F&B innovation must 'solve problems' and offer 'tangible benefits': Nielsen

By Kacey Culliney

- Last updated on GMT

Images © Nielsen
Images © Nielsen
Latin American consumers value food and beverage products that solve explicit needs, provide tangible benefits and feel honest, says Nielsen.

An estimated 20,000 new products launch every year across Latin America, according to the consumer research specialist, but half of these will see sales dip in the second year and more than 30% won't last more than one year.

“Innovation is not easy,” ​Nielsen said in its recent report 'What's Next in Innovation – Key Learnings for New Product Success in Latin America'.​ But, it also said there were some key considerations when developing new food and beverage products for the region that, if followed, gave manufacturers a fighting chance.

Solving problems, providing benefits

Nielsen said half of Latin American consumers wanted products that offered 'superior performance' and 28% wanted products 'tailored for a specific need'. One-quarter of consumers would try a new product from a brand they liked and 19% would be prompted to try a product just because 'it was new'.

“The most relevant demand throughout Latin America is related to the need for convenience and ease. True innovations should be able to save consumers' time to resolve a concrete need for different consumption moments.”

Opportunities were also available to brands who understood why consumers were willing to pay more for premium products,​ particularly if these brands demonstrated superior function, better flavor, ingredients and experiences, Nielsen said.

After analysis of more than 500 product concept proposals across Latin America in 2016, it said certain elements to innovation success had been identified.

In food, for example, it was important products solved an “explicit problem”​; clearly communicated ingredients and content; highlighted additional product benefits; and took a nutritive approach. It was also important to name the product in the local language and provide images of the product on-pack.

For beverages, products had to provide “explicit and tangible benefits”​ and clearly communicate ingredients, highlighting additional product benefits like with food. Ingredients were central to any beverage product development and references to natural origins made, where possible.

Avoiding failure

NIELSEN_LATAM_what consumers want in NPD
Image © Nielsen

Of all the product concept proposals analyzed, Nielsen said only 23% were ready to be launched with high probabilities of success; the remaining 77% were concepts that would likely fail in the market.

“The most common issue with 77% of the concepts is that they didn't solve a real consumer need or struggle in a believable way, particularly when the value and cost were included. Notably, premium-priced [products] need to clearly do something that others cannot. At the very least, they need to do something better than others.”

Many product innovations tended to “die on the shelves”​, Nielsen said, due to lack of long-term investment.

“Each new product needs a unique marketing mix, specific multichannel strategy and the right balance between in-store and media investment,” ​it said.

TV advertising still drove 59% of new product discovery in Latin America, followed by 54% word-of-mouth; 49% in-store; and 47% internet searching.

A tough crowd?

NIELSEN_LATAM_why innovation fails
Image © Nielsen

Whilst food and beverage business in any market was a challenge, Nielsen said Latin America was particularly tough, given the region had seen muted growth, flat FMCG sales and cautious consumer spending in 2017.

This year also remained a relatively hard environment to navigate, with many consumers sharing the belief they were experiencing recessionary times. “This sentiment will continue to affect their spending behavior, and we expect them to remain focused on saving and making increased purchases at discount stores and less-expensive formats.”

However, these consumers were also “finally feeling better”​ about the economy and their personal finances, which would be promising moving forward into the year.

“Latin America consumers are among the most willing, globally, to switch to a new brand. They also are willing to pay premium prices for innovative products. At the same time, however, they don't believe there is enough innovation on the market. They desire new products in the market, particularly those that truly solve unmet needs.”

Related topics: Markets

Related news