A local view of the latest product innovations Food for Thought, 3 rd November 2010 David Jago, Mintel

A local view of the latest product innovations

Food for Thought, 3rd November 2010

David Jago, Mintel

2© 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Who we are

Today’s presentation

What can companies learn from innovation in other markets?

What’s happening now in key consumer trends, and how is new product development responding?

How should companies be developing new products?

Which directions to take?

Which product attributes to focus on?


What’s happening in New Product Development?

Recession or no recession, NPD patterns have always been sporadic

NPD in drink appears to be shrinking – down to just 12% of all NPD in the current year


New product introductions, UK & Ireland

Source: Mintel GNPD

Product development and innovation

Innovation drives growth…

But the food and drink industry is conservative

Because the consumer is inherently conservative

Breakthrough innovation is sexy, but it is very rare

Commercial innovation can bring in the ££ or €€ just as effectively

A quick look back at just a few recent launches…


New in breakfast cereals


Running counter-trend?

Kellogg’s Krave – new in a category where children, women

and health claims dominate

Running counter-trend?

Kellogg’s Krave – new in a category where children, women

and health claims dominate

Opting for balance?

Weetabix chocolate – indulgent, but half the sugar and low salt

Opting for balance?

Weetabix chocolate – indulgent, but half the sugar and low salt

New in chocolate


A little “better for you”?

Twix Fino – a lighter version with wafer, 94 calories per piece

A little “better for you”?

Twix Fino – a lighter version with wafer, 94 calories per piece

What’s premium nowadays?

Cocopia luxury artisan chocolates – from Tesco

What’s premium nowadays?

Cocopia luxury artisan chocolates – from Tesco

New in meal solutions


Simple, quality, convenience

Birds Eye Simply Bake To Perfection – convenient, premium

quality proposition

Simple, quality, convenience

Birds Eye Simply Bake To Perfection – convenient, premium

quality proposition

Stretching values “safely”

Birds Eye Levi Roots Reggae Reggae Beef Burgers – bringing

fun and variety to a staple

Stretching values “safely”

Birds Eye Levi Roots Reggae Reggae Beef Burgers – bringing

fun and variety to a staple

A focus on key trends in food and drink

Staying close to home – looking at the UK and Irish markets

What motivates consumers?

Where is all the resource and effort being spent, developing and launching new products?



Which food matters matter?

Importance of food related claims to UK consumers

Base: 1,000 Internet users aged 16+, December 2009

NB Respondents were limited to three choices.

Source: Toluna/Mintel

Health & wellness remains the single most important trend

But how consumers see health & wellness is changing

11

Health & wellness: shifting definitions

Low-in claims remain important, but “dieting” and “weight loss” are replaced by weight management and hunger management

Portion control is emerging in some markets as a key trend

Focus now is on “natural” nutrition:

Inherent goodness, fresh, wholesome, balanced nutrition…

Wholegrain, superfruits, natural antioxidants from fruit or cocoa…

“Natural” and “additive-free” become part of the consumer’s wellness vocabulary

12

Consumers avoid fat, and sugar, and additives…


UK consumers, 2009

40%36% 36%

26%

Source: TGI/Mintel

14

In NPD, traditional health claims are in long-term decline

New product introductions with selected claims, as % total introductions, food & drink, UK & Ireland

Source: Mintel GNPD

15

Convenience, ethical & environmental claims take over…


Source: Mintel GNPD

16

But “natural” claims rule


Source: Mintel GNPD


No additives: from niche to mainstream

Raw Health organic crispbreads, UK, made from raw ingredients, all

organic, gluten-free

Raw Health organic crispbreads, UK, made from raw ingredients, all

organic, gluten-free

Haagen-Dazs’ Five all natural ice cream, USA, made with just five ingredients listed front of pack

Sales of $21m in 1st year

Haagen-Dazs’ Five all natural ice cream, USA, made with just five ingredients listed front of pack

Sales of $21m in 1st year


No additives: promoting the positive

Organix range with “no junk promise”, UK

Organix range with “no junk promise”, UK Planet Lunch “100% natural”

kid’s range from Walkers, UK

Planet Lunch “100% natural” kid’s range from Walkers, UK


No additives: communication built on simplicity, tradition

Charlie Bigham’s range, UK:

packaging tells the story, ingredients

statement is “clean”

Charlie Bigham’s range, UK:

packaging tells the story, ingredients

statement is “clean”


Organic

The market for organic food & drink has suffered in the economic recession

Market values are flat or in decline

NPD is in decline (in the UK)

Other premium food segments have not necessarily seen the same downturn…

So how can brands (re)capture that added value spend?

Is the answer in “more natural” rather than organic-certified products?

Or in greater differentiation? Emphasis of provenance and sustainability?

Or through “value with value”?

