COVID Impact on CPG Product Launches
- There is no evidence data exists in the public domain detailing whether new PCG product launches have increased or decreased in 2020, compared to 2019, due to the COVID-19 pandemic. However, it is a logical supposition that new CPG product launches were delayed as a best case scenario or some were canceled as a direct result of the virtual closing of many economies in March, April, and May. Many companies used the time to adapt to the new realities of remote work and communication by continuing a new normalcy beginning in the summer. Consumer Goods Technology reported in July things were working in returning to normal for CPG companies, including new product launches.
- Brands have had to adapt development of new products and planned launches while working remotely.
- However, as McKinsey explains, new product launches during the pandemic should be analyzed to determine if the launches should be accelerated or paused. Accelerating the time frame to market for single-serve needs, at-home consumption, evolved shopping missions, and growing private-label competition are important since they have changed due to the pandemic, and all have an effect on determining the timing of new CPG product launches. The report continues, “In other cases, the realities of the next normal may dictate a pause. Retailers have streamlined their assortments during the crisis, and the standard annual shelf reset is no longer a foregone conclusion. Line extensions, which represented 33 percent of all global product launches last year,11 are the most likely candidates to reconsider.”
- Madison Reed accelerated their launch of DTC subscription hair color products at the beginning of the pandemic. “The product line had already been in the works, but, says the company’s founder, they pushed forward because they understood there was a huge opportunity to be had with so many people at home for an undefined amount of time.”
- Delayed launches were not limited to only smaller or new brands. Both Kraft Heinz and Kellogg Co. moved 2nd quarter launches to later in the year as they initially decreased SKUs in their production lines as a direct result of the pandemic.
- Things were not clear in the beginning of the pandemic as Tarick Gamay, vice president of sales and marketing for shelf stable liquid mix developer DreamPak, explained. “It’s uncertain and risky. There’s going to be a lot uncertainty with getting product to customers, who’s going to want what, and when and things like that.”
- CPG thought leader Molly Olson reported brands have continued to launch products during these uncertain times. In August, she wrote, “Not only has consumer buying behavior shifted as to how consumers are shopping, it’s also shifted what they’re buying. Brands and suppliers are paying careful attention to these shifts, as they shed light on forthcoming—or already here—trends, and giving insight into what consumers want, which ultimately aids suppliers on strategizing their new product development and launches.”
- She continued, “Mask-wearing is becoming the norm, but CPG has seen a boom with other product launches that have created a new category unto themselves—personal virus protection. eOn Mist, for example, was one of the first companies to launch into this new space, with a continuous surface spray sanitizing mist, and a continuous spray hand sanitizer. Hand sanitizer launches have boomed in the past six months.”
- Founder of Australian digital marketing agency King Kong, Sabri Suby, explained, “In order to have the guts to push out your own product, have a think about the biggest issues the pandemic is throwing up. Then, flip them on their head and figure out how to turn them into an advantage.” It is vital brands understand what consumers want this year as they determine which products will launch, and which ones might need to be shelved for the time being.
- More than 3600 brands were scheduled to exhibit at Expo West when the pandemic struck. The cancellation of the show adversely affected many new product launches including functional prebiotic soda brand Poppi, which had planned to unveil its new brand identity and sodas at the expo. Co-founder of Poppi Allison Ellsworth stated, “We have spent the last year preparing for the launch of Poppi. Everything was lining up perfectly, as months of planning were coming to fruition. The momentum was tangible and electric. Two weeks ago, we were set to debut Poppi at Expo West, AKA the Super Bowl of the natural foods world, when the whole world started to shut down, and consequently, Expo West was canceled. All of our meetings with buyers and press vanished, and any ROI from the show dissolved before our eyes. We had invested a significant amount of time and money into Expo West and had high expectations of an impactful show. As a new brand set to launch nationwide in Sprouts and Whole Foods, this expo was monumental for industry exposure.”
- Ellsworth also detailed other negative effects the pandemic has had on brands and new product launches. As the initial impact of COVID-19 was realized, she said, “Retailers are hyper-focused on just keeping the essentials in stock. The last thing they are concerned with is whether or not a new product, like Poppi, will make it to the shelf, and how they can help to keep it in stock. Our in-store promotional strategies have been put on hold by the retailers.”
