New Product Pacesetters 2005

Products offering the promise of slimmer waistlines, smoother skin and cleaner homes with minimal hassles cluster near the top of Information Resources Inc.'s 2006 New Product Pacesetters study of top-selling launches.As in prior years, the report features both line extensions that simply leverage an existing platform and entirely new products that may have the potential to redefine categories. Top packaged goods companies dominate the top 10 lists, with multiple entries from companies including Procter & Gamble, Unilever, Kraft, Coca-Cola and PepsiCo.The following summary is based on a presentation by Valerie Skala Walker, IRI's vp of analytic product management, at the company's Reinventing CPG Summit in February.Definitions & ContextThe 2004-2005 New Product Pacesetters list includes 136 food and 121 non-food brands introduced between February 2004 and January 2005. To qualify, a brand must have tallied at least $7.5 million in first-year retail sales in food, drug and mass outlets excluding Wal-Mart (FDMx). A brand's first year doesn't begin until it surpasses 30% national distribution.The 2006 "Pacesetters-to-Be" were introduced in February of 2005 or later and will finish their first full year of sales some time in 2006. Sales figures are IRI's projection of each brand's eventual full-year sales with no adjustment for distribution levels. These are the brands most likely to end up on IRI's Pacesetters list next year.About 20% of all new brands IRI identifies each year pass the Pacesetters $7.5 million threshold in year-one sales, and just 2% to 3% of them exceed $50 million in year-one sales. High first-year sales don't always translate into long-term success. Of the top 10 new food brands in the 2002 Pacesetters report, just four grew in year two, and sales for the other six fell more than 15%. Factors determining long-term success include the product's true level of innovation (simple line extensions versus entirely new product categories) and whether it has the potential to tap entirely new users or usage occasions.IRI estimates that the average media ad spend of the food and beverage Pacesetters was $22 million, or about 15% of each brand's year-one retail sales. For non-food Pacesetters, median ad spending was nearly $40 million, or 30% of year-one sales. The estimates are based on adjustments that account for sales outside the FDMx outlets IRI tracks and for the typical discount off book rate that major advertisers receive. IRI has discerned no clear trend in Pacesetter ad spending over the past three years.Display and promotional support for products on the Pacesetters lists is generally very strong. New product introductions often receive secondary display space from retailers, and several of the manufacturers on the lists boast top-tier direct-store delivery networks. (See the attached image galleries for the 2006 Pacesetters-to-Be and the 2005 Pacesetters for an overview of display and promotional support.)New Food & Beverage TrendsNote: Several products that did not make the top 10 Pacesetters lists are included in the following analysis because they may point to emerging product trends. Sales figures in parentheses are for the product's year-one sales. Those followed by an asterisk are year-one projections for more recent products on IRI's "Pacesetters-to-Be" lists.Side dishes were in decline a few years ago, but added convenience is helping them make a comeback. Top new brands include Unilever's Country Crock side dishes ($71 million), Uncle Ben's Ready Rice ($24 million) from Mars Inc., Zatarain's Ready-to-Serve ($9 million), and Quaker's Rice-A-Roni Express ($15 million*).Frozen handheld entrees continue to pace well. Nestle's new line of Hot and Lean Pockets Subs are projected to post $45 million in year-one sales, while the Lean Pockets Ultra line racked up $16 million as a 2005 Pacesetter. Entrees with flexible serving sizes appealing to empty nesters and singles included Pillsbury's Perfect Portions ($23 million) and Unilever's Bertolli Dinners for Two ($88 million). Crock pots made a comeback with General Mills' Betty Crocker Slow Cooker Helper ($29 million) and ConAgra's Banquet Crock Pot Classics ($58 million).Organic and natural foods were spurred on by continued growth of natural foods supermarkets such as Whole Foods and Wild Oats and larger natural foods sections in traditional supermarkets. (Safeway launched its 150-SKU "O" Organics line this year.) Among notable brand introductions, Del Monte posted $40 million in sales with new Nature's Goodness baby food with no artificial flavors, colors or preservatives. Bolthouse Farms' all-natural refrigerated vegetable and fruit-blend juices also came on strong in 2005 ($48 million).The low-carb fad has passed, but Kraft's South Beach Diet line posted solid sales ($210 million*) with a balanced approach involving the "right" carbs, fats and lean proteins. Unilever's Slim-Fast Optima line of shakes, meal bars and snack bars topped the 2005 Pacesetters list with first-year sales of $166 million. Products have up to 50% less sugar than original Slim-Fast and most are fortified with vitamins and minerals.New USDA guidelines issued in 2005 stressed whole grains, and many new products addressed that need. Sara Lee's Soft & Smooth Whole Grain White bread launched strongly ($68 million*), while Thomas' Hearty Grains English Muffins from George Weston Bakeries posted $47 