Hipp baby food, UK, “Great

Organic Value”

Hipp baby food, UK, “Great

Organic Value”


Organic – a tough market for the next few years

UK retail sales of organic food, 2003-13

£1,883m in 2013£896m in 2003

22

Sustainability hasn’t faded with the recession

23

It’s become part of everyday business

Heightened consumer awareness and

expectation

Media coverage

Increased availability of massmarket products that

address sustainability

Financial benefits of being green for

Corporates

24

Packaging: focus on materials reduction

Kraft Foods’ Kenco instant coffee

200g refill pouch, UK, now with 97%

less packaging weight than a

regular jar

Bottle Green Squeezy Squash, UK, triple

concentrated, easy squeeze bottle

Coca-Cola Menos é Mais

Iced Tea Concentrate, Portugal, 1L

carton makes 7L drink

Coca-Cola Menos é Mais

Iced Tea Concentrate, Portugal, 1L

carton makes 7L drink

41%Of UK

consumers say they would buy

more environmentally friendly products if it saved them

money


Carbon footprints

Nearly one in five UK consumers claims an interest in carbon footprint labelling…

Consumers seek clarity, any type of clarity, in a very complex issue

Quesos Forlasa cheese, Spain, in CO2=0 packageQuesos Forlasa cheese,

Spain, in CO2=0 packageCasino (PL) potato

dishes, France, with carbon index label

Casino (PL) potato dishes, France, with carbon index label


Ravintoraisio’s Elovena oat flakes, Finland, packaging indicates total water footprint (101L) per 100g

cereal; also carries carbon footprint (80g per 100g)

What if… water footprints?

Water conservation looks set to become the next big issue

Major suppliers are addressing water usage

First “water footprints” appear on products

www.waterfootprint.org, a Unesco-run website, provides water calculator and shows water usage for diverse products


Fairtrade

Coffee, tea and chocolate still dominate, but Fairtrade and Rainforest Alliance continue to expand to new categories

Mainstream brands enter the market, while private label remains strong – accounting for nearly a third of all NPD

Fairtrade new product introductions, by

category


Fairtrade: new brands, new categories

Cadbury Dairy Milk chocolate, UK, claimed to be the first mass market

chocolate producer to gain certification from the Fairtrade

Foundation

Rude Health cereal with Fairtrade banana, UK; Bart Spices’ Black

Peppercorns, UK


Animal welfare

RSPCA’s Freedom Food scheme is the best known programme for animal welfare

Focus on farming, transportation and slaughter

2,800 members, including farmers, processors, packers and hauliers

Covers over 530 million animals, more than 700 product lines

42% share of all UK duck production (Cherry Valley)

20% of pig production (all Coop Truly Irresistible pork products are from Freedom Food, Hampshire-bred pigs)

Sainsbury’s saw a 164% increase in Freedom Food sales in 2009

40% of UK consumers cite animal welfare as an important food claim

Yet less than 3% of new food products launched in the UK carry an animal welfare claim on-pack…


Animal welfare

Little Dish chilled meals for kids, UK; “fresh, natural food” sourced

from “British farms where the animals are well cared for

Honeydrop flavoured waters, USA, with organic honey from “free bees” as a natural sweetener


Traceability

Latte Lombardia’s Latte Milano milk, Italy, in a recyclable package and a Supply Chain Traceability logo, which allows the company to monitor the entire

production process from cow to consumer; Kwetters free range eggs, Netherlands, with a code printed on each egg that provides all details on the

provenance of that egg


Traceability – or how multinationals can play at local

http://www.cokecorporateresponsibility.co.uk/journey-of-a-coke/trace-your-coke.aspx


“Local” in the wider market

Source: GB TGI, Q1 Kantar Media UK Ltd 2005-10 (Oct-Sep)/Mintel

“I buy goods produced in my country whenever I can”


Local or regional in food & drink

Local has an important emotional tag…

It can also mean lower CO2 emissions

In the UK, three times as many consumers care about whether their food is locally sourced than whether it is organic

0

5

10

15

20

25

30

Locally sourced Fairtrade Organic

Source: Toluna/Mintel, December 2009

Important issues when buying food, UK consumers

%


Supporting local or regional food: Continental approaches

Berger Regional Optimal meat products, Austria, using pork

sourced within a radius of 50km from production, while the pig fodder

comes from the Danube area of Austria, not from a South American

plantation

Berger Regional Optimal meat products, Austria, using pork

sourced within a radius of 50km from production, while the pig fodder

comes from the Danube area of Austria, not from a South American

plantation

Orlait’s J’Aime le Lait d’Ici, France, milk “from farms in our regions,

collected and packaged in France”

Orlait’s J’Aime le Lait d’Ici, France, milk “from farms in our regions,

collected and packaged in France”


8

8

12

15

20

26

27

35

36

48

0 10 20 30 40 50 60

None of these

The brand is more important than w herethe food comes from

I pay attention to the EU food origin labels

I look for the Red Tractor label w henbuying food

I’m w illing to pay a bit more for food w ithdetailed provenance information (eg

regional)

I don’t pay much attention to food origin

Price is more important than w here thefood comes from

Food origin labelling can sometimes bemisleading

I pay attention to food origin

It’s important to know w hich region/countrythe food comes from

%

Food origin important, but attention-worthy?

