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New Products Carry Both Innovations and Costs

New Products Carry Both Innovations and Costs

Kraft single-handedly launched 80 new products at last week's Food Marketing Institute Show.

Although that seems like a large number, it represents only a fraction of the 488 new products the supplier unveiled last year. Nestlé was a close second with 414 items, General Mills launched 292 and Kellogg's brought 237 new products to retailers' shelves, according to Mintel.

In the coming months, Center Store will serve as the location for countless mainstream consumer introductions to products featuring probiotics and prebiotic fiber when these ingredients make their debut in Kraft cereals, drink mixes and bars.

As was explained to me by a Kraft representative on the show floor, prebiotic fiber-containing products — such as Kraft's new LiveActive Cereal from Post and its LiveActive On the Go Drink Mix from Crystal Light — complement items that contain probiotics, such as LiveActive's new Chewy Granola Bars.

As part of a concept that shows the scientific basis of some new innovations, the representative explained that prebiotics act as food for the live microorganisms, or probiotics, that are naturally found in the human intestinal tract. Products that contain probiotics are said to promote intestinal health.

Everyone understands the idea of portion control, but it seems the aid of an in-store dietitian may be needed to help on-the-go consumers grasp this new concept.

Educational efforts are just one of the contributors to the cost of sourcing new products. And as convenience, health and ecological innovations continue to proliferate, so, too, do the burdens borne by retailers.

Category managers, for instance, have the unenviable job of weeding through thousands of new products so that the customer needn't do so at the point of sale.

Last year, Publix's 31 grocery buyers, ended up reviewing close to 10,000 new products.

Costs associated with product development and marketing are also often passed from manufacturer to retailer, Publix's vice president of product business development, David Bornmann, said during a presentation given at the National Frozen & Refrigerated Foods Association's Executive Conference last month.

“Only new items that are truly differentiated, and which avoid the cannibalization of existing sales, have the opportunity to surpass these costs and potentially create positive net sales and profits,” he said.

Indeed, less is often more, related Wayne Strickland, vice president of category management for Hallmark Cards, during a session at the FMI Show.

With the objective of improving front-of-store sales, the supplier polled customers of a national chain to get a better handle on how they shop the greeting card section. Hallmark's research revealed that shoppers found the section difficult to shop, and customers only had an average of two minutes to select a card.

It responded by eliminating 25% of the greeting card inventory and installing more user-friendly fixtures that allow greater card visibility.

“Sales are up in the double digits, and our inventory is down in the double digits,” Strickland said.