What people want from innovation in FMCG

Research into people’s grocery shopping habits finds that new product development is more acceptable in some categories than in others.

Consumers in the UK are more daring when it comes to buying snacks and confectionery than in other categories, according to the latest research. Gone are the days when a bog-standard chocolate bar or a packet of ready salted crisps would sate the mid-afternoon hunger. Shoppers have a large appetite for on-the-go food and brands are becoming more creative to fill the snack gap.

Cadbury is one brand attempting to turn heads with two new Dairy Milk chocolate products, one paired with Ritz crackers and the other with the French biscuit Lu. These new confectionery offerings are parent company Mondelez International’s biggest UK snack launch of 2014.

The combination of sweet chocolate and salty cracker is exactly the type of confectionery shoppers are interested in trying out, according to the Grocery Eye study, carried out by market research company SPA Future Thinking.

Almost a quarter (23 per cent) are most likely to try new sweets and chocolate of any FMCG category, and 21 per cent say they are most likely to try new crisps, nuts or bagged savoury snacks. Catherine Elms, research director at SPA Future Thinking, says: “People are wanting a wide variety of snacks so they can eat them at different points during the day and it’s very easy to trial new products like snacks when they are a low-entry price point.

Combination snacks

Richard Mills, head of FMCG at SPA Future Thinking, adds that brands such as Cadbury are leading the way in product launches. “Cadbury is keeping shoppers interested,” he says. “Dairy Milk with Oreos has done really well and it has even managed to blur sweet-and-savoury snacking with the launch of Philadelphia cheese spread with Cadbury Dairy Milk.”

We have spotted a greater interest in different combination snacks than we did five years ago

People are similarly open to new ideas when it comes to breakfast cereals and to beer, lager and cider, with 20 per cent saying they are most likely to try new cereals and 17 per cent saying they are willing to try a new type of pint.

But shoppers are more conservative in other categories, meaning marketers have to work much harder to convince them to try new products. Only 11 per cent say they are most likely to try new laundry brands, for example, because there is much more “brand loyalty” and a reluctance to try new things at a higher price point, says Elms.

Point-of-sale key

The public are also creatures of habit when it comes to buying biscuits and bread, with 11 per cent and 10 per cent respectively willing to try new varieties.

Consumers are most likely to find out about new products at the point of sale, according to the Grocery Eye study, which states that a massive 80 per cent say that’s how they find out about NPD. Television is the next most likely source of information, cited by 58 per cent overall, though that drops to 51 per cent among Generation Y.

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Andrew Tharme, managing director at SPA Future Thinking, says that while point-of-sale marketing has always been important, the study emphasises just how important it has become, particularly for new products. “It’s something that we’ve believed for a while, and this study confirms it. Brands are achieving high levels of stand out at the point of sale. As product loyalty levels are lower, brands are battling for share and products need to jump off the shelves.

“Measurement for online is not as easy to control and marketers are switching back to in-store marketing.”

Just over 2,000 people, aged from 16 to 64, were questioned about their shopping preferences and habits across a range of sectors, including breakfast cereals and ready meals.

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Breakfast on the go

The study, first seen by Marketing Week, shows an overwhelming desire for food on the go, and this extends to breakfast foods such as cereal bars. Almost a quarter (24 per cent) think that breakfast out of home is the most innovative category, but although shoppers are happy with the level of NPD in snack and confectionary foods, there is a desire to see a little less innovation in on-the-go breakfast foods and energy drinks.

Both are relatively recent categories, and supermarket shelves are awash with new products. The Grocery Eye study shows that care needs to be taken not to overwhelm consumers with too much choice.

Mills says: “Consumers feel that lots of products out there are doing the same thing. Some of the claims aren’t credible and it’s hard to differentiate between products.”

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Elms adds, however, that it’s “encouraging that although [energy drinks and out-of-home breakfasts] are low penetration because they’re not such big areas, they are noted as being quite innovative”.

