Most product launches fail within their first year

New product development is becoming increasingly difficult with as many as 86% of all launches failing within their first year, according to market researcher and consultancy TNS Magasin.

Manufacturers have been battling to adapt to changing consumer demands during the recession, making the prospect of launching new products even more daunting, Emilie Coles, director of TNS Magasin, said at a Food and Drink Innovation Network conference last month on Better, Quicker, Cheaper NPD. "It's essential to understand consumer behaviour and to know when and where to launch a product. Consumer confidence has been hit heavily, seeing independent and high street stores lose out to supermarkets - with sales down as much as 27%."

At the same time the supermarkets were losing share to big discounters, with budget becoming the fastest-growing category over the last 12 months, said Coles.

On top of this, the recession has brought with it the perception that supermarket own-label products are becoming an increasing threat to branded margins, as retailers have been stepping up their efforts to take market share, such as Sainsbury's Basics or Tesco's Discounter range. According to TNS Magasin, between 2007 and 2008 retailers increased their spend on advertising by 117%, compared with market leading brands which actually reduced advertising spend by 15% over the same time period. Premium label brands reduced spend by 3%, which includes TV advertising and in-store promotions and campaigns.

For example, Britvic reduced its advertising spend by about £5M last year. "Continued pressure by retailers to offer customers better value for money could pressurise margins, not least through greater emphasis on own-label products at the expense of the higher priced branded alternatives," analyst Altium Securities said about Britvic.