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Another in a series of previews of the 2005 Food Marketing Institute (FMI) Show…

It is an oft-repeated truism that new products are the lifeblood of the food industry – but new products alone cannot drive sales and profits. Rather, it is how these new products connect to the needs and desires of an ever-evolving consumer…which is exactly what a Super Session at the upcoming Food Marketing Institute (FMI) Show will endeavor to track and illustrate.

The discussion – scheduled to take place on Monday, May 2, during the 8:15-11 a.m. Super Session block – will feature Valerie Skala Walker of Information Resources Inc., Lyn Dornblazer of Mintel, and Joan Holleran of Stagnito New Products Magazine, and will be hosted by Kevin Coupe, MorningNewsBeat.com’s Content Guy.

To get a preview of the session – the products that are hot, the consumers that are driving demand, and prognostications about the future, we turned to IRI’s Valerie Skala Walker for an exclusive e-interview.

MNB: You say that in 2004, the most successful product introductions were connected to the desire to take small steps toward healthier eating. Give us a sense of some of these successful intros...and why you think they worked. It also sounds, though, like consumers were not willing to give up taste and convenience...and that they would not sacrifice these two components to eat healthier. True? Where did this trend seem evident?

Valerie Skala Walker: . . . the continued growth in diet soda, with flavor innovations like Diet Coke with Lime. . . the continued growth in bottled water sales, with products like Propel and other low-calorie flavored and vitamin-enhanced waters. . . sales growth in categories like nuts and cheese, while categories like salty snacks and cookies are flat or down (at least in the FDMx outlets) . . . innovative brands include Emerald Nuts and Kraft Twist'Ums and String'Ums cheese sticks. . . Quaker oatmeal breakfast squares. . . Breyers CarbSmart ice cream and a variety of frozen novelties with reduced fat/sugar/calories. . . continued growth in natural and organic products . . . Thomas' hearty grain muffins

Notice how the above products are all familiar, convenient, and portable.

MNB: We’re starting to see a flood of new product intros in the soft drink category – new formulations, new sweeteners, new names. At what point does this become too much for the consumer to absorb?

Valerie Skala Walker: Over the past 10 years, in response to the proliferation of product offerings and new types of retail outlets, consumers have had to develop a shopping expertise that enables them to work their way past 25,000 to 50,000 items and still complete a grocery shopping trip in under an hour. Unfortunately, the same expertise that enables consumers to quickly zero in on their desired item also means they aren't scanning the shelf and discovering new items as readily.

MNB: What are you seeing in terms of retailers and manufacturers being willing to give products time to build loyalty and interest, as opposed to demanding immediate big time acceptance?

Valerie Skala Walker: Honestly, I don't see retailers consistently reacting as quickly and strongly as you might think, to drop slow-moving items and make way for better performers. I still see shelves where the top selling item is out of stock while a slow-moving brand has 5 flavors collecting dust.

I think there might be an opportunity for retailers to re-consider the way they set their shelves, setting aside a specific amount of space for their top sellers where they make sure each SKU has enough facings to avoid out-of stocks, and setting aside a separate piece of shelf space where new items can be moved in and out with greater ease.

MNB: How about in the HBC area? What are you seeing?

Valerie Skala Walker: Products promising to keep us looking and feeling young and energetic continue to be a high-growth area. This includes moisturizers and hair-care products for the 40+ age group. But like everything, we don't have a lot of time and energy to devote to learning and using these products, so they have to fit easily into our existing routines.

Another growth area involves products that allow consumers to do for ourselves what we can't afford to pay for in high-end salons and doctor's offices. Dental whitening, wrinkle reduction, microdermabrasion, even freezing our own warts off. The average American is not experiencing real income growth, and any luxury we indulge in means we're cutting back somewhere else. But who doesn't want the beautifully decorated house and pretty face and white teeth that we see on TV? So manufacturers are seeking out opportunities to "downshift" high-end products and services to the mass market, and most of these products have been highly successful.

MNB: Finally, there is another speaker at FMI who is going to be talking about the “tyranny of choice.” Regardless of what the research says, is there any suggestion that there will be any major change in how and how frequently new products are introduced in this industry?

Valerie Skala Walker: A few manufacturers are realizing that they are doing so many new introductions each year that they can't support any of= them sufficiently to turn them into long-term successes; they're just churning items in and out without achieving real sales and profit growth. In addition to the shopper expertise I mentioned earlier, Americans are just too busy, overworked and under-rested. We just aren't going to take the time to process most of those introductions. A reasonable number of "limited editions" can be an effective way to create short-term incremental sales for a brand without sacrificing the base brand's shelf space and marketing support, but if you do too many of those limited editions, consumers will start tuning those out as well.

One smart thing manufacturers are doing in response to the increasing clutter in the marketplace (clutter of retail outlets, products, advertising messages, cars on the road, everything) is to create mega-brands that deliver a consistent promise across multiple categories. The Dove brand is a good example of this, delivering cleanliness + moisturizing benefits for your whole body, face, underarms, and hair. This is a good alternative to creating completely new brand names for every new product introduction.
KC's View:
As always, we’re looking forward to this year’s FMI as a great opportunity to connect with old and new friends in the MNB community, and hope you’ll stop by our Super Session and say hello.

As we’ve mentioned before, we’ll also be repeating something that we did last year to a good deal of success.

On Sunday, May 1, we will be hanging out at the bar at one of our favorite Chicago bistros, Bin 36, from 6-7:30 p.m. And we thought that if any members of the MNB community would like to stop by, say hello, and chat for a bit…well, the first couple of bottles of wine will be on us.

It’ll be a great opportunity for all of us to put faces and voices with the names and words that appear on MNB plus an excuse to drink good wine. (Not that we need an excuse…)

(Bin 36 is located at 339 N Dearborn on the west side of Marina City, between the river and Kinzie.)

We’ll see you in Chicago.