Recession Slows New Product Launches in US

June 9, 2009

Fewer new products are showing up on supermarket shelves in the US this year as companies cope with the changing economy, according to Mintel’s Global New Products Database (GNPD).

The latest GNPD data shows total food and drink product launches have halved since last year (a 51% decline from quarter one 2008 to quarter one 2009).

In addition, new product introductions dropped by 32% from the last quarter of 2008, compounding the annual decline.

Manufacturers typically release fewer new products during the first quarter of a year, but 2009’s reduction is higher than in recent years, reports Mintel.

“Faced with low consumer confidence and reduced spending, many food and beverage manufacturers cut back on product development and new product launches,” said Lynn Dornblaser, leading new product expert at Mintel.

“Many companies face internal budget cuts that affect everything from new product ideation to development and marketing.”

In certain categories, manufacturers have pinched new product launches even more tightly. Compared to quarter one 2008, Mintel’s GNPD saw higher-than-average declines for non-alcoholic beverages, chocolate, confectionery and dairy product launches (56%, 55%, 64% and 60%, respectively).

The number of confectionery launches may show a greater-than-average decrease due to Easter falling in the second quarter of 2009, however.

But Dornblaser believes lower new product launch numbers won’t last and reports that monthly data reveals that while food and drink introductions declined steadily from October 2008 to February 2009, they increased in March.

“Consumer confidence has leveled off for the time being, which marks an opportunity for manufacturers,” she said. “Now is the time innovation and developing products that answer shoppers’ desires for value, quality, and pleasure.”

Dornblaser added Mintel has tracked new products through three major recessions and has consistently observed that new product launches decline in the beginning of a recession but quickly increase once the economy begins to recover.