With big brands competing against small ones, thousands of new product launches each year and 20-30% more companies operating than a few years ago, the food industry has never been more complicated, says Lu Ann Williams, director of innovation at Innova Market Insights.
So what should new product developers and budding entrepreneurs be looking at if they want to be successful?
For a start, they need to think beyond sales and size. Danone's Essensis quickly made €40 m in European sales but was withdrawn by Danone in 2009, for instance.
“You can’t make it as simple as looking at sales,” says Williams. "Big sales don’t mean big success.”
So to make sense of a constantly changing marketplace that sees new trends come and go and category leaders rise and fall, here are some of Williams’ top tips.
Look at the trend
“Sometimes you have to look at the success of the trend as a whole rather than one or two individual products.”
For some categories, there may not even be a standout brand which is miles ahead in outperforming the others – such as the shandy (or radler) market in Europe.
“Just follow the trend as a whole and make your way into that space,” she says.
Once you have identified the general trend, use databases to compare in-category subtrends. Lemon is the most popular shandy flavour but data suggests that it has peaked. Go for similar flavours – grapefruit and lime – which are on the up.
Shelf space tells you a lot
Complement database statistics with a bit of personal research and a trip to your local cornershop.
“I take pictures every Saturday in my grocery store to see what sells,” says Williams.
Keeping track of which shelves are always empty at the end of the afternoon is an effective visual way of seeing what is selling, she said.
Are others following?
The rise of private labels is also a good indicator of a category or trend that has staying power.
“When retailers start knocking off the mainstream products you know that something is successful.”
In 2009 there were seven Greek yoghurt brands in the US. When private labels entered the space in 2011 the number of new product launches rose skyrocketed.
Seek out the trendsetters
“Food trends are usually started by small companies – think ancient grains, gluten-free or organic,” says Williams.
But the really small companies don’t usually show up in databases – so you need to look beyond the statistics to find them.
Check to see if a product has been launched regionally or internationally.
A brand might not have a huge market share in a given country but it may be sold all around the world. “This is a great indicator of success.”
Look at the British brand Dorset cereals which sells its high-end muesli, granola and porridge in 70 countries, says Williams.
If a brand has launched countless variations of the same range then chances are it is doing something right – that’s a good place to look for inspiration according to Williams, pointing to Mondelez-owned Belvita’s range of breakfast biscuits.
Social media engagement
Finally, look at how engaged consumers feel with a brand by reading what is said about the company on social media.
“Social media analysis is easy to do. Look at how positive the reactions, words and terms are [through] text analysis of Twitter.”