Moving Beyond Expectations
Dairy's got health and wellness on its side, but consumers want more.
Welcome to Dairy Field’s
new Product Roundup, a Preview of the Latest and Greatest Offerings From
Dairy Processors That Continue to Find new Ways to Satisfy Consumers’
Brand managers and R&D teams were an active bunch
in 2006, launching nearly 1,100 new dairy food products addressing
virtually every need for taste, nutrition and convenience. This roundup is
meant to provide a look at some of the newest items you might have missed,
a peek at things to come and an outline of the trends that will be guiding
the creation of even more new products in 2007.
It’s clear through discussions with processors
during our many trips into the field that dairy is competing with nearly
every other food product, not just other dairy companies, for share of
To that end, we thought it useful to present
information gathered by one of our sister publications, Stagnito’s
New Products Magazine, to show how the food industry as a whole is leaning
in terms of following trends and consumers expectations in developing new
products. We also present analysis from the folks at Mintel’s Global
New Products Database of the dairy product scene. — Jim Dudlicek
Last Year’s Trends Are Now Expectations
In developing new products, please don’t confuse
2007’s latest trends with those of 2006. The “healthy”
and “natural” trends of last year are now consumer expectations.
“Portion control,” however, which was so hot 12 months ago, is
apparently of much less interest to consumers at this time. That
“convenience” trend of 2005 and prior is simply something
consumers must have, say 78 percent of processors. This is the year for
R&D to turn its attention to “organic” and “energy
boosting” ingredients. In most cases, even yesteryear’s lows
— fat, sugar, salt and calories — are simply expected.
The findings contained herein are based on survey data
from 500 food and beverage processors where almost half the
respondents’ firms have annual revenue of more than $100 million.
Three percent report never having an unsuccessful new product launch.
This report discusses new product development
planning, resources, trends, flavors and advertising across seven food and
beverage categories: dairy; snack food and candy products; beverages;
bakery; meat, poultry and seafood; and prepared foods.
Let’s begin with failure as a way to emphasize
the risk in new product development. Although much risk can be hedged
through marketing, processors should consider research homework on how to
avoid a flop. “I believe we used the ready-fire-aim concept more than
the ready-aim-fire concept,” is the way one processor describes the
perils of not doing homework.
The most frequently mentioned reason for an
unsuccessful launch due to poor marketing is a lack of market research.
“Our assumption that our tastes were consumer tastes,” explains
how to fail. “We created a great product, but didn’t take the
time to test the market to see if it would be wanted — and it
wasn’t,” says another. A “lack of compelling consumer
insight,” “no consumer-testing before launch,” and
“not enough of consumer research/focus groups,” are other
Also, 22 percent of unsuccessful launches are
attributed to product errors. “We reacted to a customer who specified
flavors that were not acceptable to the end consumer,” is one
non-flyer. Twenty-one percent fail due to poor planning. “No Stage
Gate process, no forethought,” is acknowledgement of a missing plan.
However, data show that all good things — more new products, more
R&D funding, and new customers — come to processors with a plan.
Those with a plan successfully launch 30 percent of the new products
developed by R&D; those without a plan successfully launch 14 percent
of the new products developed by R&D. The data show that processors
without a plan develop many more new products than they release to market.
This year, 56 percent of processors with a plan will release more new
products to marketing. Those without a plan will be increasing the number
of new products released 45 percent of the time. This year, 43 percent of
processors with a plan are in a position to increase their R&D budget.
For processors without a plan, 30 percent will have more R&D money.
Most processors believe that new products containing
one or more of the following characteristics are currently needed in the
market place. These include, in descending order of need-frequency:
organic, energy boosting (especially in snacks and beverages), natural
ingredients, ethnic flavors and whole grain. Developing new products in
2007 that have one or more of these attributes will provide the least risk
In addition to new trends, this report finds that old
trends have become consumer expectations. “Convenience” in new
products is something four of five processors believe consumers must have.
Other must have trends are less clear cut, but the data show consumers want
“indulgent” new products that are also low in fat, sugar, salt
When processors are ambivalent about product
characteristics, these should be considered ideas with the greatest risk.
Here we find one-third of processors reporting a trend, while another third
believe consumers are not interested. This risk-list includes gluten free,
low glycemic, spicy/hot, high fiber, portion controlled and vitamin and/or
mineral fortified. Focusing new product development in these areas will
carry the highest risk to processors.
New Dairy Products
New dairy products include ice cream/frozen desserts,
cheese, yogurt, cultured products, and milk. Hot selling flavors for ice
cream and yogurt this year will be fruit, including acai, pomegranate,
tropical, lychee, blueberry, black current, exotic, goji berries, key lime,
noni and passion fruit. Top flavors for cheese will be spicy —
chipotle being the favorite; milk will be about adding fruits, coffee or
New dairy products are leveraged on advertising and
trends. Dairies report advertising success with retail promotions,
sampling, POP/in-store demos and coupons. Although too expensive for some,
consumer magazines, direct mail and trade magazine are tried and true ways
of helping a new dairy product fly.
The data show consumers expect dairy items to be
“healthy,” “indulgent” and “portion
controlled.” It is important to note that there is less expectation
that new dairy products have lowfat, low calories or low sugar.
R&D and sales and marketing are the top team
members followed by management, which is likely the chief executive officer
who has a defined role as advisor. Suppliers are available to 80 percent of
dairies where they are involved in new product development at the
inception/idea stage all the way through to product completion.
Dairies devote 3 percent of their work force to new
product development. Most do not outsource this type of work. This year, 43
percent will have more R&D dollars, 44 percent will operate at last
year’s levels, and 13 percent will have less money. Those with extra
money will invest in more new products, additional staff and growth.
Three of four dairies can develop new ice creams and
yogurts in less than nine months. New cheese and milk products take a bit
Two-thirds of dairies have a definitive new product
development plan. Final product development, production and launch are the
most important stages. Unlike any other category of food and beverage
processors, the most frequently used research method at dairies is
Five hundred food and beverage processors
completed questionnaires via a URL link for Stagnito’s New Products
Magazine’s 7th Annual New Product Development Report. The number of
responses means that the results are at the 95 percent confidence level
±4.3 confidence interval.
Thirty-one percent of processors in the sample create
snack foods and candy products, 27 percent create new drinks, and 27
percent are bakeries. Twenty-seven percent develop prepared meat, poultry
and seafood, 26 percent create new prepared foods, 18 percent are dairies,
and 16 percent develop new prepared fruits, vegetables and condiments.
These add up to more than 100 percent because many processors develop new
products in multiple categories.
Overall, 43 percent of respondents are from research
and development, 35 percent are from sales and marketing, and 30 percent
are from upper management. Quality control accounts for 7 percent of
respondents. Packaging, production and purchasing are also represented.
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