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European economic woes have led to less ‘real innovation’, says Mintel

By Caroline Scott-Thomas+, 17-Dec-2012

Major food and drink brands are producing fewer truly innovative new products as recessionary mindsets and behaviours continue throughout Europe, according to Mintel director of innovation and insight David Jago.

In 2012 to date, new food and beverage product launches in Europe are up 21% compared to 2010, when there was a noticeable dip in the number of new product launches as the recession hit industry innovation. However, these figures do not give the whole picture, as many of the new launches are simply new varieties or package sizes of existing products, Jago said.

He told FoodNavigator that big-brand manufacturers were likely to remain cautious about investment in innovation for some time yet.

“I would guess that it is going to be a couple of years before we will see some of the big brands launching really new products. In the meantime, I think we’re going to see more new packaging sizes and formats – safe stuff,” he said.

Major food companies might bring new, more innovative products to other markets, but Europeans may have to wait, he said. A boost in new product launches later in 2010 and into 2011 also reflected the introduction of new products planned for earlier release that manufacturers had put on hold.

Packaging for value

According to Mintel data, new packaging accounted for 16% of new product launches in Europe in 2012, up from 8% in 2007.

“Brands are moving to smaller product sizes to make them more affordable, and larger packaging to offer better value,” Jago said.

The rise and rise of private label

The other big trend in new product development has been in private label, as retailers’ own brands are pushing into new categories.

“2011 was the first time in the UK when there were more private label launches than branded launches,” Jago said. “…We’re seeing less real innovation from the big guys in particular. They have introduced fewer products than they used to.”

Across Europe, private label new product launches accounted for 17% of all launches in 2007, and had nearly doubled in 2012, to 32%. The UK is the most extreme example of this shift, where own brand products accounted for 52% of all new launches in 2011, up from 35% in 2007. This has slipped very slightly in 2012, but private label still accounts for the majority of new products, at just over half.

“Private label innovation is still innovation…but what we are seeing is the big guys are getting a bit more squeezed than they used to be,” said Jago.

Smaller players are also losing out to private label products, as retailers give more shelf space to their own brands.

Quiet on reformulation

Jago added that Mintel has seen cases of companies reformulating to make products cheaper to make, with less expensive ingredients or smaller quantities of high-cost ingredients, but the prevalence of this approach was very hard to analyse, as manufacturers were unlikely to openly discuss such changes.

“You can see some examples of brands that have simplified…but very few cases flag it up on pack,” he said.