IRI Reveals 2013 Annual New Product Pacesetters

May 1, 2014
Last year's new products shared a similar theme of nutrition, indulgence and excitement.

Greek continued to be the word in 2013, and this trend shows no signs of abating in 2014, according to the annual New Product Pacesetters report from Chicago-based IRI, formerly Information Resources Inc. Three of the top 10 food items for 2013 are Greek yogurt, as are two of the Rising Stars for this year. It’s no wonder, as Greek yogurt speaks to the three benefits today’s consumers seek out in food and beverage products: nutrition, indulgence and excitement.

The September 2013 edition of IRI’s Times & Trends provides deep insights into the way consumers are thinking about, buying and consuming food & beverage products today. Factors impacting these decisions include the blurring of eating occasions and the country’s challenging economy, which have combined to profoundly impact the food & beverage competitive landscape.

“What hasn’t been changed by these forces is consumers’ appetite for nutrition, indulgence and excitement,” says Larry Levin, IRI's executive vice president and practice leader. “These benefits are the trifecta of new product trial, particularly among early adopters of new food and beverage products.”

IRI New Product Pacesetter Criteria

IRI has been tracking the New Product Pacesetters for many years. To be considered for Pacesetters, IRI starts tracking a product once it reaches 30 percent of national market penetration. "Multi-outlet geography" for IRI means grocery, drug, mass, dollar, club and convenience channels, including Walmart, Sam's and BJ's club stores and military commissaries. The product must complete a full year of sales in calendar 2013.

To download the full report, which requires registration on IRI's website.

They are also the basis of those products identified as IRI’s 2013 New Product Pacesetters. Making the list is no easy feat, as the competition is fierce. With new products being the catalysts for the success of consumer packaged goods (CPG) companies, marketers invest sizable sums of money, time and enthusiasm into innovation, development and marketing in order to get consumers to try the product, and then buy it again and again.

In 2012-2013, the era when these 2013 Pacesetters would have entered the marketplace, 190,000 new UPCs hit retail shelves across the multi-outlet geography, which includes traditional grocery, drug and mass market retailers, as well as sales from dollar and club channels, Walmart and military commissaries. That 190,000 accounted for an estimated 15 percent of total moving UPCs and represents some 9,500 new brand launches, according to IRI.

“Some of these innovations accumulated sizable year-one sales, while others failed to live up to expectations,” says Levin. (See “Criteria” sidebar for definition on year-one sales.) “The dollars, though, are just the tip of the iceberg. New products bring excitement, buzz and competitive advantage. They establish and protect category leadership. They break into entirely new categories. In short, they are game-changers for CPG companies and life-changers for consumers.”

The lessons learned from IRI’s 2013 New Product Pacesetters are profuse, but they boil down to a single critical principle: Establishing and following a disciplined new product innovation process will breed successful new products and mitigate costly mistakes. This process involves three iterative steps, according to Levin.

First, a company must understand the deep context of consumer attitudes, usage and shopping habits. It’s all about the consumer, not the manufacturer. Second, the manufacturer must develop a business plan to meet these consumer needs in ways that are incremental, profitable and sustainable. Finally, the marketer must make every effort to make sure the consumer knows that he or she needs this product. The marketer must fundamentally change the consumer’s shopping behavior in a long-lasting way.

This year’s top-10 food items hit the market at a very challenging time in CPG history. “Conservative behaviors still have a stronghold on the industry,” says Susan Viamari, IRI's editor for thought leadership. “But the upside of conservation is the critical role that packaged goods play in helping consumers live well for less.”

In 2013, health drove sales while convenience remained critical. “Innovation in 2013 is all about healthier-for-you products,” says Viamari. “Healthy is truly everywhere. From food and beverages to hair care, skin care and even pet food and cleaning products, consumers not only want to look and feel their best, but they want improved wellness to extend to their homes and pets, too.”

In addition to the top 10, which forms the "Pacesetters," IRI tracks the top 100 food & beverage introductions. Their average year-one dollar sales were $35 million. Of that 100, 73 offered a healthier-for-you benefit. Overall, the most prevalent “add” in 2013’s Pacesetters brands was fiber and whole grains, which was found in 42 percent of the new launches.

In addition, the report underscores that dieting has evolved into “nutritional management.” Consumers are looking for products that remove or limit less desirable attributes, so products offering lower calories, less sugar and fewer ingredients are hitting just the right note.

Among the top 10, seven launches had a healthier-for-you approach. Dannon, for the second straight year, owns the top spot. This year’s leader, Dannon Light & Fit Greek, sold $144.9 million in first-year sales. The line boasts more than 10 flavor options that play into consumers’ passion for healthy convenience. The No. 1 product in last year's report (based on 2012 sales) was Dannon Oikos.