ADJUSTMENTS MADE IN RESPONSE TO COVID-19
- CGT explained, “The three keys to successful product launch are the same now as they were before the outbreak. But executing on them is all new and brands need to adjust accordingly.” Shortening time to shelf has become a critical aspect of product launches during the pandemic. Since shopping has changed and logistics issues are challenged, brands must address both in planning for their new launch. In addition, “brands will need to take advantage of retailer media networks to effectively promote, prominently position, and drive awareness and purchase of their new products.”
- Also, “as Amazon moves into brick-and-mortar stores, consumer-goods manufacturers should take a hard look at brands and packs that are most likely to succeed online and reevaluate the role that e-commerce can play in new product launches.”
- Food Engineering Mag offered a solution, “Many new products slated to launch are already in production, and driving trial is essential to any successful innovation. But what happens when you can’t actually get the product on shelf? CPG and brand manufacturers, particularly within food and beverage, should look beyond the traditional supermarket channel, and consider potential foodservice partnerships they’ve minimized or ignored altogether.”
- The article continued, “Producers of household or personal care goods can revisit the option of building out a direct-to-consumer (DTC) model as an additional testing ground for planned new products. A DTC model has been top-of-mind for many manufacturers for years, even before the internet was around to facilitate it, but hasn’t scaled because of cost and the fear of alienating existing retailer relationships. Today, DTC can be leveraged to de-risk product introduction, testing out new options or variations and enabling a stronger story for retailer sell-in, by establishing proven success metrics.”
- As reported by The Future of Commerce, “The accelerated adoption of digital technology by businesses and consumers during the coronavirus crisis has prompted many brands to revise their go-to-market strategies in a bid to capitalize on new opportunities and fulfill new customer and consumer demands. For some, the solution was to take the plunge and enter the direct to consumer (DTC) market.”
- McKinsey advises to reconsider the “timing of product launches to account for delayed consumer demand and supply-chain disruptions.”
2020 LAUNCH DATA
- While no specific global or U.S. 2020 CPG launch data was found in the public domain, CPG digital advertising spend, which new product launches trend, is estimated to increase only 5.2% this year compared to increases of 22.7% and 14.5% in 2018 and 2019 respectively. It is estimated to rebound a bit next year at 16.4%.
- Food Industry Executive explains for the United States, “An average of 20,000 new food and beverage products are launched every year. Time will tell if that number holds for 2020. The year started out with business as usual, where consumers could browse full shelves at the grocery store and almost be guaranteed that they would find what they wanted – even if that was something as simple as rice.”
- However, The Economic Times reported that over 9700 products entered the Indian CPG market from April through September, which is the most ever and represents an increase of 35%.
- In April, Mattson surveyed “food and beverage professionals to find out how industry insiders believe that COVID-19 might impact the future of food innovation, development, launch, and success with retail customers and consumers. About two-thirds of those surveyed indicated that 2020 launches have been delayed, canceled, or are in limbo.”
2020-2021 CPG Product Launch Comparison
- No evidence exists in the public domain estimating the expected or anticipated quantity of new CPG product launches in 2021. This is consistent with a lack of data found for 2020. Each CPG category, beauty, food and beverage, personal care, household products and healthcare CPG products were researched separately, as well as on a regional basis. Any potential sources discussing an outlook for 2021 generally focused on 2021 trends in CPG products.
CPG Launch Case Studies
- There have been many new CPG product launches in 2020, even if they were delayed a bit. Dozens of products from a variant of CPG categories appear in a plethora of industry news articles and blogs by industry experts.
- Foodboro produces monthly list of food and beverage CPG products, such as this article from August highlighting 8 CPG products. Each of the 8 product presentations include a link to an article introducing the particulars of the item, such as this one about LesserEvil’s Grain Free Veggie Sticks. The product articles do not detail the reception of the launched items, most likely since they have just been launched and initial sell-through data has not been made public yet.
