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.