplace and private label can’t imitate them easily.”
Perhaps because the economy is at least mildly building steam, "really new" product development gained a few points (cited by 42 percent of respondents) in our 44th Annual R&D Survey back in May. Meanwhile, line extensions were flat (at 12 percent) and cost control dropped 10 percentage points (checked off by 7.5 percent of respondents).
We acknowledge there's no denying the logic and profit in a Light version of Budweiser or even in a Straw-Ber-Rita (now, the original Lime-A-Rita was truly novel for a beer company). But let's take a moment to acknowledge the big companies that still manage to take risks and move their brands and their categories (if they fit into one) fast-forward.
Hormel Compleats breakfast microwave meals
It took seven years to make a shelf-stable egg breakfast.
All we gotta say up front is: Imagine scrambled eggs, shelf stable at ambient temperatures, safe for two or three years … ready after 60 seconds in the microwave (although technically you could eat them at room temperature right out of the tray). That's product and process innovation!
Hormel broke new ground in 2007 when it created shelf-stable meals in microwave-ready plastic trays. A new factory was built in Dubuque, Iowa, to make Compleats, which made beef stew, turkey & dressing and lasagna available in 60 seconds for lunch and dinner. They were an ideal lunch standby to keep in your desk drawer, not the office refrigerator.
But what about breakfast? The first meal of the day has garnered a lot of attention and growing market share lately, so it looked like too good an opportunity for Hormel to pass up. But was it possible to put eggs in a shelf-stable package?
"We knew from research consumers were not happy with the current offerings for breakfast: cold cereal or bars," says Jason Baskin, senior brand manager for microwave meals. "They wanted a hearty breakfast -- eggs, bacon and hash browns."
Hormel did have some breakfast competency with its meat businesses making bacon and breakfast sausages, but no real experience with eggs, although they're an ingredient in many of the company's products. And how to make eggs shelf-stable?
"This was an incredibly challenging product," Baskin continues. "We've actually been working on this project for seven years. Our R&D teams developed some proprietary technology to crack the code."
Any resulting product had to have the flavor, texture and color expected in eggs. "The egg is such a delicate ingredient, there's not a lot to hide behind," he adds. "Doing anything [extraordinary] with it is difficult. But there was a series of breakthroughs.
"First we figured out the color, but that affected the texture. Next we figured out the texture, but that affected the flavor. But the R&D team did a terrific job of bringing it all together.
"99 percent of the work was done in-house, although we did consult a little with outside experts," Baskin says. "As an industry-first product, there was not a lot of knowledge out there." The American Egg Board did help with some consumer research.
The breakfast Compleats were released in limited markets in 2013, and reached full national distribution last year. Four varieties were in the launch: Bacon Breakfast Scramble, Sausage Breakfast Scramble, Sausage Gravy & Roasted Potatoes and Apple Cinnamon Oatmeal (those last two did not contain eggs). The top seller has been Bacon Breakfast Scramble. Three more were added this year: Ham Breakfast Scramble, Turkey Bacon & Egg Whites Breakfast Scramble and Spam Breakfast Scramble.
The shelf life is similar to other entrees in the Compleats line: two to three years. The price is similar, too, at about $2.49. They heat up in 60 seconds in a microwave. Because they're fully cooked, they've been shipped to natural disasters for relief efforts – they can be eaten unheated right out of the tray.