Market View: The Return of Truly New New Products

The area of food marketing that fascinates me the most is new products. They are so important to the life of a company, but generally have a high failure rate. In many food companies more than 50 percent of the current revenue comes from products that were not in the product line five years earlier. New products are tied to the ability of a business to remain competitive and also to the longevity of such a business.

It is estimated that the failure rate for new products launched in the grocery sector is 70-80 percent. With smaller food businesses, the new product success rate is around 11 percent. These numbers represent significant lost resources in terms of both money and management time.

One of the areas I investigated in the past was "How are new products introduced?" After all, we all agree that we only get one chance to make a first impression. How do America's food companies make their first impression? Alternatively what are the various launch types used to introduce new food products? I also wondered whether the U.S. food industry introduced new products any differently than other parts of the world.

Using data from the Mintel Global New Product Database 2009 and 2011, I was able to identify the various types of new product launches used in the U.S. The launch types included:

New Product: This launch type is dependent on the brand. It is assigned when a new line of products is launched. An example is Goya making new frozen meals.New Variety/Line Extension: It is used to create an extension to an existing range of products. An example is Healthy Choice frozen meals getting into vegetarian meals.New Packaging: This is a launch type that has a New Look, New Packaging, or New Size written on pack. Example: Hellman's mayonnaise in a squeeze bottle, a pop top on a soup can, etc.New Formulation: This launch type is determined when terms such as New Formula, Even Better, Tastier, Now Lower in Fat, New and Improved, or Great New Taste are indicated on pack.Re-launch: This launch type depends entirely on secondary source information (trade shows, PR, websites, and press). It is using new media to get the same product to a new audience or the same audience via a new medium.

How frequently was each of these introduction methods used between 2009 and 2011? The most frequently used launch method for new products was New Product with 41 percent of all launches being basically new products. I think this is good news for the food industry because it implies that the R&D functions are working again, after years of relying primarily on line extensions to get new products into the market. My personal opinion is that some of our new product development has gotten a little stale as research budgets were cut, and simpler new product solutions were sought.

The second most popular launch method was the traditional brand extension, with 34 percent of the launches. I always think of this as the "lazy person's" route to new products. I am appropriately criticized for calling it this, because it's a lot of work to produce any new product, anyway you launch it. However in many cases this launch type is often a new variety of the same spaghetti sauce, a new flavor of a condiment, a new vegetable in a frozen meal, etc. The rush to put "new" on the package often leads a company to make the most modest changes to existing products.

New packaging is the third most frequently used launch method with 21 percent of the launches following that type. I believe that these new products are often more innovative and more focused on solving the customers' problems. I love the squeezable ketchup bottles, so that I no longer have my hands covered in the product as I reached the bottom of the bottle. I believe new packaging is a way to entice non-users into the brand family or to get existing users who use the product to use even more. I think we'll see new packaging become a more important launch type in the future as technology and new packaging materials make these more available.

You may find it interesting to know that most of the world also uses new products as the most frequent method of new product launches. The EU (48 percent ) and China (54 percent ) use the new product launch type even more frequently than we do in the U.S. Korea and Japan use the more traditional line extension (45 percent) as their primary new product launch method.

After years of having line extensions be the primary method of new product introduction with the highest failure rate of any method, the food industry has again focused its attention on R&D in an effort to create great new products for our great consumers. This means your competitors may be looking at new products and new packaging for the future. Maybe we all should be tooling up our R&D efforts.

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Market View: The Return of Truly New New Products
John Stanton, Contributing Editor
The food and beverage industry shows signs its R&D engines are revving again.

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Whiskey Makers Court Jewish Market

An alternative arrived suddenly in the form of a new one-night event, held on the eve of WhiskyFest. Despite little time to advertise, it drew a crowd of 250 to its unlikely Manhattan location: the West Side Institutional Synagogue.

These whiskey devotees, it turned out, were Jews shut out of the big event because they observe the Sabbath. And to drive home the point of the tasting, its founder, the fledgling Jewish Whisky Company, called it Whisky Jewbilee.

Whiskey has numerous fan bases, but few are more devoted — and arguably less noticed by the press and public — than Jews, particularly observant Jews. Synagogues are increasingly organizing events around whiskey, and whiskey makers are reaching out to the Jewish market.