This is the fourth straight year a single-cup coffee launch made the ranks. Keurig Green Mountain accounts for two of those four launches. In 2013, Green Mountain made the Pacesetters list with Eight O’Clock K-Cups, which recorded $89.8 million in year-one sales. In 2010, Keurig Green Mountain introduced the first Green Mountain Coffee K-Cups.

PepsiCo has 2 1/2 top-10 launches: Tostitos Cantina tortilla chips, Pepsi Next and Müller Yogurt, the last of which it shares in a joint venture with Germany's Theo Müller Group. All seem to capitalize on consumers’ growing home-based approach to dining and entertaining while simultaneously catering to strong better-for-you and restaurant-flair opportunities. The Müller Yogurt brand includes a Greek variant, as well as dual compartment and parfait concepts.

Kellogg Co. had two products make the list. Special K Pastry Crisps ranked third with $100.6 million in year-one sales, and Special K Flatbread Breakfast Sandwiches came in ninth.

Single-serve and convenience were commonalities among all of the top 10, except for the tortilla chips. This brings us to the top 10 in the convenience channel (c-store).

The convenience channel

C-stores win with energy and relaxation, wellness and indulgence. This quick-stop shopping format plays a vital role in delivering immediate-consumption, often indulgent CPG products to consumers. “The most powerful convenience channel launches of the year clearly reveal the seemingly paradoxical trends of health and indulgence that permeate the CPG marketplace,” says Levin.

In the c-store arena, average year-one sales across the top-10 Pacesetters were an astounding $94 million, more than double the average in the combined previously mentioned channels (traditional grocery, drug and mass market retailers, dollar and club channels, Walmart and military commissaries). In 2012, this average was $50.4 million.

Energy is the name of the game in this channel, and Monster Energy Ultra boasted $268.2 million in year-one sales. In second place, but not even close in sales, is Red Bull Total Zero, with $139.1 million in year-one sales.

Beer and liquor continue to be a dominant driving force for the success of the convenience market, and manufacturers are constantly looking for the latest product spin to appeal to the ever-changing consumer palate. And tobacco and electronic smoking alternatives undoubtedly are carving out a major niche in overall c-store sales and growth by listening to consumer demands and adapting with new market entries. Marlboro NXT and NJOY have proven they can get ahead of the curve by appealing to consumers’ quest for variety and alternatives to traditional smoking.

Two products made both top-10 lists: Bud Light Lime Lime-A-Rita and Pepsi Next. This gives them combined first-year sales of $210.5 million and $114.3 million, respectively.
The Pacesetters report also includes a top-10 list of non-food items. A first in recent Pacesetter history, three home-care products achieved top-10 status for the year. At the top of the list is Tide Pods with year-one sales of $324.6 million. Ajax Triple Action ($84.2 million) and Downy Infusions ($90.2 million) round out this powerful home-care trio.

Satisfying consumers’ appetites

As you can tell, there is no shortage of variety on food and beverage shelves today. So how does a CPG marketer compete and come out a winner?

Marketers must get consumers to bring their products home. “Consumers must have a clear understanding of the benefits offered by new products and how those benefits support their needs and wants,” says Levin. “A critical benefit today is value. Value has become a central message in marketing communications.” For example, Bud Light Lime Lime-A-Rita is reinforcing value with imagery of a tropical vacation at home.

Many successful innovators are finding success by casting their nets further. For example, Kellogg’s Special K continues to expand its position as a 24-hour partner by adding Kellogg’s Special K Flatbread breakfast sandwiches to its line of wholesome breakfast foods, snacks and shakes.

“Fresh flavors are also winning in the marketplace, and beverages are showing just as much strength as food launches,” says Levin. For example, for a natural oomph from coconuts plus natural flavor essences, there’s Zico Pure Premium Coconut Water. Tropicana Farmstand, a chilled 100 percent juice, also notches up the wellness factor with one serving of fruit plus one serving of vegetables in every glass.

“Regardless of the path taken to get there, delivering indulgence, which is often pumped up by variety, remains a sizable opportunity for CPG marketers,” adds Levin. “For the year, Pacesetting innovators captured more than $2.5 billion with indulgent-product introductions.”

These 2013 themes will continue to trend throughout this year, as exemplified in IRI’s 2013 Rising Stars. “Consumers are looking across CPG aisles for opportunities to make their homes, menus, bodies and minds healthier,” concludes Viamari. “CPG innovators have a significant opportunity to help consumers live well for less. Brands that provide powerful results and exciting experiences are sure to capture attention and excitement, accelerating share of spending into 2014 and beyond.”

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