Top 20 companies synergistic acquisitions pay off

Prepared Foods, March, 2003 by Lynn Dornblaser

When Kraft, Glenview, Ill., bought Nabisco, Parsippany, N.J., and when General Mills, Minneapolis, and Pillsbury, Minneapolis, merged, many thought there would be trouble ahead for the new behemoth companies. Not so, as our annual Top 20 ranking shows.

After perhaps a rocky start for both companies, Kraft and General Mills both have shown very significant growth in their new product introductions in the last year. Kraft, almost as always, led the list with 228 new products in 2002, up 24% from the prior year (that prior year also included the Nabisco purchase). General Mills had fewer new products (151), but also showed significant growth from the prior year. Those 2002 figures were up 32% from 2001's figure of 114 products. CocaCola, Atlanta, doubled its product offerings in 2002, partially because of its Odwalla, Half Moon Bay, Calif., purchase.

However, the news is not always quite so positive. Looking more closely at the Top 20 companies, we see that Tyson, Springdale, Ark., in terms of new product introductions, has not benefited so well with its new acquisitions; its ranking fell substantially. Tyson introduced half the number of products in 2002 (57) that it did in 2001. Less severe is Kellogg, Battle Creek, Mich. While Kellogg (combined with Keebler, Elmhurst, Ill.) did not experience the drop that Tyson did, its introductions were essentially flat in 2002 compared to 2001 (79 compared to 83).

Also in the top half of the list are ConAgra, Omaha, which saw 157 new product introductions last year--the most significant of which is its Twist & Sprout vegetarian frozen meal line. Nestle's, Glendale, Calif., new product introductions remained flat with 137 compared to 136 in 2001. The introductions were led by a significant number of pet food products. Schwan Food Co., Marshall, Minn., continues to increase its offerings, with more than 100 in 2002. Schwan's brands include Tony's Pizza, plus a broad line of Schwan's-branded products.

Overall, the total number of products introduced by the Top 20 was 1,731, up 3.2% from the Top 20 companies in 2001. That is a significant figure, as the total number of new food product introductions actually was down a very slight 0.5%. As a result, we see the total percentage of all food products--coming from the 20 most-active companies--continuing to grow. In the late 1990s, the percentage this group contributed hovered around 12% or so. In 2001, that percentage climbed to 17.4%, and climbed even further to 18.1% in 2002. Those percentage contributions are the highest seen since the late 1980s.

Each year, this list is presented with the same caveats. Although raw numbers of new product introductions are no measure of an organization's success or failure rate, it is instructive to see which companies consistently invest their assets in new product development and marketing, which are innovation laggards, and which change overall new product strategies from year to year. Also, it should be noted that this study defines a new product as a new food or beverage featuring changes or introductions of flavors, colors, or varieties. However, changes in size or packaging, as well as product improvements, are not represented.

Top 20 New Product Companies in 2002

Company                              2002   2001  % change

Kraft Foods                           228    184     24
ConAgra                               157    143      9
General Mills (includes Pillsbury)    151    114     32
Nestle USA                            137    136      1
PepsiCo                               111    106      5
Schwan's Sales Enterprises            106     65     63
Unilever                              105    101      4
Kellogg USA (including Keebler)        79     83     -5
Campbell Soup (Pepperidge Farm)        74    108    -31
Hormel                                 71    100    -29
Coca-Cola                              68     30    127
Atkins Nutritionals                    66     12    450
H.J. Heinz                             66    109    -39
Tyson Foods                            57    114    -50
Cadbury-Schweppes                      50     31     61
Wells' Dairy                           46     42     10
Perdue Farms                           44     21    110
Sara Lee                               42    113    -63
Dreyer's                               37     31     19
American Roland Food                   36     25     44

Total                               1,731  1,668      4

Source: New Product News/GNPD

New Food Product Introductions by Top 20 Companies, 1997-2002

                1997    1998   1999   2000   2001    2002

Total foods   12,396  11,037  9,664  9,248  9,598   9,546
Top 20 total   1,430   1,150  1,278  1,245  1,677   1,731
Top 20 (%)      11.5    10.4   13.2   13.5   17.4  18.10%
Other (%)       88.5    89.6   86.8   86.5   82.6  81.90%

Source: New Product News/GNPD

Lynn Dornblaser is editorial director with Mintel International's Global New Products Database, www.gnpd.com, 312-932-0400.