Manufacturing consultancy Newton has released a report which claims food manufacturers and retailers in the UK grocery industry waste £2.7 billion annually on product innovations that consumers do not want, or prove too expensive to produce.
However, the report claims that if companies focused on products consumers want rather than basing innovations on ‘gut feelings’, the industry could generate up to £233 million in profit from new products and offset the £2.7 billion wastage.
Newton’s report estimated that £2.1 billion is wasted annually on new product production, as these new products can prove costlier to produce than to sell, contain expensive ingredients, or can cause costly manufacturing issues.
The research also estimates £600 million is wasted every year on the release of new and rebranded product lines which do not return the investment made by companies in terms of sales.
One key area the report said manufacturers should focus on was convenience, citing evidence that shoppers are now buying food items on the basis that they were “quicker and easier to use.”
Paul Harvey, head of grocery at Newton, says retailers and manufacturers shouldn’t “Innovate for innovation’s sake.”
He added: “Regardless of the nature of innovation or the rationale behind it, one point remains of paramount importance – innovation must either add value to the end consumer or reduce costs for the company producing it.
“An understanding of what a customer really wants is critical to the success of innovation and new product development. Research that sets out to prove a company’s own hypothesis right, rather than understanding the needs of the end consumer, is more likely to result in products that fail.”
The report also stated that a three-point approach would help to achieve greater innovation:
© FoodBev Media Ltd 2019
Asia Food Innovation Awards – DEADLINE EXTENDED!
Due to popular demand, the deadline has been extended to Friday 14 June.
Don’t miss out on having your innovations recognised on a global scale.