FMCG Innovation Thriving During Cost Of Living Crisis

 Namnews, 17th May 2023

Amid the cost-of-living crisis impacting households and the FMCG industry alike, new research suggests that there is a silver lining for brands in the sector.

According to Kantar’s new report ‘The Great British Squeeze: Innovation Edition’, despite the rise of private label products and consumers shopping increasingly at discounters, product innovation is thriving.

The research notes that the top 10 new product developments (NPDs) of 2022 demonstrated an ability to resonate with households who consider themselves to be struggling financially. Seven out of the top 10 new product launches over-indexed with this group.

The struggling shopper group has experienced a consistent increase in size, from 14% in May 2020 to 25% in the latest data. As inflation rates soared and borrowing costs grew, the number of individuals finding it difficult to manage costs has nearly doubled. In such an environment, Kantar noted that brands that can offer value to consumers without sacrificing quality are often seeing success and mitigating the pivot to private label.

Additionally, the study suggests brands need to communicate more effectively with consumers about the value they offer and be more transparent about their pricing. “Struggling shoppers are willing to risk their hard-earned cash for new products, but brands have to get it right,” said Sam Hart, Head of Marketing Insights at Worldpanel Division, UK.

Leading the list of top NPDs is Madri Lager, a standout success in the British market. This beer’s popularity stems from its ability to transform an out-of-home experience into an affordable in-home indulgence. With its faux Spanish provenance, Kantar said it allows shoppers to strike a balance between saving money and maintaining a premium vibe.

However, the success of Madri Lager and the other NPDs goes beyond the products themselves. Innovative packaging, marketing campaigns and the overall presentation played a crucial role. Brands that thrived in 2022 embraced unique and relevant ideas, and some even redefined their product categories.

P&G’s Flash Dust Magnet disrupted the duster category, generating nearly £10.5m in sales in its first year. This premium offering resonated with price-sensitive consumers, showcasing the power of well-crafted innovation.

The top 10 NPDs of 2022 also included Walkers Reduced Salt Crisps (HFSS compliant), Fairy Max Power WUL (premiumisation), Stella Artois Unfiltered Lager (change in flavour), Andrex C/C Mega Toilet Tissues (sustainability with less packaging), McVities Blissfuls Biscuits (snacking and treats), Cushelle Tubeless Toilet Tissues (sustainability), Walkers Wotsits Crunchy (snacking and treats), and Heineken Silver Lager (lighter flavour targeting younger shoppers).

Hart concluded: “Tailoring new product development strategies to align with the preferences of various shopper groups is crucial for success. By incorporating these learnings, brands can navigate the crisis, meet customer needs, and position themselves for long-term success.”

NAM Implications:

• As always…
• …applying all the basics to optimise the difference.
• Nothing ‘New’ except the ‘Norm’….