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Renovating products could boost growth

By Sarah Hills , 08-Jan-2009

Renovation as well as innovation could help food and beverage manufacturers who are looking for growth in a downturn economy, according to an outlook report on the year ahead by the Nielsen Company.

More and more companies have been testing established brands with restages and re-launches over time, said the review called: “2009 Industry Outlook: When times get tough, the tough go back-to-basics”.

And this trend is expected to continue into commercialization as marketing budgets are tighter, according to the author Tom Pirovano, director of industry insights, at Nielsen.

Pirovano said: “Reinventing established brands can be managed as a lower risk innovation strategy.

“However, making this strategy a success requires a delicate balance of providing continuity to current buyers while offering sufficient novelty to attract new triers.”

It is also anticipated that established national brands will aggressively go after ‘private label switchers’ to win back store brand business. This could be done with innovative packaging, unique flavors and additional health and wellness claims.

He said: “In the early part of the year, private label dollar growth was driven by higher pricing. As the economy continued to struggle, however, more and more consumers began replacing their branded products with private label equivalents.

“Winning back these shoppers will not be easy for branded manufacturers.”

Commodity costs

Meanwhile the analyst said it is unlikely that savings from declining prices for commodities, such as food ingredients and fuel, will be passed on to the consumer.

Pirovano said: “In 2008, food manufacturers felt pressure from retailers to keep price increases to a minimum while production and shipping cost rose significantly.”

At the same time fewer premium-priced new products are expected to be introduced into the market this year.

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