National NewsJuly 2020
Innovating in a Changing World:
What You Need to Know
Our ShIFT 2020 webinar series partnered with Mintel to explore changes in the food & beverage landscape brought about by the COVID-19 pandemic. We also shared specific action plans for manufacturers and foodservice providers that will help with the development of product innovations that consumers crave.
Highlights from Session 1:
Consumers are sourcing food differently. They’re cutting back on time spent at restaurants and relying more on grocery retailers. Stock-up trips, on-line shopping, and curbside pickup are becoming more common ways to buy food. Since consumers are spending less time in-store, manufacturers have fewer opportunities to showcase new products through traditional forums like end-aisle displays or demos.
Brand loyalty is shifting, and SKU ‘irrationalization’ is happening. Increased demand for food through retailers has strained the supply chain and created scarcity in many grocery store aisles. Consumer loyalty went out the window as they purchased what was available. Retailers began carrying what they could get, expanding stock-out to fill the shelves. This SKU irrationalization cut more than 7 percent of SKUs through June – about 3,300 products in the average store. Foodservice operators who experienced some of the scarcity facing consumers and additional pressure from lower demand, reduced menu assortment 7 to 8 percent.
Need+Value+Ability to Buy drive product purchase decisions. Although need remains high for most food and beverage categories, the downturn in economic conditions driven by COVID-19 shutdowns affects many consumers’ financial stability. Through May, about 1/3 of U.S. consumers lost 50 percent or more of their income. Price points continue to influence purchase decisions, but some consumers also associate value with product safety and corporate values.
New product launches around familiar comfort flavors are up. Mintel’s Global New Product Database shows new products featuring comfort flavors edging out adventurous and functional options for the first half of 2020. Familiar tastes often connect consumers with happy occasions and pleasant memories, themes that resonate during these disrupted times.
While some categories had more innovation in the first half of 2020, total new product launches in H1 declined. A June survey from McKinsey & Company revealed many food and beverage manufacturing executives view the changing landscape as an opportunity for growth. One of the challenges ahead, however, is finding the resources to continue innovating.
Highlights from Session 2:
Sometimes, cost savings is a ‘must.’ As consumers try to deal with more financial insecurity, companies providing food face increased pressure to deliver value. Finding ways to improve price-value includes reducing the cost of goods, including ingredient costs like flavor. With support from National Flavors and Flavorush, you can easily compare flavor options to find solutions that fit your cost-savings goals.
Fight SKU ‘irrationalization’ with reformulation and ‘welcome back’ campaigns. Since brand loyalty has softened due to scarcity, and consumers prioritize availability over exact flavor matches, reformulations represent an opportunity to offer better value. Creating campaigns to reintroduce your brands may also compel retailers to put your items back on the shelf.
Look at Limited Time Offers (LTOs) to engage customers. Seasonal or occasion-based LTOs can generate much-needed incremental revenue and keep your brands top-of-mind with consumers. Slotting LTOs into your production calendar 2 to 4 quarters ahead ensures you have a consistent pipeline of news (and delicious flavors) to showcase.
Agile innovation can help reach launch goals. In our desktop innovation activity, we layered several flavors onto lemonade. Close-in line extensions that offer a fresh take on a familiar brand will stimulate interest. The addition of favorites like coconut, blackberry, grapefruit, and watermelon elevate a classic beverage into buzz-worthy new tastes.
To watch the sessions and get additional insights, click on the buttons below.
Ready to Try the Agile Innovation Activity?
If you’d like to experiment with layering, click on the link below to order samples of the flavors we used in our innovation activity.
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And if you’re looking for additional ideas, Flavorush has 100s of options to explore. Samples ship in 24-hours!
AMS Provides Validation Process Guidance
In early July, the USDA’s (United States Department of Agriculture) Agricultural Marketing Service (AMS) issued four documents with information about the National Bioengineered Food Disclosure Standard (NBFDS), found in 7 CFR Part 66. The documents include final guidance and a detailed FAQ on validation and test methods about refinement procedures and the detection of modified genetic materials (GM) in foods and beverages.
The information touches on many aspects of those topics such as proper determination of test methods, defining commonly used terms, and clarifications for limits of detection. It also includes general steps to validate if a GM is undetectable in an ingredient or finished product.
In addition to validation guidance, the AMS provides a clarification stating that NBFDS is solely for marketing purposes and removed sections of the standard that connected food safety to it.
These guidance documents were heavily anticipated by food manufacturers and provide more in-depth insight into proper compliance for the final rule that goes into effect on January 1, 2022.
The end of June marked a change in leadership at National Flavors. We said farewell with gratitude to Dan Hinkle, who remains active as a member of our Board of Directors. And we welcomed our new CEO, Brian Briggs. Our celebration included a catered lunch from Q-It-Up, some friendly cornhole competition, and cake!
Coming up in next month’s National News:
How to Celebrate Fall with Flavor!
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