Convenience food

Chilled ready meals, on the other hand, is a category where more innovation is needed. Eleven per cent of respondents to the study want to see more new products in this category and Mills says there needs to be a bit of a shake-up. “People are not seeing the variety in this category, there’s not enough excitement. There needs to be a brand or retailer to disrupt the category. Convenience is massively important these days and brands need to not only think about ingredients but packaging.

“Younger people especially are looking for something convenient. They might buy a sandwich or ready meal every day so they’re ready for a larger repertoire to prevent things getting repetitive.”

Age is a factor when it comes to which products people are interested in trying out. The younger generation (16 to 34-year-olds) are most likely to try frozen pizza and ready meals (13 per cent) and juices and smoothies (10 per cent), while 35 to 54-year-olds are interested in trying laundry products (15 per cent).

New savoury biscuits and crackers are more likely to pique the interest of those 55 and over (13 per cent) while new savoury snacks are of interest to all ages.

High-quality ingredients

Following the horsemeat scandal in 2013, it is perhaps not surprising that ‘the highest quality of ingredients’ is the most important product attribute for 88 per cent of respondents – but while shoppers are interested in what is in the brands they are buying, they don’t mind as much where they come from.

More than two-thirds (69 per cent) think British ingredients are an important attribute, with 62 per cent saying local ingredients are important. However, ethical and environmental benefits are less crucial, with 55 per cent saying Fairtrade is an important product attribute and 39 per cent saying likewise about organic goods.

Tharme says: “There’s clearly not a link with high quality and organic. The purse-strings are tight, so people want value but also still want quality. That’s why shoppers value products with good packaging, because it extends the life of what they are buying.”

Methodology

SPA Future Thinking conducted The Grocery Eye research last November, speaking to just over 2,000 shoppers to understand purchasing behaviour in supermarkets across a range of sectors including snack foods and ready meals. The respondents were aged between 16 and 64 and regionally representative in the UK. More females (71 per cent) than males were interviewed to represent the profile of shoppers making decisions in supermarkets.

Marketers’ response

Matthew Williams
Marketing activation director
Mondelez International

We have spotted a real interest in people wanting to try different combinations in snacks and we see less rejection of ‘combination’ concepts than we did five or 10 years ago.

With NPD we research the product as a concept and then as a final product. Often the final product has better scores than the concept, because there will be a bit of nervousness about the taste. However, as the Cadbury/Ritz combination’s recommended retail price is 58p, it’s not that difficult to convince people to try it.

We spend a large amount of money on in-store marketing displays as well as traditional advertising. Cadbury also does well on word of mouth, which is quite easy to track and is certainly what we’ve seen for Cadbury with Ritz.

Charles Phillips
Director and co-founder
Scheckter’s Organic Beverages (energy drinks)

There is a lot of innovation in the energy drinks category but, generally speaking, brands are trying the copy each other with aggressive macho rock star-type branding. There are energy drinks launching every month and if you approach anybody in the trade, they groan and say: ‘Not another one.’ The key is to differentiate.

Three out of five consumers don’t drink energy drinks. They are predominantly drunk by young males.  When we ask consumers aged 20-40 why they don’t drink energy drinks, 78 per cent say they don’t like the ingredients, 19 per cent don’t like the taste and 4 per cent don’t like what the brand stands for. Consumers are keen to drink caffeine but as you grow older you’re more aware of what you’re putting into your body.

Cheap, healthy meals, please 

When it comes to choosing healthy food, people are still after a bargain. Half of all respondents to the Grocery Eye research say that making healthy food cheaper would be the primary driver of eating it. 

Dinner is the meal where people are most likely to choose products based on them being healthy. This is followed by breakfast, with 29 per cent saying a food’s healthiness is important, compared with 23 per cent for lunch.

For an adult audience, checking the fat content of a product is most important to health (41 per cent), while for children it’s looking at sugar content (38 per cent), showing that brands need to alter their health messages according to age group.

Although people are interested in the quality of ingredients when choosing food for children, only a quarter are actively checking for artificial ingredients – and knowledge of what constitutes an artificial ingredient is poor. When tested on what is a natural ingredient and what is an artificial one, people on average scored an average of five out of 10, suggesting that while there is an interest in healthy food, education is lacking.

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