Against the odds

A new product has less than one chance in 10,000 to post $50 million in first-year sales. According to Nielsen. Less than one in 500 reaches the $10 million in its launch year, and one in 33 surpasses the $1 million benchmark. Odds appear high because the vast majority of new items represent only minor changes to existing products and brand extensions,

Despite the slowing economy, new product introductions in 2008 remained steady compared to 2007. According to a Nielsen report, 122,743 new UPCs were sold through U.S. grocery, drug and mass merchandiser channels, excluding Walmart. Of these, 39 percent were food and beverage items, 29 percent were general merchandise items such as DVDs, 20 percent were health and beauty items with the remaining 12 percent non-food grocery items such as paper products, diapers and detergent.

Of the more than 122,000 items introduced, 3,882 (3.2 percent) reached more than $1 million in sales, while 198 items (0.2 percent) achieved more than $10 million in sales. Only 15 items (0.01 percent) generated more than $50 million in sales. The new items generated more than $21 billion in sales in 2008, representing 5.7 percent of all CPG sales reported by Nielsen for the year.

Categories with the most new product launches include cosmetics, candy, paper products and bread and baked goods. The snack category, which saw 3,619 new products, generated the highest sales - more than $21 billion - and accounted for 18.2 percent of all snack sales for the year.

“Most of the top new items are extensions of existing brands.  Of the top 100 new items, 98 were extensions, with only two entirely new brands,” says Tom Pirovano, director of industry insight at Nielsen.

Even though the number of new items introduced in 2008 remained about the same from 2007 (122,743 versus 122,530), they generated 6.6 percent more sales.

“The consumer shift to private label items requires that brands innovate and add new features to win back shoppers.  It is difficult to predict the year ahead, but we expect new products to have more health and wellness claims, additional package size adjustments and more premium private label products,” says Pirovano.