Dependence on product breakthroughs to meet health expectations

By Sarah Hills

- Last updated on GMT

Related tags Nutrition Health

Retailers are relying on food manufacturers to come up with new
product developments to help address consumer demands during
challenging economic times, according to a new report.

Attempts to meet the trend for healthy consumption among consumers depends to a large degree, on providing the right product mix, said the report from the Grocery Manufacturers Association and PricewaterhouseCoopers. It added: "For this, retailers rely upon product development breakthrough from manufacturers." ​ The report, called The Food, Beverage and Consumer Products Industry: Achieving Superior Performance in a Challenging Economy 2008, highlighted one example of such successful innovation. This was ConAgra's reenergized Healthy Choice brand, which is projected to generate $100million in sales in 2008 through improved frozen dinner taste and texture and increasing consumer awareness about healthy recipes. Herb Walter, partner in PricewaterhouseCoopers' retail and consumer practice, told that many food manufacturers are looking to respond to the consumer demand for health products by changing formulation, focusing on innovation and focusing on market messages around more healthy products. He added: "It has become much more important from a product innovation point of view to develop products that are low in calories and low in bad ingredients - less sodium, less fat, more grains, more ingredients considered to have health properties - and the retailers are seeing an increase in the demand for the products and interest in the products. "It is the increased collaboration between the manufacturers, who are leading innovation, and retailers, who are leading the voice of the consumer in terms of helping the manufacturers focus on product development." ​ The IRI top ten new food and beverage products launched in 2006-2007 were products that helped consumers meet their dietry, disease-fighting and weight goals without sacrificing taste. Examples include Campbell's reduced-sodium soups with 25 percent less sodium than traditional Campbell's and Birds Eye Steamfresh frozen vegetables, which meet consumers' desire for steaming, perceived as a healthier cooking method. The report stated that beyond price, consumers are associating value with products that contribute to a more active and healthy lifestyle and make less of an impact on the planet, among other factors. Meanwhile companies are becoming more "consumer-centric".​ Other issues raised in the report include the impact of rising commodity prices. It said crop prices are up 31 percent from last year and some prices have soared even higher - 62 percent for food grains, 55 percent for oil-bearing crops and 56 percent for commercial vegetables. Walter said this had forced the manufacturer to "look at their supply chains more carefully, look at their product mix more carefully and emphasis products where the ingredient impact is not so severe".​ However, he added: "While 2007 was certainly a challenging year, ultimately the food manufacturers, as seen through their financial performance, responded and were able to deliver strong financial results."​ The food industry showed a year of healthy sales growth from 5.1 percent to 8.2 percent in 2007 and slightly higher profitability from 28.1 percent to 30.2 percent in 2007.

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