Attitudes towards food

origin, December 2009

Base: 1,000 Internet users aged 16+


78,000 farmers

400 packers/mfrs

£10 bn p.a.


Two in five buy British to support local business

Attitudes towards British food,

December 2009


Source: Toluna/Mintel 12

2

17

17

19

28

32

35

37

39

40

0 10 20 30 40 50

None of these

British food is not as good as otherimported food

British food is expensive for w hat it is

British produce tastes better

I’m w illing to pay a bit more for British food

There is not enough British food in my localsupermarket

British food has a good reputation

Food sourced from Britain has a low ercarbon footprint

I trust British food more than food fromoverseas

I expect British food to be cheaper

I buy British to support local businesses

%

Sainsbury’s bread made with British flour

Sainsbury’s bread made with British flour


Half the nation want local food - effortlessly


Source: Toluna/Mintel 15

6

12

13

14

26

26

31

32

37

45

48

0 10 20 30 40 50 60

None of these

I prefer local food because it's different

I trust local food more than big brands

I seek out local food

I prefer local food because it's authentic

The availability of local food has improved

I w ould buy more local food if I could affordit

I buy local food to support local businesses

Local food is often over-priced

Local food is better for the environment

I’d like more local foods at my supermarket

I buy local food w hen possible

%

Attitudes towards local food, December

2009


One in six are food origin enthusiasts

Target groups, December 2009Base: 1,000 Internet users aged 16+


Origin interested

35%

Origin committed

17%

Apathetic48%

One in six people are food origin enthusiasts

They pay attention to food origin

They are willing to pay more for British and traceable food


One in three are interested

Target groups, December 2009Base: 1,000 Internet users aged 16+


Origin interested

35%

Origin committed

17%

Apathetic48% One in three stand out as above

average positive towards British and local food

But unwilling to pay higher prices in return

Brands need to leverage qualities to differentiate and justify price premium


Leveraging the “local” message: simple formulations

Sharpham Park Organic Spelt Granola, made with pure British

wholegrain spelt milled in Somerset, 100% organic, ingredients travel “the

minimum number of food miles”

Sharpham Park Organic Spelt Granola, made with pure British

wholegrain spelt milled in Somerset, 100% organic, ingredients travel “the

minimum number of food miles”

Glenilen Farm yogurt, handmade on Alan and Valerie Kingston's family farm in West Cork. “Absolutely no

additives”, premium glass pot

Glenilen Farm yogurt, handmade on Alan and Valerie Kingston's family farm in West Cork. “Absolutely no

additives”, premium glass pot


Leveraging the “local” message: more complex recipes

Tanfield Food’s Sharrow Bray gourmet food range, e.g. Country Mushroom Soup “made with the

whitest of button mushrooms combined with double cream from

cows grazed in Northumberland and Durham”

Tanfield Food’s Sharrow Bray gourmet food range, e.g. Country Mushroom Soup “made with the

whitest of button mushrooms combined with double cream from

cows grazed in Northumberland and Durham”

Country Crest From the Farm Shepherds Pie, a microwave

wholesome meal of minced Irish lamb and root vegetables topped

with creamy Irish potato

Country Crest From the Farm Shepherds Pie, a microwave

wholesome meal of minced Irish lamb and root vegetables topped

with creamy Irish potato

Local – the challenge of availability

All major supermarkets play an important role…Tesco claims to stock around 3,000 local lines

Tesco aims for $1 billion sales of local products by 2011

“Local” means produced in the county where sold, or in a neighbouring one

Farm shops and farmer’s markets grew fast in early 2000sGrowing interest in food, provenance, quality, transparency…

Especially favoured by more affluent consumers and over-35s

Recessionary pressures since, but note boost from “staycation” trend and trading up

Increase in online activityEspecially via portals of multiple suppliers e.g. localfoodadvisor.com, with its 20-mile radius search facility

But: Only 14% of consumers shop at farmers’ markets and farm shops, and just 13% seek out local food

Essential to take local food to where the mainstream shoppers are


Future opportunities

Half the population consider it important to know where food comes from

But only one in three pay attention to food origin

Half the population say they buy local food where possible, but just one in seven seek it out

Huge opportunity to translate interest into action…Transformation of brands into experiences as a means of differentiation

Create stories, personality and engagement via brands

Local food concessions in supermarkets as retail theatre (e.g. Rowes pie and pasty concessions in Asda stores in Cornwall)

Regular (local) sampling stands in store

Supermarkets tying in with local farmers’ markets


Future opportunities

Need to engage the young…Building engagement through high interest values such as animal welfare, ethics and the environment

Consider the role of “new” media

Tackle the price issue: build value with valuesValue for money works in both premium and economy

Convert the “origin interested”Leverage PR and face-to-face communications at the local and regional level

Focus on core brand values: transparency, authenticity, authority


Thank you

tel: +44 20 7606 4533

email: [email protected]

Director of Insight & Innovation

David Jago

Documents

A local view of the latest product innovations Food for Thought, 3 rd November 2010 David Jago, Mintel