New Product Study Reveals Breakthrough Innovations Yield Lower Returns
Innovation is the most important factor for building competitive advantage in the global food and drinks market, however, most industry executives are unsatisfied with the return on investment for their new products, according to a recent study published by NPD Group.
Although breakthrough innovation is generally perceived to be the most profitable, incremental innovation and category repositioning could prove to be more effective strategies, according to the Port Washington, N.Y.-based research company.
Future Innovations in Food and Drinks to 2012: NPD, Trend Convergence and Emerging Growth Opportunities is a new management report based on analysis of more than 75,000 new product launches and an exclusive global panel survey. The report explores the key trends in the global food and drinks market, assesses the most innovative models, analyzes the most innovative products and provides actionable recommendations for increasing innovation success rates.
The following are some key findings from the report:
Consumer health will continue to dominate innovation. Of all products launched between 2004 and 2006, 39.1 percent had a healthy proposition.
External sources of innovation may be quicker and more cost effective, in spite of this the industry relies heavily on internal sources.
Convergence of the health, premium, convenience and ethical trends is set to intensify with an increasing number of new products positioned in two or more trends over the next five years
The premium trend will be driven by super premium and guiltless gourmet amid increasing competition from "me too" producers and private-label imitators.
Packaging is expected to play an increasingly important role, especially in nutrient/flavor preservation.