TraceGains: Why Food and Supplement Companies Need to Fail Fast
Ahead of his speaking role at Future Food-Tech San Francisco, Gary Nowacki, CEO, TraceGains, shares his insights on why food and supplement companies need to fail fast.
With seismic shifts in consumer priorities and changing sales channels, pressure for food, beverage, and supplement companies to innovate is at an all-time high.
In fact, a 2013 KPMG survey found that more than 60 percent of food and beverage executives believe product innovation or portfolio adjustments to “healthier” trends will be required for ongoing growth.
Executives in the supplement market have long been immersed in a shelf-space war, pressuring them to bring new products to market faster. With disruptive trends such as millennial demands for transparency and the entrance of Amazon into supplement manufacturing, it’s become more important for companies to stand out.
For many food and beverage manufacturers, more than half of their revenue stems from products that have been rolled out within the last five years, according to Food Processing.
Legacy brands face a tough road, as consumers eschew brand loyalty in favor of smaller manufacturers. According to market research firm IRI, roughly “$15 billion in industry sales have shifted away from large companies to smaller players since 2012.”
Top Food and Beverage Launches
A look at 2017’s top food and beverage product launches reveals how smaller manufacturers have become big players: They’re responsible for nearly half of the most successful new products. Based on IRI’s research, “In 2017, 40 percent of food and beverage and 25 percent of non-food Pacesetters were entirely new brands to the CPG marketplace, demonstrating consumers’ willingness to try ‘unknown’ brands.”
IRI’s 2017 Pacesetters include:
Halo Top: $324.2 million in first-year sales.
Good Thins: $87 million.
Dunkin’ Donuts Iced Coffee: $67.1 million.
Nestlé Splash: $55.2 million.
LIFEWTR: $50.4 million.
Trending Supplement Products
The younger dietary supplement market continues to enjoy explosive growth and analysts don’t expect a slowdown anytime soon. Experts estimate the global supplements market will enjoy a CAGR of nearly 7 percent over the next five years.
According to the Nutrition Business Journal, the top selling supplement categories include:
Probiotics: 17 percent annual growth.
Sports nutrition: 8.3 percent.
Meals: 7.6 percent.
Vitamin D: 7.5 percent.
B vitamins: 5.2 percent.
Market Pressure Drives Innovation
Food, beverage, and supplement companies face growing pressure to innovate, especially since retailers are increasingly launching their own brands.
Additionally, the traditional retail models have been shattered, with explosive growth in online sales, the emergence of delivery and curbside pickup options, and even meal kit services.
Finally, the growing millennial market is not only more open to new products, they’re clamoring for them. And it’s not just what they eat, but how they eat it, with snacks driving more sales than ever before.
A 2017 McKinsey study examined new product launches and how many remained on the market. The findings were startling:
Large companies: Three out of four new products didn’t survive the first four years. That’s an anemic 25 percent survival rate.
Small companies: Despite more agile operations, their new product launches didn’t fare any better, with only 25 percent of their products lasting longer than four years as well.
Not only are companies failing 75 percent of the time when bringing new products to market, they’re failing slowly. So how can businesses solve this problem and compensate for such poor success rates? It’s simple. The answer lies in speeding up the NPD process to increase the number of product launch attempts. By failing faster, companies can beat the competition and enjoy a higher rate of success. True transformation requires increased efficiency and speed at every stage of the product development process.
Supply chain quality assurance, ingredient identification, and R&D acceleration require a new working paradigm between vendors and their customers. External and internal knowledge silos must be eliminated and replaced by collaborative platforms that connect all stakeholders, streamline workflows, and scale without adding more headcount.
TraceGains Network is the food, beverage, and supplement industries’ collaborative platform, where R&D, procurement, quality assurance, and regulatory departments work jointly with suppliers globally to safely bring new products to market faster. TraceGains Network makes available more than 16,000 supplier locations in more than 90 countries for manufacturers and brand owners to source and qualify new vendors, procure new ingredients, build recipes, negotiate ingredient specifications, and automatically collect supporting quality and regulatory documentation from an ever-growing library of more than 1 million supplier-provided documents.
TraceGains Network is accessed through a suite of SaaS-based products provided by TraceGains. Companies can quickly plug into these solutions to make connections with existing supply chain partners or find new vendors and ingredients. Making connections is as easy as networking on LinkedIn.
Join TraceGains’ four-part webinar series, “Plug In. Go Faster.” to hear how the siloing of departments and data is crippling business, and learn how to speed innovation and launch products faster. Save your spot now.
Gary will present ‘Accelerating Growth and Time to Market through AI and Automation‘ at Future Food-Tech San Francisco on March 22 at 9.30am.