Small companies making up greater share of new product launches

Thousands of new brands hit retail shelves during 2017, with 49% of the top-ranking brands hailing from small manufacturers — defined as those earning less than $1 billion annually — according to IRI’s New Product Pacesetters report. Those brands account for 26% of Pacesetter dollars. Overall, the top-selling 200 new brands captured cumulative year-one sales of more than $4.6 billion across IRI’s multi-outlet geography.

“Consumers are demanding products that are customized to their needs, and this type of targeted innovation continues to put small and niche companies on the New Product Pacesetter map,” said Susan Viamari, vice president of Thought Leadership for IRI. “Just five years ago, an estimated nine out of every 10 Pacesetters launched were extensions of existing brand lines. In 2017, 40% of food and beverage and 25% of non-food Pacesetters were brands entirely new to the CPG marketplace. This clearly demonstrates consumers’ willingness to try ‘unknown’ brands. Millennials, in particular, are more moved by experiences and solutions to their needs and less likely to purchase based solely on brand name.”

Larry Levin, executive vice president of Consumer and Shopper Marketing for IRI, added, “Smaller, more targeted product launches have become the new norm in CPG aisles, as manufacturers look to enhance impact with launches that align more closely with key consumer needs and wants. In a testament to the power of this shift, 20% of this year’s top-selling launches earned less than $10 million during their first year on the shelves, continuing a trend we found in last year’s analysis.”

Food and beverage leaders

For the top 100 food and beverage champions, median year-one sales were $14.5 million, excluding outlier and overall leader Halo Top, which earned year-one sales of $342.2 million. All of the top 10 New Product Pacesetter brands were new market entrants, though many of these — including Dunkin’ Donuts Iced Coffee, Nestlé Splash and Hershey’s Cookie Layer Crunch — certainly benefited from the brand equity their manufacturers already enjoy in the marketplace.

The Pacesetters report noted that it’s no surprise that Millennials are eager adopters of new CPG products. This group, after all, is continuously on the lookout for new, exciting and unique experiences. This quest for newness is pushing innovation into new territory.

While frugal, Millennials will spend on things that matter to them. Of the 20 largest 2017 Pacesetter brands, 85% command a price premium compared to their respective category averages. PepsiCo’s LIFEWTR, for instance, sells at a significant premium compared to other convenience/still waters. The brand hit strong in the market as a purified water, pH-balanced with electrolytes added for taste.

Millennials are also embracing wellness and self-care to ward off ailments. Campbell’s Well Yes! soup easily meets this demand because it features clean, simple and nutritious ingredients to make healthy eating quick and easy.  

Of course, no matter how health conscious consumers become, there will always be room for treats and sweets. Overall, candy and gum accounted for 9% of food Pacesetter dollars, which is in line with trends seen during the past five years. The largest launch in this area was Hershey’s Cookie Layer Crunch, a line of milk chocolate bars with a shortbread crunch and creamy fillings. Healthier-for-you indulgences are becoming more prevalent, though. For instance, Weight Watchers ice cream treats are deliciously decadent treats at only 4 SmartPoints value or less.  

In the dinner sector, the largest launch was SmartMade by Smart Ones, a nutritious and delicious frozen meal inspired by the quality ingredients and smart cooking techniques used in the home. Eighteen of the 76 food Pacesetters are breakfast solutions, which cater to consumers at both ends of the wellness spectrum by offering both indulgent flavor experiences, such as Kellogg’s Cinnamon Frosted Flakes (ranked 19^th) and healthier, on-the-go options, like Jimmy Dean Delights Frittatas (ranked 23^rd).