Retailers have long recognized Jews as valuable customers. “Jewish men are very interested in the selection of whiskey available at a wedding or bar/bat mitzvah,” said Jonathan Goldstein, vice president of Park Avenue Liquor Shop, a Manhattan store known for its whiskey selection. “They very often will pick up a special bottle to offer close friends or relatives.” Of the Friday before the Jewish holiday of Purim, last February, he said, “It was like Christmas in here.”

Part of the spirit’s appeal to many Orthodox Jews is that most whiskey is naturally kosher. In contrast, wine, owing to its long connection to Jewish tradition, must satisfy many regulations to earn a hechsher, the symbol of kosher certification.

But that hasn’t stopped prominent Scotch producers like Glenrothes, Glenmorangie, Ardbeg, Bowmore and Auchentoshan from courting the Jewish consumer by obtaining official kosher certification for certain bottlings.

Bourbon producers have even less to worry about, because by federal law their spirits must be aged in new casks, rather than in the sherry, port or wine barrels that some whiskey distillers use, and that give some kosher drinkers pause because of their exposure to wine. Yet the Buffalo Trace Distillery in Kentucky recently enlisted the help of the Chicago Rabbinical Council in laying down more than 1,000 barrels of three styles of whiskey, all certified kosher and set for release in five or six months.

In a smaller-scale but similar enterprise, the Royal Wine Corporation, a New York producer of kosher wine and grape juice, asked Wesley Henderson two years ago if he would be interested in making a kosher-certified version of his boutique bourbon, Angel’s Envy. “We were looking for a bourbon line in general,” said Shlomo S. Blashka, a wine and spirits educator at Royal, also the New York-area distributor of Angel’s Envy. “The Jewish community is a very big bourbon community.”

Mr. Henderson did not have to be told. “You’d have to be blind not to notice it,” he said. “I thought, if you had a kosher bourbon, that would be a great thing. It seemed a no-brainer.”

For the new whiskey, Angel’s Envy was aged for six months in barrels that had held Kedem kosher port for 20 years. The run sold quickly, Mr. Henderson said, and may become a permanent addition to the bourbon maker’s line.

In 2011, Jason Johnstone-Yellin and two partners founded the Jewish Whisky Company, which has bottled barrels from six Scotch distillers. “We had the opportunity to purchase casks, where not everybody would have that opportunity,” said Mr. Johnstone-Yellin, who was born in Scotland and whose American wife is Jewish.

During a recent trip to the Victoria Whisky Festival in British Columbia, he said, he buttonholed a representative of a well-known international whiskey distillery and asked if it would let the Jewish Whisky Company bottle one of its casks.

“The response was: ‘We’re very protective of our brand. We don’t do that,’ ” said Joshua Hatton, another partner in the business, who also founded a popular blog, Jewish Single Malt Whisky Society — now renamed Jewmalt.

Mr. Johnstone-Yellin, not giving up, gave the man his card and pointed to the word “Jewish.” “This is our market,” he said. “These are our customers and members.”

The man paused, he said, then agreed to talk to them.

The bond with whiskey goes way back. Mr. Blashka said early Jewish immigrants to America, unable to trust the provenance of local wines, turned to certain distilled liquors, including whiskey. “Because the wine was an issue, typically spirits was their avenue for drinking,” he said.

As recent decades have ushered in a revival in Scotch, bourbon and other whiskeys, Jews, like many other groups, have moved beyond the usual blends and have developed more sophisticated tastes. “Now we have many whiskeys that we know are kosher,” said Rabbi Aaron Raskin of Congregation B’nai Avraham in Brooklyn Heights, whose preferred whiskey is the smoky Laphroaig, a single malt from Islay. “It is used to add to our joy.”

“And it helps attendance at synagogues,” he added.

Whiskey-centered events at temples are a lot more common than they used to be, said Joshua London, a lobbyist for the Zionist Organization of America who regularly writes about whiskey for Jewish publications. For the last three years, Mr. London has been asked by his Orthodox synagogue in Potomac, Md., to pull together bottles for an annual pre-Passover whiskey and barbecue night.

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