Food Products Snag 3 of Top 10 New CPG Products of 1998

This week at the Food Marketing Institute's (FMI) convention in Chicago, Information Resources, Inc. (IRI) announced the top 10 new consumer packaged goods (CPG) products of 1998. At the very top of the list was Frito-Lay's WOW Chips. Introduced last year, WOW Chips have netted Frito-Lay $347 million in sales. Two other food products in the list included Frito-Lay's Deli Style Chips in 8th, netting $103 million, and Pepsi One in 10th, netting $89 million.

In addition to their top 10 list, IRI teamed up with New Product News magazine to predict trends for 1999.

Their study analyzed four years of historical data to identify food and non-food trends for the coming year. Together Howard Cohn, IRI's executive vice president for Marketing Solutions, and NPN editorial director Lynn Dornblaser, presented the following:

Product Trends for 1999
• As they age, baby boomers will continue to drive new product introductions. Currently, 20% of the U.S. population is over the age of 55, a number that will grow to 33% by 2030. More and more, this group focuses on wellness and nutritional concerns when making purchasing decisions. Mineral supplements are emerging as a significant trend as individuals become concerned about their health and aging.
• Pacesetter dollars for snacks and dinners are growing while beverage and breakfast products are decreasing. The Pacesetter study again saw consumers seeking products that are better for you, without sacrificing taste. Offering low-fat products is no longer enough to satisfy many customers. This year's top Pacesetter, Frito Wow Chips, exemplifies the trend toward better-for-you, full-flavor products.

"Consumers are returning to the snack category as manufacturers recognize the demand for healthy, flavorful products," said Cohn. "This year's Pacesetters confirm that consumers want traditional salty snacks - they have simply been limiting their purchases until healthier and more flavorful options were available."

This year's study found that the most successful Pacesetters included true innovation -whether a new product or an update or refinement of an existing product. These new products featured a combination of improved technology, design and effectiveness.

The study found that companies introduced the fewest new products since 1994, and continued to receive a smaller return on those products in terms of sales. Most of the new products that achieved at least 30% distribution in the U.S. reached less than $10 million in sales. The average sales in a launch year dropped nearly 11% from $27.7 million in 1997 to $24.9 million in 1998.

Despite these challenges, new products grow brands. An analysis of the largest 1,500 brands showed that 69% of growth was attributed to new product introductions - either line extensions or entirely new brands - while 31% was a result of changes in trade support, pricing, advertising, packaging or consumer promotion.

"New products continue to be the main source of growth for CPG brands, categories and companies,'' said Cohn. "This year, not unlike previous years, we found that new products can represent 20% or more of a company's dollar sales."

Methodology
The 1999 IRI Pacesetters study defined new products as those that achieved at least 30% national distribution or more in their first year of sales. Sales data was tracked for 52 weeks using IRI's InfoScan database of 266 different product types. Only new products that achieved at least $7.5 million in sales were used in trend analysis.

Pacesetters methodology included entirely new brands - new names to the consumer - and new line extensions, but excluded new flavor/package size introductions and add-on or promotional items.

Information Resources, Inc. provides UPC scanner-based solutions to the U.S. consumer packaged goods (CPG) industry. IRI obtains data from point-of-sale scanners, integrates it with other proprietary data and maintains it in data warehouses. The data is then used to provide CPG manufacturers, brokers, retailers and wholesalers with a variety of services critical to their sales, marketing and logistics operations.

For more information contact Information Resources, Inc., 150 N. Clinton St., Chicago, IL 60661. Phone: 312-726-1221; Fax: 312-726-0360.