Since 2016, Nestlé has shortened the time to market for new products by 60%, and between 2020 and 2021 it tested and launched 12% more innovations, most of which it says offered meaningful differentiation in the market.
And it did all of this with a flat budget.
So, what is the company’s secret?
Senior Director for New Business Ventures Doug Munk attributes Nestlé’s success in part to the adoption of a hybrid growth model that simultaneously drives relevance of the company’s core, iconic brands, such as frozen pizza brand DiGiorno or Coffee mate creamers, and new brands – either through high profile partnerships, such as with Starbucks at home, or new innovation models.
Nestlé’s Open Channel
One of the most successful, and engaging innovation models that Nestle has adopted in recent years is its Open Channel – a Shark Tank-esque approach that crowdsources ideas from employees, who Munk notes are “all stewards of the business” and “all consumers who have unmet needs.”
An early win from Nestle’s Open Channel was the recent launch of Outshine Smoothie Cubes, which employee Kelaine Cleary originally pitched as Blenderful Smoothie Cubes in 2019 as a way to make smoothies at home more easily but without compromising quality, wasting ingredients ore getting bored with the same flavors over and over.
In a fast five months, the product went from idea to in about 20 stores in Northern California, where the team gathered consumer feedback through demonstrations that it then applied to create a “winning proposition,” Munk said.
‘R&D is closer to the business than its ever been’
Nestlé also is cultivating innovation through a new R&D accelerator that launched in the US about a year and a half ago, and which dramatically changed how the company thinks about new product development and significantly shortened the timeline from idea to market.
“R&D is closer to the business than it’s ever been,” thanks to “winning” combination of technology and competence in Nestlé’s R&D facilities, which the company marries with “winning” consumer needs to bring concepts to test markets in a short six month period.
Boosted Brew is an example of a product cultivated through this channel, which Nestlé showcased at Natural Products Expo West.
Partnering with retailers enhances innovation, creates win-win opportunities
Another element of Nestlé’s winning innovation strategy is working closely with retailers to create products that not only meet consumer needs but also store needs.
“As we know with the supply chain challenges, the pressure margins, retailers really need to be selective in which products they’re going to put on the shelf. When there is no incrementality coming to them, they’re going to be very reluctant,” and so it is important to involve them and tap into their expertise as buyers who know their territories and spaces, Munk said.
He added Nestlé is bringing retailers into its Open Channel initiative as partners to test concepts off-cycle and make adjustments as necessary so everyone wins: the store, shoppers and Nestlé.
New areas for innovation
Looking forward, Munk says he sees significant potential for innovation around better-for-you products, including products like the Outshine Smoothie Cubes and Boosted Brew, but also in plant-based through brands like Sweet Earth, which recently tweaked recipes to boost both flavor and nutrition.
“Beyond that, consumers are always looking for greater convenience” and “frictionless experiences,” which Nestlé is meeting through product launches like bake at home brownies that come in their on pan and which will scale nationally later this year, Munk said.
He said he also sees significant potential to innovate around the air fryer, which offers a “much easier, simpler solution” than the oven, and appeals to younger consumers.
“And then, finally, we are looking at new business models … beyond CPG,” including more solutions for personalized nutrition, and products for the emerging hot automated vending segment, he said.