- Or these 17 food and beverage CPG product launches from May presented by Nosh.
- Beverage Daily spotlighted 10 beverage brands, mostly seltzers, in its May new product launch edition.
- And, Self presented several new products launched in October from the beauty and wellness category.
- In south Asia, India’s The Economic Times reported on about a half dozen new product launches from a variety of CPG segments.
- California based product design an go-to-market consultant Mattson highlighted many of early 2020 product launches from its product partners.
- RightRice Medley was launched in early 2020 just as COVID-19 was reaching America’s shores, launching nationwide exclusively in Whole Foods Market and on Amazon.
- The company’s launch press release reads, “Whole Foods Market and Amazon are the perfect partners to launch RightRice Medley and give us the opportunity to bring even more innovation to the rice category,” said Keith Belling, founder of RightRice and former CEO and founder of Popchips. “Introducing Medleys and doubling our on-shelf presence with the #1 natural foods retailer in the country within a year of debuting RightRice is a remarkable validation for our new brand.”
- Reception by retailers was mixed by March as stay-at-home orders began to be implemented. Keith Belling, founder & CEO of Right Rice and founder of popchips, has real-time experience with COVID-19’s impact on new products. He told Mattson’s webinar audience that he has seen a mixed response from retailers as the pandemic hit during the launch of Right Rice Medleys. “I think, first of all, it depends on the retailer and it depends on the innovation and the product,” Belling said. “But at the end of the day, there are retailers we work with that are incredibly responsive and excited about meeting under a different format, so it’s Zoom meetings and the like. Others have been really clear and let us know that even though we had something set up they are going to hold it off and do it later in the fall.”
- However, Belling’s company didn’t sit on its heels. In September, “CAVA, the Fast Casual Mediterranean brand, announced today the launch of RightRice, the breakthrough protein-packed, lower-carb veggie rice, in all of its 100+ restaurants across the US. This partnership with CAVA marks the national restaurant debut of RightRice and meets the growing consumer demand for restaurant menus to incorporate more plant-forward and protein-rich options.”
- Belling detailed, “As one of the most popular fast casual concepts in the country, CAVA is the ideal partner for RightRice to launch our food service business.”
NESTLE POLO PAAN
- Just this past week, Nestle launched 3 new packs of Nestlé POLO Paan in India. The new packs are aimed at offering more product options to younger consumers.
- “Over the last many years, NESTLÉ POLO with its unique proposition of Mint with a hole has provided unmatched freshness and cooling for millions of Indian consumers. In the current context, everyone is going through a lot of stress as they are forced to live restricted lives without friends, without doing the things they love and at the same time, deal with various uncertainties. POLO with its unique shape, taste and freshness and a witty brand language, encourages consumers to look at the positive side of everything; and thereby stay cool,” said Nikhil Chand, director of foods and confectionery, Nestlé India.
- Nestlé POLO introduced the new packs in the market with the aim to “further strengthen its proposition of ‘POLO keeps you cool’”.
PEPPERIDGE FARM FARMHOUSE HINEY WHITE BREAD
- After an initial pause brought on by the pandemic, Campbell Soup continued with its development and July launch of its Pepperidge Farm Farmhouse Honey White Bread and Farmhouse Butter Buns.
- The development and subsequent launch required crativity from the soup makers since much of its workforce abruptly began working remotely. This included research and development, marketing, quality assurance and supply chain teams.
- The launch of Farmhouse Honey White Bread and Butter Buns marked the brand’s first successful virtual product launch. They stated they will continue to develop creative ways like “tele-tasting” to keep advancing new products.
- The company did not launch simultaneously on social media sites due to its commitment to the Black Lives Matter movement and the increasingly divisive nature of the platforms.
KELLOGG’S MASHUPS CEREAL
- “In an effort to deliver an innovative experience to their loyal customers and delight new product users, Kellogg’s created a limited-edition product line: Mashups, a cereal product which combines two cereals in one box. The launch of the Kellogg’s Mashups product line is a result of consumer data which indicated half of all cereal eaters mix different cereal flavors.” The first Mashup, a combination of Frosted Flakes and Froot Loops, launched this past summer and is available in stores nationwide in the U.S.
