Newness is in the eye of the beholder - product innovations - Brief Article

DSN Retailing Today, Nov 19, 2001 by Debbie Howell

Whatever happened to genuine innovation? Today's successful new products are seldom unique brands. Instead, the hottest "new" products are either line extensions or specialty items that have broadened distribution.

Take, for example, Iams, the premium brand of dog and cat food that moved from veterinary clinics and pet food stores to mass merchants and supermarkets within the past two years. This made Iams, with $469 million in new channel sales, the No. 1 ranking "new product," according to the 2000/2001 New Product Pacesetters report from Information Resources Inc.

The second biggest success was Metabolife, a controversial herbal diet supplement sold through sales representatives since 1989. In 2000, this product broke into mainstream retail. Metabolife and a competing item called Metab O Lite both made the Pacesetters list--neither is really a "new" product, but both are now available at virtually every corner drugstore and food retail outlet.

Of the 15 items making the list, nearly half were line extensions. These included Breyers Ice Cream Parlor, Ruffles Flavor Rush, Cover Girl Smoothers, Mini Oreos and Cascade Complete, among others. Five were the result of increased channel distribution, including Boston Market frozen meals through a licensing agreement with H.J. Heinz and Starbucks ground coffee and beans, the result of a licensing deal with Kraft Foods.

Only two might be considered genuine, daring innovation: Physique, a brand of shampoo and conditioner from Procter & Gamble, and Clorox disinfecting wipes, which created a new product category.

Though some of the items are innovative--Cascade's new dishwashing detergent has a dissolving aid that eliminates the need to pre-rinse dishes--the reality is it's less risky for companies today to put R&D into their established brands. In fact, some are even cutting back on their existing lineups. Clorox, which added 21 products last year, found the number of new SKUs had outpaced net customer sales growth, according to its latest annual report. Too many choices led to higher costs, lower margins and efforts to whittle down SKUs to a more productive assortment.

The bottom line is that while innovation certainly hasn't died, what's "new" in food store aisles may in fact be something old, but with a new twist.