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Learning from 8 Years of Innovation Success: What you can discover from top CPG launches

Information Resources, Inc. (IRI) publishes an annual pacesetters report of the top new “brands” launched in food, drug, and mass merchandiser stores each year that demonstrates the good, the bad, and the ugly of innovation.  We’ve analyzed the results from 2004–2012 and found some really intriguing insights. 

Please note IRI’s definition of “brands” is squirrely, sometimes representing a parent brand and sometimes a line within a megabrand; for example, Crest Pro-Health toothpaste and PedEgg foot care products are both considered new brands. 

First, the statistics (all sales data are food/drug/mass merchandiser store Year 1 retail sales, excluding Walmart):

  1. In 2012, there were almost 2x more new non-food brands launched than food brands (1,172 vs. 690).

  2. 25% of the new non-food brands that achieved 30% distribution grew to over $7.5 million sales in Year 1, only 2.3% achieved $50 million, and only about 0.3% achieved $100 million retail sales.

  3. Average sales across the top 80 pacesetters over these years was $83 million, the median was $60 million, and max and min among them were $343 (Allegra) and $35 (K-Y Yours+Mine), respectively.

  4. The 10 biggest winners were Allegra ($343 million), Zyrtec ($316), Tide with Touch of Downy ($266), Prilosec ($239), Gillette Fusion ($191), Huggies Supreme Natural Fit ($174), Alli ($160), Crest 3D White ($154), Herbal Essences ($154), and Charmin Ultra Strong ($154).

Switches Rule: If you noticed quite a few Rx to OTC switches (Allegra, Zyrtec, Prilosec, Alli) among the top 10 pacesetters above, you’re ahead of the game; Plan B, Zantac 150, MiraLAX, Prevacid, Mucinex, and Pet Armour round it out for 10 of the past 80 pacesetter brands being switches. Mucinex and Pet Armour weren’t Rx brands, but their ingredients were previously, and within a broader “channel switch” category, you might even add the salon-to-OTC switch of Nexxus and direct-response switches of PediPaws, Smooth Away, and PedEgg as well, for a whopping 13 of the last 80 successes.

P&G Dominance: If you counted the P&G brand names within the top 10 above, you’d find even more in the top 80; in fact, P&G launched 37, or an incredible 46% of these big kahunas. Competitors left were J&J at 8 (10%), Kimberly-Clark and L’Oréal at 4 and 3, respectively (4-5%), and a dozen other companies with 2 or fewer hits in the 8-year period.

Blue Oceans: Surprisingly, true “blue ocean” launches that created entirely new product categories couldn’t fill a teacup in the pacesetter seas, as there were only 5 (6% of total): Plan B, PedEgg, PediPaws, SmoothAway, and Jergens Natural Glow (self tanners weren’t really on the map before it launched). Unfortunately, these new category/new brand opportunities that are most coveted by retailers and innovators alike are extremely rare and difficult to pull off, especially within a 1-year time frame! Interesting that 3 of 5 were launched via direct response, isn’t it?

The Elephant in the Room: What’s left? A whole lot of big brand line extensions and not-so-distant flankers, 58 of them to be exact (a whopping 73% of the pacesetters). The familiar giants dominate the list, like Tide (with Downy, with Febreze, Total Care, Coldwater, Simple Pleasures, Pure Essentials, and Stain Release), Crest (3D White, Complete Multi-Benefit, Whitestrips Premium, Pro-Health, Whitening Expressions, and Night Effects – many thanks to premium pricing!), Gillette (Fusion, M3Power, Venus, Venus Embrace, and Venus Divine), Huggies (Little Movers Slip-On, Pull-Ups with wetness indicators, Supreme Natural Fit), Mucinex (Original, DM, Fast-Max), Olay (Body Collections, Pro-X, Regenerist), and 2-hit wonders from Dove, Secret, Schick, L’Oréal, and Tylenol. When you’re lucky enough to have big brands, flaunt them!

Co-Brand Math, 1+1=3: P&G has led the co-branding movement and been rewarded for it on the pacesetter list. One tactic is to simply add a second brand to enhance the first, like Tide with Downy, Tide with Febreze, Dawn Hand Renewal with Olay moisturizers, Crest+Scope, and Fixodent+Scope. A second model is to create new trademark equity platforms across closely related brands, like Pro-Health extensions of Crest toothpaste and rinse and Oral-B toothbrushes, 3D White versions across the same franchises, and Colgate Optic White and Listerine/Reach TotalCare. Another example is Tide/Downy/Dawn Simple Pleasures (with natural botanicals/fragrances).

Seeing is Believing: A picture’s worth a thousand words; there’s big money in creating visible differences. Examples include Jergen’s Natural Glow (slow/steady bronzing), PedEgg (you can see the callus flakes being removed), Smooth Away (smoothes, i.e. sands away fine hairs), PediPaws (file Fido’s claws), Crest Whitestrips, John Frieda Brilliant Brunette, and, before this review period, Bioré Pore Strips, which allowed women to see their pore “gunk” for the very first time.

Professor Gadget: Mechanical and electrical devices are the true “blue ocean” leaping across categories, including Febreze Noticeables, PedEgg, Smooth Away, PediPaws, Gillette M3Power (and Swiffer, before this review period). We’ll have to see how the new Lysol home soap dispenser fares. If your company’s not deep in competency in creating “things,” don’t fret – none of the big consumer goods players have a commanding advantage in industrial design capabilities!

Our Conclusions?

  • The biggest paydays in non-foods stem from extending big brands and from Rx-to-OTC or specialty channel-to-mass switches.

  • Co-branding, delivering visible differences, and new device gadgetry are ripe with potential.

  • Given the odds, it’s important to have a portfolio balancing high-risk/blue-ocean and lower-risk close-in initiatives.

  • Don’t think of innovation as a sprint to launch a business, think of it as a marathon to learn a new business. In a 4-decade study through the 1980s, P&G’s average time to market leadership in a category it newly entered was 15 years! Aquafina’s Year 1 sales were $13 million in 2001, but by 2009 were a whopping $460 million. Similarly, Olay Regenerist was $37 million in 2004, but $151 million by mid-2009. So recognize that Year 1 sales don’t tell the whole story; make sure you choose to invest in areas that are sufficiently strategic and attractive, and that you’re willing to hunt, fight, scratch, and, yes, invest, for success in the long run.