- “Kellogg’s is always looking to innovate and deliver new experiences that our cereal fans desire,” said Erin Storm, marketing director of Kellogg All Family Cereal. “As almost half of cereal lovers mix cereals together1, we wanted to make this two-in-one breakfast experience even easier. With Kellogg’s MASHUPS Cereal, families have a convenient way to enjoy a delicious mix of Kellogg’s Frosted Flakes® and Froot Loops® all in one box.”
- It is being offered for a limited time.
- The brand’s press release shows a picture of the packaging.
- In recognition of the newly release movie Hocus Pocus, “ColourPop debuted the ColourPop x Hocus Pocus collection on its website on September 30th. Consumer interest was so high, the ColourPop Shopify store could not handle the volume of web traffic causing the brand’s ecommerce site to crash and pushing the launch to October 1. ColourPop announced the launch of the new collection on it’s Instagram page and quickly received more than 353,000 likes and 15,000 comments. In fact, since the launch, ColourPop Instagram page posts featuring images or videos of the Hocus Pocus collection are the top performing content, averaging more than 117,000 likes per post.
- The collection is available on ColorPop’s website and their Shopify store, as well as in Ulta retailers beginning on October 4th. The launch was highlighted on many fashion websites and the brand’s Instagram page.
- In the Philippines, 7-Eleven launched take-home packs of ‘Big Bites’ hotdog and siopao for a limited time. The home packs target consumers who want affordable merienda (‘light meal’) or a midnight snack without traveling all the way to the store during the quarantine.
- Launched last month, “Barry Callebaut’s new Accent line of chocolate for confectioners was specifically made for the tastes and needs of North American consumers. It combines the European process of making chocolate with the flavor North American consumers want. Many consumers have turned to sweets as a way to make the pandemic more palatable, making this launch from Barry Callebaut well timed. According to data from the National Confectioners Association, candy sales are up 4.3% in the U.S. since mid-March.”
- “We have worked relentlessly to craft a range of chocolates that deliver distinct flavors that American consumers will love,” said Laura Bergan, director, Barry Callebaut brand. “We understand the high standards of passionate confectioners, so we have committed to ensure that we deliver on five promises with each batch that is produced in our factories.”
Direct to Consumer (DTC)
- Dale Buss, writing in Retail Wire explains, “By edict or by choice, Americans sheltering in place have sent e-commerce orders for CPG goods through the roof since the beginning of March. Direct-to-consumer (DTC) brands have been huge beneficiaries of the shift, which promises only to grow in the long term as millions get comfortable with the idea of buying groceries and other staples online. “
- Ken Harris, managing director of Cadent, a CPG consulting firm declared, “DTC is ‘the new currency’ It’s democratic, universal, a way to launch and get in front of consumers fast — and a way to fail fast and ramp up quickly again. Startups that figure this out and are able to do it will succeed far faster than those that can’t.”
- The Shipyard Marketing Engineers detail, “Brands that first launch a product via the DTC channel actually provide retailers more confidence that the brand team knows what is appealing about it, thereby reducing risk. With the increase in digital engagement during the COVID-19 pandemic, the opportunity to build direct relationships with customers online has never been more important.”
- “Brands can also use their DTC channel to inform product launches, using the insights they gain to bring new offerings to more channels. Weleda N.A., a subsidiary of the Switzerland-based progressive European natural beauty brand, launches every new product on its own e-commerce DTC site before distributing to retail shelves. The result? Consistently successful product launches along with double-digit growth in retail distribution and turnover.”
- “Using Shopify Plus and consultants Good Growth, Heinz UK introduced Heinz to Home, launching after just three weeks on April 9. The service offered a limited selection of the popular Heinz Beanz, Tomato Soup, and Spaghetti Hoops packaged as a bundle. Products were delivered in two to three days across the UK. In keeping with Covid-19 safety best practices, deliveries were contactless. In the weeks following its launch, Heinz to Home introduced two new product categories, also providing a selection of sauces and baby foods. After 150 years, Heinz now has a new digital channel, which has been such a success (gaining much positive media and consumer feedback), that it will now form a key part of its strategy.”
