Supplier Leadership Award 2012 Winner for Product Innovation: Kraft Foods

Kraft's creation of the liquid water enhancer category and a healthier-for-you cookie caught the attention of consumers, as well as SN, which awarded Kraft its Supplier Leadership Award for Product Innovation.

• SymphonyIRI Group flagged MiO and Newtons Fruit Thins as “Rising Stars” on its list of the top 10 new food and beverage products on their way to becoming top sellers.
• MiO created the new category of liquid water enhancers.
• As consumers are snacking more frequently, they are also seeking to eat healthier.


 

At a time when consumers hunger for new products, Kraft Foods stepped up to the plate in 2011, creating a new category of water enhancer and a healthier-for-you cookie.

According to SymphonyIRI Group’s 2011 New Product Pacesetters report, 22% of consumers are actively looking for new products to try. Yet, CPG manufacturers introduced only 665 new food and beverage products and brands last year, a decrease from the 900-plus new food and beverages that hit the market annually during the mid-2000s. Average year-one sales of new products, however, declined from $35 million in 2002 to less than $25 million in 2011.

Manufacturers are introducing more products targeted to the niche needs of smaller consumer segments, filling specific needs and attracting loyal followings, according to the report.

“We have small manufacturers that are making a big splash. We also have large manufacturers that are continuing to cast a wide net on innovation but supplementing that with more targeted innovation,” said Susan Viamari, author of the 2011 New Product Pacesetters report.

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Kraft introduced two innovative products: MiO and Newtons Fruit Thins, which resonated so much with consumers that they achieved retail sales high enough to earn both products SymphonyIRI’s “Rising Star” designation, a term for the top 10 food and beverage brands projected to achieve the highest year-one sales.

Creating the new category of liquid water enhancers, MiO, meaning “mine” in Spanish and Italian, gives power to consumers to customize a drink to their own personal tastes. Packaged in a portable, pocket-sized bottle, MiO self-mixes with water and doesn’t need to be shaken or stirred, making it convenient to use at home or on the go.

Consumers can add a lot or a little to water to create a zero-calorie drink, now available in 11 flavors. The Orange Tangerine variety even contains B-vitamins. MiO Energy, available in Green Thunder and Black Cherry flavors, contains B-vitamins and an energy boost of 60 mg of caffeine per 8-ounce serving — about the same amount of caffeine contained in a 6-ounce cup of coffee.

MiO hits key trends toward personalization, flavor excitement, convenience and better-for-you beverages. It’s also cost-effective, as a MiO bottle contains up to 24 servings, allowing consumers to save money perhaps otherwise spent on bottled flavored water. The MiO Energy varieties also appeal to the strength of the energy drink arena. Because of these qualities, consumers have taken notice. For the 52 weeks ending Aug. 12, 2012, MiO sales are over $104 million across grocery, drug and mass channels, excluding Wal-Mart, Viamari said.

“Kraft Foods has been stepping up its innovation investments for several years, which is driving business momentum,” said Becky McAninch, director of MiO/liquid concentrates, Kraft Foods. While MiO appeals to anyone wanting the freedom to customize their beverage, it is making its mark with Millennials, “a new target audience for a Kraft Foods refreshment beverage brand,” she said.

Private label and national brands have stepped onto Kraft’s playing field in the past year with water enhancers of their own, featuring fruity and energy boost varieties. Coca-Cola released Dasani Drops nationwide in four flavors this month.

Competition in this space is likely to continue in the coming months as demand is high for liquid water enhancers, Viamari said. “As new ingredients and technologies emerge — new flavors, new ‘additives’ such as vitamins — there will be a footrace for who can bring these new attributes to market most quickly and effectively,” she said.

A Healthier-for-You Cookie

Kraft Foods also innovated within the cookie category and its own Newtons brand — now part of Kraft’s spinoff global snack business Mondelēz International — with Newtons Fruit Thins. As of 2010, cookie-eating had hit a five-year low due to consumers’ concerns over health and wellness, said Tara Rutan, brand manager, Newtons, Kraft Foods.

“Driving much of these declines were Boomers aged 45-65, who, at the same time, were one of the fastest-growing consumer segments in overall snacking with [more than] 40% growth estimated through 2012,” Rutan said. “We needed to bring them back and introduce them to different choices in the cookie category.”

Healthier-for-you attributes seem to be the secret ingredient to successful snacks. As snack frequency has increased in 2012 over 2009, 87% of consumers are trying to eat healthier, according to SymphonyIRI’s 2012 State of the Snack Industry report.

Read about SN's Collaboration winner: Hershey’s [6]

Kraft had also set out to reinvent its more than 120-year-old Newtons brand, known for its fig-filled soft, chewy cookies. Having previously expanded its fruit-filled offerings, Kraft created a crispy cookie with 8 grams of whole grains per serving and real fruit baked inside. Newtons Fruit Thins are available in six unique flavor combinations such as Cranberry Citrus Oat, Blueberry Brown Sugar and Fig & Honey. “Those benefits enabled consumers to feel better about their snacking choices,” Rutan said.

Consumers are clearly looking for calories that count, allowing them to splurge without breaking the bank or their diets. “When we looked at growth during the past couple years, the healthier-for-you segment has been consistently outpacing the indulgence segment,” Viamari said. For the 52 weeks ending Aug. 12, Newtons Fruit Thins sales are over $43 million across grocery, drug and mass, excluding Wal-Mart, she said.

“I really think anything making a cookie healthier for you is very innovative. Nabisco did that very well,” Viamari explained, while also “giving consumers that experiential eating so that they don’t feel like they’re sacrificing by having a healthier-for-you cookie.”

Slideshow: A Look at Fig Newtons Since 1892

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Fig Newtons launched in 1892, a year after the development of machinery to fill a cookie with jam. "When consumers think of Newtons, they most often connect it to figs. Newtons has a more than 120-year history of baking figs into a soft and chewy cookie," said Tara Rutan, brand manager, Newtons.

Newtons has expanded its flavor offerings over the years, and in 2011, released Fruit Thins, a crispy cookie now available in six flavors. Newtons Fruit Thins changed not only the structure of the cookie but also of the package. "While most cookie packages stand horizontally on shelf, we went vertical," Rutan said. "We also changed the communication hierarchy. Instead of having the branding on top, we made the fruit and cookie our hero. And, since we were targeting Boomers that tended to have smaller households, we added a stay fresh tie."

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