Innovation is the most important factor for building competitive advantage in the global food and drinks market. However, most industry executives are unsatisfied with returns on investment achieved on their new products. Although breakthrough innovation is generally perceived to be the most profitable, incremental innovation and category repositioning could prove more effective strategies.

Future Innovations in Food and Drinks to 2012: NPD, trend convergence and emerging growth opportunities is a new management report published by Business Insights based on extensive analysis of over 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.

Create more effective new product development strategies and increase returns on investment with this new report.

This new report will enable you to...

• Enhance the effectiveness of your innovation strategies with this report’s analysis of the innovation models of leading food and drink manufacturers, including Procter & Gamble and Nestlé, and actionable recommendations for choosing an innovation strategy.
• Assess the key trends in food and drinks innovation based upon this report’s analysis of Productscan data from over 75,000 product launches between 2003 and 2006 detailing regional contribution, category coverage and product claims.
• Benchmark leading executives opinions on the future of food and drinks innovation using this report’s analysis of our proprietary global survey detailing the key issues affecting the future of NPD and innovation in the food and drinks market.
• Identify new and emerging market opportunities using this report’s extensive analysis of the most innovative new product launches, trends in NPD and convergence.

Key issues examined in this report...

• Improving return on investment. Industry surveys show that the majority of food and drink executives are dissatisfied with the return on their investment in innovation.
• Understanding changing market trends. The increasing convergence of “health”, “premium” and “convenience”, combined with the emergence of “ethical” in the food and drinks market is reshaping product innovation. This report explores the direct impact of convergence on NPD.
• Choosing the right innovation strategy. Many companies place too much emphasis on line extensions. This report explores the effectiveness of different strategies, their usage and gives concrete examples of recently launched products.
• Leveraging external sources. The report analyzes the potential for developing partnerships with external sources, such as suppliers, research centers, universities and private individuals.

Some key findings from this report...

• Consumer health will continue to dominate innovation. 39.1% of all products launched between 2004 and 2006 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 toos” and own label imitators.
• Packaging is expected to play an increasingly important role, especially in nutrient/flavor preservation in spite of the dominance of formulation-led innovation.


Your questions answered...
• What are the key industry issues affecting the future of food and drinks new product development?
• Which factors are driving the key developments in food and drinks innovation?
• Who are the innovation leaders and what lessons can be learned from them?
• How are food and drink companies improving their return on investment in innovation?
• Which innovation strategies are the most effective?
• What regions are leading innovation in the global food and drinks market?

Executive Summary 10
Trend convergence 10
Developments in innovation 11
Types of innovation 12
Global NPD evolution 13
Future innovation trends 14
Conclusion 15


Chapter 1 Trend convergence 18
Summary 18
Introduction 18
Increasing convergence of key market trends 19
Healthy food and drinks 21
Indulgent food and drinks 22
Convenience 23
Ethical food and drinks 24


Chapter 2 Developments in innovation 26
Summary 26
Introduction 27
NPD and building competitive advantage 27
Key drivers for future NPD 28
The innovation challenge 30
Solutions to innovation challenges – the Procter & Gamble case study 31
Re-inventing the innovation model 32
Consumer rather than R&D driven 32
A global network of external innovation partners 33
Proprietary network 33
Open network 34
Portfolio management 35
Adapting the culture 36
Illustration: Pringles Print 36
Conclusion 37
Enhancing innovation through strategic partnerships 38
Innovation partnership management at Nestlé 39
Tapping into technology centers 39
The role of ingredients’ suppliers 40
Partnering with media companies 41
Engaging consumers in product innovation – the net revolution 42


Chapter 3 Types of innovation 46
Summary 46
Introduction 47
The NPD cycle 47
Innovation success metrics 48
Types of innovation 50
Introduction 50
Breakthrough innovation 51
Incremental innovation 54
Category repositioning 55
Line extension 58
Importance of the types of innovation 59


Chapter 4 Global NPD evolution 64
Summary 64
Introduction 65
The evolution of NPD by product category 65
The evolution of NPD by region 67
The evolution of NPD by product tag 68
Innovation levels by product category 70
Innovation levels by region 71
Innovation levels by type 74
Innovation by formulation 75
Innovation by positioning 76
Innovation by technology 77
Innovation by packaging benefit 77
Most innovative food and drinks companies 78


