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The Best CPG Segment(s) to Nurture New Product Development

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Q: Which CPG segment(s) is best at nurturing new product development today and how?

(a) ‘It is in two areas: One is the era of convenience, easy-to-prepare foods. In our time-starved society the primary caregiver either a mom or dad or even a single person is looking for fast and healthy dinner-at-home alternatives. Here you see all the frozen food lines migrating to single-serve and family-portion steam solutions to overcome the “stigma” of frozen food. You also see more one-meal solutions with ready sauces, soups and packet offerings where you simply add a protein. Time-saving solutions that still feel like a home-cooked meal! 
 
The second area is anti-aging in the HBA category. As the aging of America continues and the trend expands to both males and females, both are looking for youth in a bottle and a jar.’ 
 
— Terri Goldstein, Goldstein Group
 
(b) ‘Dairy space is limited. But retailers have grown sales per square foot with higherpriced items like Greek yogurt and all sorts of specialised products like lactose-free milk along with non-dairy beverages like soy and coconut milk.’
 
— Gary Stibel, New England Consulting Group
 
(c) ‘My initial answer would be the gum and beverage categories (soda, beer, etc.). These are fast-moving, innovation-driven categories in which marketers recognize the power of packaging — and are willing to invest in new structures (unique shapes, sizes, delivery systems, etc.) that may better meet consumer needs. 
 
In these innovation-driven categories, marketers also recognise the importance of breaking through retail clutter, and they are always experimenting with new ways (added-value elements, etc.) to create unique appearances and differentiate.’ 
 
— Scott Young, Perception Research Services
 
(d) ‘In addition to craft beer, wines and liquors are showing a lot of trends, with spirits becoming more of a “rotational” category with the influx of flavoured vodka, small-batch and premium spirits. It used to be a very stable category, but it isn’t any more. Wine used to be very intimidating for many people. But now brands like [Gallo’s] Barefoot Cellars are targeting young people and making it casual and inexpensive. Then there’s the growth of malt beverages like Mike’s Lemonade. Years ago, nobody knew what hard lemonade was.’
 
— Scott Young, Kantar Retail
 
(e) ‘There are patterns in consumer behaviour and certain patterns in corporate behaviour. Brands and the organisations behind them are not designed to create change in their own category, with the exception the exception of Apple, which had a former founder and CEO who could see things most people would have a tough time comprehending. So, by observing corporate human behaviour we can see the more stagnant the category, the more likely innovation will be forced upon the category. Think about the household cleaning categories before Method, Mrs. Meyer and 7th Generation. The segment wasn’t good at nurturing new product development until the competitive landscape changed and corporate behaviour had to change with it.  
 
Just walk a retail store and go to the aisles where no one shows up and ask yourself, why would people come back to this aisle? When would they and what new products could be developed to get them back into this aisle of the store. These are likely the areas which, while they may not nurture NPD now, they will be soon.’ 
 
, Capsule 
 
(f) ‘Wines and spirits do a great job at nurturing new products. I think this is for two reasons: Firstly, a lot of entrepreneurs dream of creating the next new vodka or rum. It’s a glamorous business and to some extent, the cost of entry is affordable. Even though it’s such a competitive category, there always seems to be room for another small-batch spirit or micro brew to dream of making it big. Wine producers, in particular, are launching more and more “brands” into the market, focussing particularly on millennials. I was lucky enough to lead the design of the new Thorny Rose line, which was able to bridge the gap between wine “newbies” and budding connoisseurs. The other reason there are so many new spirit launches… it’s so much fun to organize a launch party!’ 
 
— Marcus Hewitt, Product Ventures
 
(g) ‘Single-serve coffee pods. These have reinvented coffee and are responsible for all coffee growth due to the convenience and customisation aspects. If you want one cup and you want it brewed quickly, you can have it. And different household members can brew different flavours.’ 
 
— Don Stuart, Kantar Retail 
 
(h) ‘One of the biggest innovations came when Post introduced a Honey Bunches of Oats cereal made with Greek yogurt—it’s really tasty. Then Kellogg’s launched Crave, a chocolate cereal, along with some limited editions of Special K. These will come out for a cycle and then be switched up to maintain the excitement—kind of like craft beer.’ 
 
— John Ferramosca, Edgewood Consulting 
 
(i) ‘Innovation within the breakfast solutions segment is in lock step with trends around the blurring of eating occasions, a phenomenon that is revolutionising the food and beverage world. These manufacturers are deftly balancing consumer calls for wellness and indulgence, and they are doing it with portability and flavour/ texture excitement. Consumers are responding with their wallets, supporting segment growth that far outpaces industry average during the past three years.’ 
 
— Susan Viamari, Times & Trends, IRI