Can big food companies launch successful new products? Bernstein rates 10 key launches
Bernstein analysts Alexia Howard and Zhihan Ma – who reviewed* the performance of 10 high-profile product launches from leading CPG brands in 2018 based on measured channel sales, distribution results and Amazon reviews – say results have been mixed.
“Hershey's Gold, Hershey's Reese's Outrageous, Just Crack an Egg by Kraft Heinz, and 1850 by Smucker's are on track to generate more than $40m sales in the first year, placing them better than 90% of new products launched in 2017 according to an IRI report.
Conversely, Joyböl by Kellogg and YQ by Yoplait appear to be off to a slower start in measured channels, although sales could be taking place in non-measured channels such as the natural channel or online.
“Some of the 2018 packaged food innovations seem more promising than others. That being said, some line extensions appear to have been cannibalistic and we wonder how sustainable the sales growth of the new products will be once distribution gains run out of steam.
“While their incremental product innovations may occasionally create pockets of growth opportunities, we remain skeptical of the big food companies' ability to come up with the next Chobani to fundamentally disrupt themselves or to solve their long-term growth problems.”
Joyböl (Kellogg): Launched in mid-2018, each Joyböl contains granola clusters and dried fruit powder (users add water and stir to make a smoothie bowl).
While this checks many of the boxes (on-the-go convenience, snacking, light-weight and suitable for e-commerce) and leverages Kellogg's existing supply chain and manufacturing base, “we cannot help but wonder if this is really what smoothie consumers are looking for,” given the powdered nature of the fruit and fact each bowl contains 15g sugar, said Bernstein.
Six months into the launch, Joybol has gained very limited traction in measured channels, with nominal sales and distribution, added Bernstein, which noted that it “does not seem to have gained a lot of traction online either.”
As of January 11, the Joybol Flavor Variety Pack has 63 reviews on Amazon with an average rating of 3.8 out of 5 stars. Some customers liked the taste and convenience factor but others didn’t like the texture, with one noting: “It doesn't taste bad, but you'd be a lot better off just buying a regular fresh yogurt and dropping in granola of your choosing.”
Happy Inside (Kellogg): Launched in November 2018, Happy Inside cereal contains prebiotics, probiotics, and fiber to support digestive health. It’s too early to tell the performance of Happy Inside in measured channels, says Bernstein. “However, customer reviews on Amazon have been largely favorable with customers saying that the product is ‘delicious and healthy.’ Nonetheless, the relatively high price point… will likely result in a smaller target customer base.”
Just Crack an Egg: Launched in early 2018, each cup contains vegetables, Oscar Mayer breakfast meat, Kraft cheese, and Ore-Ida potatoes (consumers add a fresh egg, stir and microwave it to get a scrambled egg dish).
“Close to a year into the launch, Just Crack an Egg has achieved 4-week sales of ~$5-6m with over 50% distribution in measured channels,” says Bernstein. “This is a decent set of results and makes Just Crack an Egg one of the more successful new product launches in our coverage in 2018.”
Amazon Fresh reviews show “customers seem to like the taste but think the product is overpriced at $2.79,” adds Bernstein.
O, That's Good! Frozen Pizza (Kraft Heinz in partnership with Oprah Winfrey): With a third of the flour in the crust replaced with cauliflower puree the frozen pizza line is “relatively small in measured channels today with 4-week sales of ~$1.4m and average distribution of 12%,” says Bernstein.
Based on reviews on Amazon Fresh, it adds: “Although the health & wellness-oriented cauliflower pizza crust is on trend, it appears that Kraft Heinz has more work to do to improve the taste of the product.”
YQ by Yoplait (General Mills): “Compared to the successful (albeit perhaps cannibalistic) launch of Oui by Yoplait, YQ [a 99% lactose-free yogurt made with ultra-filtered milk that ‘delivers big on protein with an intentionally less sweet taste’] appears to be off to a slower start in measured channels,” says Bernstein.