Chapter 5 Future innovation trends 82
Summary 82
Introduction 83
Health 85
Wellness and wellbeing 86
Weight management 88
Energy and vitality 90
Targeted nutrition 91
Nutraceutical foods and drinks 92
Premium/gourmet 94
Guiltless gourmet (low cal/low fat gourmet) 95
Super-premium 96
Authenticity 97
Novel flavor combinations 99
Ethnic food repositioned 101
Convenience 102
On-the-go 103
Freshly prepared 104
Innovative packaging for flavor/nutrition preservation 105


Chapter 6 Conclusions 108
Summary 108
Introduction 108
The importance of innovation 108
Developing adequate innovation models 109
Key product innovation trends 110
Index 112


List of Figures
Figure 1.1: Convergence of the major trends 19
Figure 1.2: Organic, premium, healthy and ethical olives 20
Figure 2.3: Areas of investment important for building a competitive position over the next 5 years 28
Figure 2.4: The importance of key drivers for NPD over the next 5 years 29
Figure 2.5: Obstacles to innovation 31
Figure 2.6: Pringles Print Trivial Pursuit 37
Figure 2.7: Key future sources of product innovation for food and drinks companies over the next 5 years 38
Figure 2.8: Green Mountain’s fair trade PBS Blend 42
Figure 2.9: Kettle Chips’ “Crave-O-Meter” consumer feedback platform 43
Figure 2.10: Consumers pick the next Danette flavor 44
Figure 3.11: Present and future NPD cycle 48
Figure 3.12: Most important metrics for measuring innovation success in food and drinks industry 49
Figure 3.13: Innovation/product attribute matrix 51
Figure 3.14: OMU yogurt drink 53
Figure 3.15: Flora Inc.’s super-premium Omega Truffles bar 55
Figure 3.16: Kellogg’s cereal products’ category repositioning 57
Figure 3.17: Rosenborg’s Pear and Cranberry blue cheese lines 58
Figure 3.18: The types of innovation most important for food and drinks NPD today and in the next 5 years 60
Figure 4.19: New product launches by category, 2004-2006 (% of overall product launches) 66
Figure 4.20: New product launches by region, 2004-2006 (% of overall product launches) 67
Figure 4.21: Percentage of food and drinks products launched in each category that were classed as innovative, 2004-2006 70
Figure 4.22: Percentage of food and drinks products launched in each region that were classed as
innovative, 2004-2006 72
Figure 4.23: The region that will have the most innovative companies over the next 5 years 73
Figure 4.24: Innovation by type, 2004-2006 (%) 74
Figure 4.25: Danone’s Danino “brain health” yogurts for kids 76
Figure 5.26: Share of products launched in each overall trend, 2004-2006 83
Figure 5.27: Most important trends for future food and drinks NPD 84
Figure 5.28: Most important health trends for future NPD 85
Figure 5.29: Nativa Yerba Mate’s “wellness” herbs 86
Figure 5.30: Nutrition for the body, mind and soul 87
Figure 5.31: Enviga, the “calorie burner” sparkling green tea 89
Figure 5.32: The new FRS Antioxidant Energy Drink 90
Figure 5.33: Energy drink for teenagers from Stonyfield Farm Organic 92
Figure 5.34: Yoplait’s Essence “wellness” drinkable yogurt range 93
Figure 5.35: Most important indulgent trends for future NPD 94
Figure 5.36: Whole grain bread that tastes like white bread 95
Figure 5.37: Paradise Coffee’s Kopi Luwak super-premium blend 97
Figure 5.38: Caranda Teas’ Organic African Gourmet Iced Blends 98
Figure 5.39: Ehrmann’s sweet and sour flavored cheese desserts 99
Figure 5.40: Alcohol flavored food products 100
Figure 5.41: Giacomo “Bombay Style” Green Tea-Lime premium yoghurt drink 101
Figure 5.42: Most important convenience trends for future NPD 102
Figure 5.43: Molkerei Lanz’ dual-consumption yogurt 103
Figure 5.44: Lifestream’s Pie Oh My! microwaveable pies 104
Figure 5.45: Emmi Schweiz AG’s Lacto Tab Q10 106


List of Tables
Table 4.1: Top 20 product tags on innovative products, 2004-2006 69
Table 4.2: Most innovative food and drinks companies 78