IRI Pacesetter report shows strength in beauty, consumables
The economy is still a predominant theme resonating with today’s shopper, judging by some of the new-product trends identified within the SymphonyIRI Group “2011 New Product Pacesetter” report — namely beauty and consumables that replace a trip to the salon or restaurant with an upscale home experience, as well as product launches that target a specific, finite audience.
New products help create that much-needed excitement at the shelf, especially over the course of the recovering economy. According to the report, 22% of consumers are always looking for new products to try. And there is some hope among consumers, many of whom feel the economy can’t get much worse and a good amount of consumers who think it might even get better, at least for them.
“There’s almost this polar nature in the marketplace — almost half of all consumers expect that the coming year is going to be [on par] with what we’re seeing today,” Sue Viamari, editor of SymphonyIRI Group’s Times & Trends told DSN. “Those that are feeling that the economy and their financial health is going to get better [about 28%] are saying, ‘OK, I’m not ready to go back out to the salon, but I’m willing to spend up on a premium tier product.’”
Within the group of consumers who are generally optimistic about the future, 3-out-of-10 are actively looking for new products to try.
That leaves 1-in-4 consumers who are pessimistic about the coming year. “These consumers are hunkered down; they’re really ready for the rough seas [ahead],” Viamari said. “[But] those that are hunkered down also represent opportunity,” she said. Half of these consumers will only try a new product if that product fulfills more of a “need” as opposed to a “want.” Yet even in this group, 1-in-5 want to try new products, particularly new products that successfully communicate that greater value quotient.
That’s one of the trends identified within the report. While that prestige-experience product may be slightly higher-priced than other similar products on the shelf, it still represents a savings versus the salon, Viamari said. It’s a form of guilt-free splurging, or what SymphonyIRI characterizes as a “smart splurge.”
“It’s a bit of a boon for [consumer packaged goods] marketers because [those shoppers] are cutting back on the salon, but they’re going after the high end within the CPG [market],” Viamari said.
There also is an increasing trend toward manufacturers bringing highly
targeted new products to market. “What really hit the mark with consumers in 2011, it was … products that really had a niche appeal — whether it was the cosmetics area that was targeted [with] an anti-aging product for people in their 50s or it was an on-the-go product that was targeting young babies with some new yogurts that we’re seeing,” said Larry Levin, EVP consumer insights at SymphonyIRI.
For manufacturers, the niche trend represents a leveling of the playing field, somewhat, given that reaching a niche demographic is a much less expensive marketing strategy to execute thanks to social media.
“With the growing presence and power of social media, as well as the potential to innovate freely and creatively, the ‘go-to-market’ playing field is a bit more level than it has been in the past,” Viamari said. “Many of today’s most powerful launches are quite targeted, and this trend is ultimately changing the definition of successful innovation. Big or little, CPG manufacturers with a laser-like focus on true marketplace needs, at an increasingly granular level, will be the ones to enjoy new product success in the years to come.”
A new launch that achieves $7.5 million in year-one sales — the clock for those year-one sales begins ticking once the brand reaches 30% distribution — qualifies a new product for SymphonyIRI Group’s Pacesetter status.
Pampers Cruisers/Swaddlers with Dry Max, Gillette Fusion ProGlide and P.F. Chang’s Home Menu were the top three new product introductions in 2011. Pampers generated $296 million in first-year sales, Gillette Fusion ProGlide $169.4 million and P.F. Chang’s Home Menu $101.6 million, and were the only new brands to break the $100 million barrier in year-one sales through 2011.
SymphonyIRI Group also identified several brands to watch for next year — the “2012 Pacesetter Rising Stars” — including Dr Pepper 10, MiO liquid water enhancer and Magnum gourmet ice cream bars across food, as well as Allegra, Huggies Little Movers Slip-On and Kibbles ‘n Bits Bistro Meals across nonfoods. Within food, new products that balance healthier-for-you ingredients with indulgence appear to be gaining traction among consumers, Viamari said. Across nonfoods, the professional experience in the home setting remains a trendsetter.
As might be expected, new brands generally outperform branded line extensions in the first year by a significant margin. The exception in 2011 was nonfoods — new brands generated an average of $14 million vs. $22.9 million for brand extensions. “This is not a common occurrence,” Viamari said. And a lot of that has to do with the lack of new over-the-counter medicines switching out of prescription-only status.