million in year-one sales. Pasta brands adapted to the whole-grain lifestyle with notable introductions including Barilla Plus ($22 million*) and New World Pasta's San Giorgio's Healthy Harvest ($31 million).New trans-fat labeling requirements that took effect in January spurred many manufacturers to reformulate their products to remove "bad" fats and add good ones, such as omega-3 fatty acids. GFA Brands' Smart Balance Omega Plus with added omega-3 posted $88 million in 2005 sales. Land O'Lakes Light Butter with Canola Oil ($15 million) offers zero trans fat and 60% less cholesterol and saturated fat than butter.With snacks and desserts, it appears consumers are of two mindsets: they want calorie-controlled "better for you" products (but only if they also deliver on taste), yet they also want extremely indulgent products for special occasions. Standouts among the "better for you" snacks and desserts were Dreyer's Slow Churned light and no-sugar-added ice creams ($111 million*) and Frito-Lay's Light salty snacks ($112 million).Packaging innovations also played a strong role in calorie control this year. Nabisco's 100 Calorie Packs launched well ($107 million) in a category that also includes Kellogg's 100 Calorie Right Bite snacks, General Mills' 100 Calorie Pop Secret microwave popcorn, and Frito-Lay's 100 Calorie Mini Bites line.Consumers responded favorably to better-tasting, low-calorie options from beverage manufacturers. Examples include Coca-Cola's Zero ($83 million), Welch's Light juices ($15 million), Tropicana Light Lemonade ($31 million) and Minute Maid Light juices ($36 million).On the other side of the diet continuum, indulgence products went over the top with premium and "fresh from the oven" themes. Notable launches were General Mills' Betty Crocker Warm Delights ($36 million), Masterfoods USA's Dove Cookies ($50 million*) and Dove Ice Cream ($36 million*), Hershey's Cookies ($22 million*), and Dreyer's Dibs bite-sized ice cream ($63 million*) .New Non-Food Product TrendsHome cleaning products capitalized on the proliferation of larger single-family homes that typically have more surfaces to clean. Specialized cleaning tools that drove the category included SC Johnson's Scrubbing Bubbles Fresh Brush ($33 million), Clorox's Toilet Wand ($30 million) and BathWand ($20 million*), and P&G's Mr. Clean MagicReach ($32 million*), Swiffer CarpetFlick ($21 million*) and Mr. Clean AutoDry carwash ($25 million).The emergence of dollar stores, club stores and supercenters has caused a shift in what consumers perceive as value. Quality improvements that enabled top brands such as Bounty and Charmin to command premium prices left room for store brands to capture market share among consumers willing to settle for a lower quality product. In response, P&G addressed the value-priced segment with products like Bounty Basic ($41 million*) and Charmin Basic ($26 million*). P&G also topped the 2005 non-food Pacesetters list with Tide with a Touch of Downy ($266 million) and will most likely score similar success with Tide with Febreze ($126 million*).Products that helped toddlers care for themselves were the focus in baby brands. Introductions included P&G's Kandoo line ($18 million) and Pampers Feel 'n Learn ($35 million), Gerber's Graduates toddler foods ($28 million*), and Kimberly-Clark's Cottonelle for Kids toilet paper and Huggies Cleanteam soaps and wipes.Pet owners continued to pamper their companions with gourmet flavors and products designed for special health needs. P&G's Iams Savory Sauces ($9 million*) add a dash of flavor to bland dry dog food, while Feline Greenies ($22 million) treats indulge your cat while helping to control plaque and tartar.OTC drugs relied on new delivery systems and flavors to tease new growth. Johnson & Johnson led the way with Tylenol Cool Burst liquid cold medicine ($28 million), Children's Tylenol Meltaways and Tylenol ES Rapid Release Gels ($68 million). Other notable introductions were Adams Respiratory Therapeutics' Mucinex DM ($48 million) and Pfizer's Sudafed PE with phenylephrine ($36 million*), which cannot be converted to methamphetamine.New mouthwashes and teeth-cleaning technologies freshened up the oral care category, with introductions including Pfizer's Listerine Advanced ($41 million) and Listerine Whitening ($43 million*), and P&G's Crest Pro Health Rinse ($48 million*), Oral-B Pulsar ($27 million*) and Oral-B Brush-Ups teeth wipes ($16 million).Aging Baby Boomers drove the skincare segment with continued demand for moisturizers, including P&G's Olay Body Quench ($32 million), Olay Moisturinse shower body lotion ($12 million), Kao Brands' Jergens Natural Glow daily moisturizer ($44 million*) and Unilever's Dove Cool Moisture Lotion ($20 million*). Meanwhile, personal intimacy products are faring quite well in the post-Viagra world, as J&J's K-Y Warming gels and massage oils posted strong sales of $38 million in 2005.Standouts in hair coloring included Kao Brands' John Frieda Brilliant Brunette ($49 million), P&G's Nice 'n Easy Root Touch-Up kit ($23 million*), which covers roots in 10 minutes and can be used with most hair-color brands, and L'Oreal's Garnier 100% Color ($21 million). Garnier's gel-cream formula is positioned as a general market brand but provides extra colorant and after-color conditioning treatment to meet the needs of ethnicities with thicker hair.

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