- “Ultimately, opportunities lay unclaimed for CPG companies to reinsert themselves into a market that is leaving yesterday’s tactics behind,” said Sabrina McPherson, managing director and management consulting consumer products lead at Publicis Sapient, in Digital Commerce 360. “Testing for market readiness and digital maturity while verifying key components like resource allocation, budget, and overall strategy to determine appropriate stakeholders and prioritize implementation is key to successfully rolling out new DTC capabilities. With the proper planning and resources, each brand that chooses to invest will be stepping into a sort of “Wild West” adventure of understanding their market in new and more direct ways. With the advent of a post-COVID world where more consumers have made the jump to online orders, the chance to get on the front foot with fresh, scalable DTC solutions seems riper than ever.”
- “Ocean Spray launched its Lighthouse Innovation Incubator to create new products that will compete against DTC startups in the health and wellness industry. In August, the company debuted Tally-Ho, a line of water enhancers for dogs, that are now available online and in some stores in Boston. Through the incubator, they’ve been able to test consumer reactions to their new lines of herbal tonics, sparkling waters and edible gummy supplements.”
- “AB InBev saw major growth in DTC business during the pandemic, especially in countries such as Brazil, China, Mexico and Argentina. The company now reports connections with 250 million consumers per year across a network of 1,300 stores, pop-ups and e-commerce projects. The different touchpoints allow company leaders to track vital metrics such as lifetime customer value and average customer orders.”
- Tom Treanor, head of marketing at enterprise customer data (CDP) platform Arm Treasure Data, stated, “Some legacy CPG companies – like PepsiCo, Clorox and our client, AB InBev – are already rolling out their own DTC brands. This is a smart, low-risk way to experiment with new products and markets, without having to transform a large company overnight. If DTC efforts are successful, they can coexist with traditional channels and contribute to company-wide goals.”
The Role of Social Media on CPG Product Launch
- Research did not uncover any direct information related to initiatives or the role social media platform companies take with CPG product launches. However, there exists information related to how the platforms are used by brands and marketers in launching CPG products.
- Thought leader Holly Pavlika wrote recently, “Instagram is testing a new feature that lets users set alerts/reminders ahead of new product launches. I can see this working well for passion brands where dedicated fans rabidly await new flavors or special-release items that have been teased out in the market. Imagine knowing when Oreo launches a new, limited-edition flavor or receiving an alert before your favorite sneaker brand drops a coveted release! Sweet-tooth foodies, sneakerheads, and other perpetual hunters of the new and scarce should embrace the addition.”
- “For creatives and brands, many of whom already use the platform to hype new releases, the value is obvious. Through product launch stickers in Instagram Stories and product launch tags, audiences will be able to discover, follow, and set reminders for upcoming launches. As those items become available, users can preview and purchase entirely within the app. This feature test is the latest in a series of moves by Instagram to transform itself into a major shopping platform.”
- “For CPG and FMCG, traditional product launch methods such as in-store samples, pop-up stores, and launch events have been limited due to the pandemic – now is the time to make the most of out of what social has to offer. Done effectively, social can be more cost-effective and allow for greater flexibility when it comes to creative concepts and campaigns. And creativity is essential right now with many consumers saying that they’re overwhelmed right now with information. Brands must enhance their creativity to cut through the noise, and make an impression. It could be something as simple as using Twitter’s new disable replies feature to get fans in a frenzy.”
- “Cadbury created excitement and urgency with the re-release of the Cadbury Orange Twist. Cadbury knew they would get a good response when that flavor sold out last year, so they created scarcity and a hype machine at the same time by making people “take a number” on Twitter in a virtual queue during a limited time with the first 5000 people receiving the product.”
- “Social listening can provide insight on the problems customers have that the new product can help solve. For example, Elf Cosmetics joined TikTok when it discovered that #elfcosmetics was already trending. Since then it’s commissioned songs, started challenges, and had campaigns go viral. By using social listening, brands can get ideas on ways to market the new product on social media that they might not have considered before.”