“Six months into the launch, YQ generated $1.6m sales in the latest 4-week period with distribution representing 26% of ACV [all commodity volume] in measured channels. This compares to Oui's $7.5m sales and 60% distribution six months after its launch. The umbrella Yoplait brand experienced a decline in sales of -0.7% since the launch of YQ vs. the year-ago period, although market share has increased at the margin, suggesting some incrementality of YQ as well as Oui.”
Cheerios Oat Crunch Cinnamon (General Mills): Launched in June 2018, the line features a new taste and texture with whole grain oats “although arguably is more of a line extension than a true product innovation,” says Bernstein.
“This seems to be off to a relatively slow start with only ~$2m sales in measured channels in the latest 4-week period despite having gained 50-60% distribution. The umbrella Cheerios brand experienced a -4% decline in sales since the launch of Cheerios Oat Crunch while market share also declined, which implies some degree of cannibalization.”
That said, online reviews have been “mostly positive.”
Hershey’s Gold: Launched at the tail end of 2017, Hershey's Gold bars contain salty peanut and pretzel bits in a caramelized crème, and quickly ramped up distribution to the 85% range, reaching peak sales of $11m during the 4-week period leading up to the Winter Olympics. “Distribution has since flat lined and 4-week sales have moderated to the $3-5m range,” says Bernstein.
“Overall, Hershey's Gold has been a successful launch with first-year sales of ~$80m, better than ~99% of new product launches in 2017. That said, Hershey's Gold fell short of the track record of Hershey's very successful launch of Cookie Layer Crunch in late 2016 which achieved ~$110m sales in the first year and Mars' launch of Caramel M&Ms in early 2017 which achieved ~$135m sales in year one.”
As of January 11, Hershey's Gold Candy Bar (24 Count) had 100 reviews on Amazon with an average rating of 3.9 out of 5 stars.
Reese's Outrageous (Hershey): Launched in May 2018, the peanut butter chocolate candy bar features Reese's peanut butter stuffed with Reese's Pieces candies wrapped in chocolate. Seven months into the launch, Reese's Outrageous has achieved $3m sales in the latest 4- week period with 64% distribution, says Bernstein.
“It appears that there is additional room for distribution gains as Hershey was able to ramp up distribution for Cookie Layer Crunch and Hershey's Gold to the 80-90% range fairly quickly.”
As of Jan 11, the bar has 78 reviews on Amazon with an average rating of 4 out of 5 stars, although some consumers described the product as too sweet.
1850 premium coffee line (Smucker). Launched in April 2018 as part of its effort to increase its exposure to the faster growing, premium segment in the coffee category, the 1850 line focuses on the original story of the Folger's brand in San Francisco during the gold rush years and features 100% Arabica coffee beans (whereas Folger's Classic Roast contains Arabica and less expensive Robusta beans).
“Eight months since the launch, 1850 has achieved 4-week sales of ~ $4m with 55% ACV distribution,” says Bernstein, which notes that the 1850 Black Gold Dark Roast KCup Pods have an average rating of 4.4 out of 5 stars on Amazon.
“At the current rate, 1850 is on track to achieve over $40m sales in its first year post launch, better than 90% of CPG products launched in 2017. However, the sales trend of the umbrella Folger's brand remains negative at -4% on average since the launch of 1850 in April vs. the year-ago period and the brand has continued to experience market share losses, which seems to suggest some degree of cannibalization, in addition to the underlying weakness of the Folger's brand.”
Jif Power Ups (Smucker): Jif peanut butter granola bars were pitched as a nutritional snacking option for children. Seven months into the launch, the brand has achieved 4-week sales of $2-3m, with distribution flat lining a bit in the 50% range in recent months, says Bernstein. “The umbrella Jif brand has experienced slightly negative sales growth of -0.5% since Jif Power Ups was launched in May 2018 vs. the year-ago period. However, as Jif Power Ups essentially extended Jif into a new category, it is difficult to quantify the degree of cannibalization, if any.”
As of Jan 11, Jif Power Ups Creamy Clusters Granola with Peanut Butter Center has 70 customer reviews on Amazon with an average rating of 3.9 out of 5 stars.
* Bernstein Weekend Consumer Blast: A year of U.S. food innovation in review January 11, 2019
