The future is bright with consumer-led innovation: complex consumers pose marketing challenges that can be overcome when innovative dairy brands develop products based on the four mega drivers shaping today's food industry

Dairy Foods, Oct, 2004

Contemporary, lifestyles and values have produced four mega trends that are driving innovation in consumer goods. The trends--convenience, health, mood enhancement and self indulgence--present tremendous opportunity for dairy marketers to formulate foods for the harried, yet gourmet-demanding consumer, who is health-conscious, yet pleasure seeking.

"What this means is that many successful products going forward are likely to deliver on two or more of those drivers," says Marie Benedix, manager, premium dairy, Tetra Pak. "For instance, there will be meal replacement solutions that are all-natural, grab-and-go beverages that are simultaneously good for you. Mood enhancement may involve products that give you energy, de-stress you or give you an emotional pick-me-up--all depending on occasion. And the strongest new mood-enhancing products are likely' to combine the mood effect with being convenient, healthy or indulgent."

Linda Gilbert, president, HealthFocus International, St. Petersburg, Fla., says, 8"The pursuit of health today is about feeling good and achieving a high level of well-being. Shoppers are reconciling their lifestyle situations, health conditions and dietary choices to satisfy their expectations of themselves. They are making a conscious choice to be happy and to feel good about themselves, regardless of the situation.

"Healthy eating no longer means just avoiding nutritionally undesirable foods and ingredients. It means balancing healthy with less healthy choices," Gilbert concludes. "With milk as a base, dairy marketers are well poised to help shoppers balance the healthy and the indulgent, the nutritious and the fun, the new and the familiar choices."

The good news for dairy marketers is that dairy products are already intuitively associated with some of the four drivers. Consumers recognize the healthful halo milk possesses. In addition, dairy foods have excellent emotional equities. Dairy is associated with being calming, comforting, energizing, indulging and satiating.

For dairy companies to capitalize on today's trends, consumers' beliefs and dairy's equities, they must think beyond milk. With its healthful image, milk can form the basis of new foods and beverages that meet the complex needs and desires of today's consumers. The trick lies in formulating a relevant, attractive, simple message that communicates how the product benefits the consumer, how it provides a solution in the person's life.

At the same time, it's important not to overwhelm consumers with too many new things or too complex a proposition all in one go.

"The key to innovation is to start with something consumers already know, and then add a twist to it," adds Benedix. "For instance, if consumers are familiar with milk and juice for breakfast, a new breakfast juice-milk drink that puts it all together may not be a big stretch, especially if it's in a convenient form that suits their lifestyle."

Getting consumers to accept a new product concept does not occur overnight. "Once consumers accept a juice-milk drink, the next step could be to take that product and add something new, perhaps fiber, probiotics or extra protein," says Benedix. "If you innovate using this step-by-step approach, most likely you will eventually be marketing products that are quite sophisticated, without having lost or overwhelmed consumers in any one step along the way."

The Milk Processor Education Program's (MilkPEP's) Fluid Milk Strategic Thinking Initiative (FMSTI) is working with Beverage Marketing Corp., New York, to provide milk marketers with intelligence on how to add profitable growth to the fluid dairy category. Beverage Marketing has identified a variety, of initiatives including optimizing consumer reach of dais- beverages, but more importantly. meeting unsatisfied consumer needs through the development of new products and packages. Indeed, the future of daily is contingent on innovation.

Number of New Milk/Dairy Beverages Introduced

                 2001    2002    2003    2004 *

Europe           279     310     324        344
North America    176     156     155        112

European dairy marketers' progressive approach to innovation
has already resulted in more than three times the number of new
milk/dairy beverage products in 2004.

* Through August 2004

Source: Mintel's Global New Products Database

Four Mega Drivers of New Food Products

Convenience--On-the-go, harried lifestyles require products that travel well.

Health--More nutritionally aware, consumers are rejecting beverages that provide empty calories.

Mood Enhancement--A stressful, complex life needs little boosts throughout the day.

Self Indulgence--And, in the end, it is all about pleasure.

New Products, New Needs, New Place

Dairy marketers around the world are capitalizing on the four mega drivers of product innovation. The result is not only new products based on new ingredients and technologies, but also new usage occasions and venues. For example, meal replacement beverages such as breakfast drinks based on milk and loaded with protein, fiber, vitamins and minerals appeal to individuals rushing out the door to work in the morning.