Absent from the top 10 nonfood pacesetters are any Rx-to-OTC switch products that typically generate in excess of $100 million in first-year sales. Allegra, which has certainly heated up allergy aisles over the past year, will qualify for the SymphonyIRI Group Pacesetters list next year.
Another product aspect that drives significant sales in nonfood launches is “going pro,” what SymphonyIRI Group defines as a product that delivers an at-home, self-administered treatment that bring professional-quality results at a lesser cost — teeth whiteners, for example. “While there were numerous ‘going pro’ launches in 2011, there were no huge ‘going pro’ launches,” Viamari said.
Notably, OTC switch brands and other “going pro” brands command a much higher year-one return. The “going pro” proposition generated an average of $36.9 million in first-year sales over the past 10 years versus other product launches that generated an average of $18.9 million in sales, a 95% differential.
“A trend that we’re seeing: Very, very few products are able to achieve more than $100 million, and most are lucky with $20 million in first-year sales,” Levin said. Two-thirds of all Pacesetter products did not clear $20 million in the first year. “What’s more: Some people are saying it is getting even harder [to clear that hurdle] as time goes by,” Viamari said.
Still, 198 new product introductions qualified as a “Pacesetter” in 2011, out of more than 1,500 new product launches. The Pacesetters collectively brought in more than $4.4 billion in sales to food, drug and mass retailers, Levin noted.
As many as 15% of new food products and 11% of new nonfood products reached Pacesetter status. “We did see food innovation pick up just a little bit, while nonfoods was essentially flat,” Viamari said.
The ritual of home-based eating has really driven the need for products that offer quick and easy meal solutions and provide the variety, comfort and/or restaurant quality that consumers need at a solid value. According to SymphonyIRI’s “Q1 2012 MarketPulse” survey, 55% of consumers are eating out less frequently today versus before the economic downturn began. This opportunity has been addressed and capitalized on by today’s most savvy manufacturers, evidenced by the fact that successful dinner solution launches became more numerous versus historical averages in 2011.
In nonfoods, most of the 2011 innovation came out of beauty and personal care launches — only nonprescription medicines GlaxoSmithKline’s Nicorette Lozenge ($45.2 million in first-year sales) and Abbott Nutrition’s Ensure with Vigor ($37.5 million) cracked the top 10 nonfood New Product Pacesetters. “Just like home-based eating is on the rise, more and more consumers want to take care of many of their beauty and personal care needs at home,” Viamari added. “They want professional-level performance of such places as spas and hair and nail salons without the price tag. From the top of your head to the tips of your toes, beauty and personal care products that bring luxury and indulgence into the home are really striking the right chord with consumers.”
Another chord being struck with consumers, particularly moms of newborns, is baby care. “In 2011, baby care accounted for 15% of non-food Pacesetter dollars — that’s versus a historic average of about 7%,” Viamari said.
Bolthouse Farms brings new beverages to market
BAKERSFIELD, Calif. — Bolthouse Farms has introduced new additions to its beverage lineup.
Bolthouse Farms has launched orange and carrot blend, which offers 300% more vitamin A than traditional orange juice; Protein Plus blended coffee, which offers a spin on the traditional coffee drink by providing consumers with a boost of protein and key B vitamins; and two new breakfast replacement drinks: Strawberry parfait breakfast smoothie and peach parfait breakfast smoothie.
"Consumers should not be forced to choose between their health and their taste," Bolthouse Farms chief innovation officer Bryan Reese said. "The success of our beverage line flows from our ability to create drinks that you would desire even if they were not so good for you."
In related news, the company also has introduced new sizes for two of its customer favorites: Amazing Mango fruit smoothie and 100% pomegranate juice. The fruit smoothie now is available in a 52-oz. size, while the juice is available in a 15.2-oz. single-serving size.
The new Bolthouse Farms beverages are available nationwide and are offered in a single- (15.2 oz.) or family-sized (32 oz.) servings for a suggested retail price of $2.99 to $5.19. The 52-oz. Amazing Mango is priced at $6.29.
Q&A: Pet nutrition
With more retail pharmacies pursuing pet prescriptions, Drug Store News recently talked to Rob Devlin, Nutramax director of veterinary science division, for some perspective on what the opportunity might be across the aisle in over-the-counter pet health products.
DSN: With the number of retailers looking to expand their reach into veterinary pharmaceuticals, what is the opportunity on the OTC side?
