Why NPD in the Food & Drink sector creates churn, not growth

What constitutes NPD for a lot of food & drink manufacturers?

Answer: different flavours & pack sizes

From family-run SMEs to global monsters, we hear this time and again – “innovation” being measured by the number of new flavours and pack sizes.

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NDP accounts for 25% of yearly grocery sales

Source: BG20, Europanel

It’s frustrating for retailers, who are fed up with manufacturers bringing their new varieties to them. As a Senior Buyer pointed out recently “we get 25 new proposals each day but it’s not innovation, all they’re doing is creating 20% churn in the category. In 3 months it’ll be replaced by another variety.”

There are some obvious exceptions…flavoured gin for example, as a new alternative to traditional gin. That created new sales in the sector. What doesn’t create new sales is introducing additional new flavours – that brings us back to churn.

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The problem seems to be that this is now the norm, most manufacturers just don’t have the tools to break this cycle.  They need to take a different approach to NPD, try think and do things differently.

They could do worse than take look at Agile, usually regarded as a corporate IT thing.

Agileists would tell them to bring the customer back into the heart of their NPD process. More than that, they would tell them to focus on the actual needs of the customers and the “job to be done” by the product (ref. The Innovator’s Dilemma by Clay Christensen, professor at Harvard Business School).

 

The job to be done by a milkshake is a story that every food & drink NPD manager should know and learn from.

Of course, the next mistake we see is the manufacturer relying on their own assumptions about the customers and their needs. “Gut feel” and experience can work, but for every success story there are 99 failures that don’t make the shelf or stay on it for long!

The only people you can rely on to tell you what customers truly need and value? Customers themselves.

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