In the mature and stable food and drinks industry innovation is often seen as the lifeblood of growth, writes market analysts Datamonitor this week. The researchers report that at a recent meeting of US corporate leaders and key industry analysts this was certainly the message hammered home. But effective innovation and trend spotting is inextricably linked to real consumer insight.
General Mills' CEO, Steve Sanger, told Wall Street analysts that innovation on existing lines has been good with more to come. At the same meeting, Gary Costley, CEO of International Multifoods, stressed that innovation is one of the company's core strategies.
General Mills has introduced about 100 new items in the first half of its fiscal year. But, states Datamonitor, it is worth remembering that innovation can be a costly self-indulgence if it is not matched by an understanding of how new products will fit into consumers' lives.
In the UK, for example, the nation's obsession with dieting and appearance is stronger than ever, leading manufacturers to develop low and light food and drinks. However, the low-calorie alcoholic drinks, Hooch Light and Bud Light, both failed to have an impact on the market and were quickly pulled. Other producers have struggled, and there is doubt as to whether Bacardi's new diet version of its Bacardi Breezers will fare any better.
Most consumers flit between periods of indulgent and healthy behaviour throughout the course of a week and even the same day, continues Datamonitor. Going out for a drink with friends is exactly the time when they want to get away from all their worries, not be reminded of them. They compensate for such indulgences at other times in the week.
For Datamonitor, the problem for manufacturers was a lack of insight. They correctly spotted the dieting trend, but failed to make the insight that this concern is not omnipresent in consumers' lives.
Although companies must innovate to accumulate, there is a danger in rushing to jump on the bandwagon of the latest consumer trends. Spotting consumer trends is one part of the innovation game, but manufacturers also need insight into consumers' behaviours and attitudes to understand how to proceed with new product development, if at all. Datamonitor warns food industry players to first understand the consumer insight, and then understand whether it is applicable to the trend.