Rob Devlin: Packaged Facts and other research groups are seeing pet care as a potential opportunity to expand OTC offerings. Much of this interest has been driven by sales and associated revenue of the OTC flea and tick products and newer OTC heartworm preventive [products]. New pet supplement products also are entering the OTC marketplace and likely will contribute to a boost in pet care sales. But it may be to a somewhat lesser extent.
Customer awareness surrounding the need for a flea and tick product exceeds the awareness of joint health, skin and coat, and probiotic supplements. Therefore, while supplements indeed will see growth from a general increase in OTC pet offerings, the ramp up in sales likely will take longer for supplements until consumer awareness rises. Many people know of and use supplements for themselves, but may not as yet realize the benefit for their pets.
DSN: What is driving consumers looking for pet health solutions into retail?
Devlin: I believe that there are three drivers for retail. [The first is] convenience. Most people are very busy with work and family, so anything that allows for one-stop shopping or provides convenience (e.g., home delivery) is welcomed.
[The] second is to benefit greater pet health. While I think everyone agrees that the veterinarian is the best authority for pet health, and pets need to have routine exams by their veterinarian, the truth is that some owners don’t see their veterinarian as often as they should. Providing quality and safe products that can be sold at retail helps provide some pet owners with options for products to support their pets’ health. Many pet owners feel that by using supplements they also can protect against costly health issues.
[The] third is cost. I truly believe cost is third on the list and ranks below the other two. However, with unemployment rates [being] what they are and fuel costs eating at household disposable income, families are looking to save costs wherever they can.
DSN: How big is the pet care universe?
Devlin: In the [United States], there are approximately 78 million dogs, while cats [number] slightly [more than] 78 million. The average number of pets per household is approximately two, and the percent of U.S households with pets is approximately 60%. The overall [market] for pets in 2012 is estimated to be $52.87 billion, which includes veterinary, boarding and pet foods costs, along with product sales.
DSN: OTC and natural pet health solutions have been available in retail sets before with mixed results. What is the best merchandising strategy — in pet care with pet toys and treats with shelf-talker call-outs? Or does it make sense to carve out a pet health block where consumers are shopping for the rest of their family’s health in the OTC section?
Devlin: First and foremost, when pet owners are considering any pet health-related purchase, we always recommend they consult with their veterinarian in order to develop a healthcare strategy designed for their pets’ needs and understand the veterinary-recommended products.
With that said, I believe that the pet health category needs to be a separate block from treats. While many treats claim to have beneficial ingredients and highlight them on the label, when one looks at the actual [nutrient levels] of these ingredients the treat is labeled to provide, it typically is very, very low. For example, a popular brand of chew sticks claim glucosamine and chondroitin sulfate, but when you look at the ingredient list, a dog would have to eat 2.2 lbs. of the product at one sitting to get 400 mg of glucosamine and 200 mg of chondroitin sulfate. And the chew stick package contains less than 6 oz. of product. In contrast, a single tablet of Cosequin DS plus MSM contains 600 mg of glucosamine and 300 mg of chondroitin sulfate.
The perception of a treat by the consumer is likely something that doesn’t cost a lot but is fun to give to a pet. In contrast, Nutramax Labs’ line of supplement products are not intended and marketed as treats. Rather, we provide pet supplement products with high-quality ingredients at levels that provide pets support beyond what they get in their diet. Cosequin likely is the only branded joint health supplement for dogs, cats and horses with any significant brand awareness, and is the No. 1 veterinary-recommended joint health brand.
Many other products crowd the marketplace, but retailers need to be mindful of their selections as there are products that have failed to meet label claims when tested by third parties. Even some pet food companies have had issues with melamine contamination or salmonella contamination of their products, and perceptions about the product issues can spill over to affect the retailer.
Many customers shop by room or by task, so keeping all things pet together likely will help the customer quickly find what [he or she] needs/desires and [will] minimize frustration when searching for the product. Section headers by indication (e.g., flea and tick, heartworm, joint health, skin and coat, etc.) will enhance the shopping experience and allow [consumers] to quickly find the products.
Pet owners also shop by brand, especially those brands recommended by their veterinarians, and many will not substitute other products. I also feel that more is not always better but may lead to confusion. If a shopper is unsure of what supplement or healthcare product to buy due to a myriad of products on the shelf, then [he or she] might not purchase at all, which delays or stops the pet from enjoying the benefits of the product.