Shared values should drive crossover growth

Related tags New product development Nestlé

Cross-segment product launches are nothing new in the food
industry, but the pace of new product development appears to have
quickened in recent years as manufacturers seek to leverage the
strength of their brand by reinventing it in a new product
category.

Some of the most successful crossovers have been little more than a sidestep - Smirnoff Ice and Bacardi Breezer, for example, are not vastly different than their parent brands, but they are nonetheless different enough to be classified as an entirely new product category - flavoured alcoholic beverages.

Other crossover launches have seen brands take a few more steps away from their traditional spheres of influence, though - Mars, for example, launched a chocolate milk flavoured like its eponymous countline bar, not to mention numerous ice cream variants of its chocolates, while Rice Crispie Squares from cereal maker Kellogg simply mass-produced and conveniently packaged a children's favourite, the recipe for which had frequently featured on the cereal packaging.

But some crossover launches have been less successful, and even the biggest names in the industry can come a cropper if the premise behind the launch is not well thought through. Diageo, for example, spectacularly failed to reproduce the success of Smirnoff Ice with either Gordon's Edge or Captain Morgan Gold.

Clearly, the further the original brand is 'extended' from its traditional market, the bigger the gamble for the brand's owner - but also the bigger the potential reward. Nestlé, for example, has had considerable success pushing its confectionery brands into the ice cream sector, or indeed into dairy desserts, but one of its most recent ventures - the UK launch of a cereal bar based on its Rowntree brand of sugar confectionery - was little more than a disaster, with the product being pulled from the shelves within less than a year.

Undaunted, and no doubt wiser as a result of its earlier failure, Nestlé UK has just announced the launch of another new crossover product - but this time based on its Ski brand of yoghurts - which seems to have a far greater chance of success.

Like the Rowntree launch before it, the new Ski-based product will be a cereal bar, but while the gap between sugar confectionery and cereal based snack was apparently too far for most consumers to bridge, that between yoghurt and cereal bar is much less so, given the healthy credentials of both product categories.

Nestlé's new cereal bar variant is due to be launched in July with two varieties: red berries and yoghurt; and citrus burst and yoghurt. The cereal bars will be promoted as an all-day snack rather than a breakfast alternative, and according to market analysts Datamonitor​, the move is a shrewd one..

"Extending Ski into cereal bars is the second significant attempt Nestlé has made in recent months to strengthen the brand. Only last month, its new yoghurt drink, Ski Stopgap, was made available, marketed as a breakfast alternative and on-the-go snack with a mix of low fat yoghurt, cereal and fruit,"​ analyst Daniel Bone said.

"Both extensions are aimed at developing the Ski brand's snacking credentials, but it is this latest move that is the most significant. Nestlé is now developing the brand beyond the dairy sector into an area where it has already been unsuccessful."

The breakfast bar market is growing rapidly, with consumers in the UK increasingly looking for the right mixture of convenience and health to help them start the day on the move. Indeed, the market is estimated to be worth between £190 and £200 million, and to be growing at 20-30 per cent a year, meaning that increasing numbers of companies are keen to jump onto the bandwagon.

But if companies like Kellogg (which is also to launch its Crunchie Nut Cornflakes in cereal bar form) and Weetabix (which hopes to garner up to 5 per cent of the market with its new cereal bar this year) can hope for success, building on their already solid reputations in the breakfast market, products such as the Fruitsome bar are more likely to fail because they do not have the same healthy perception.

Moreover, the growth appears to be alnmost entirely in the breakfast bar market - since this is the meal most people are likely to skip or eat on the move - rather than the wider snack market as a whole, Bone suggests.

"As people get further into the day, and have to cope with the stresses of work, they are perhaps more likely to turn to a more indulgent product for a snack, as comfort food rather than healthy food becomes more of a priority."​ This is perhaps another reason why the Fruitsome bar failed - it was neither healthy or breakfast-centred enough for the morning market nor indulgent enough for late-afternoon snack.

But Kellogg, at least, clearly believes that there is a future for healthy snacks throughout the day, having recently launched a new snack product under its Special K brand. Packaged like crisps, the cereal snack is targeted squarely at women, and offers an innovative (and sufficiently indulgent) snacking opportunity without the guilt of calories.

"Using established brands with already well-known health credentials could well be the ace card for manufacturers and retailers seeking to capitalise upon the booming and increasingly health-focused UK snack market in the next five years,"​ Bone said, adding that the best opportunities were likely to come in crossovers between dairy and cereal brands.

Related topics Market Trends