Why aren’t soft-drinks companies investing more in new product development?

Britvic%20DrenchBritvic’s struggle to get supermarket listings for its water brand Drench, despite an extensive overhaul, has prompted some to question whether the big soft-drinks companies are spending too much time and money tinkering with existing brands and not enough on developing new products.
Britvic spent £2.4m relaunching Drench last year, and introducing new packaging in the hope of broadening its appeal beyond its “youth” market, but it is still struggling to find favour with buyers (MW last week).
However, Britvic is not alone in looking at revamping its existing portfolio, whether through introducing new packaging or launching healthier variants of existing brands, as a means of boosting sales.
Coca-Cola followed its launch of Coke Zero, a low calorie variant, with Diet Coke Plus, a new formulation of Diet Coke fortified with vitamins and minerals. A new variant of its Fanta brand, Fanta Still, will be on the shelves this year. Meanwhile, PepsiCo is adding its first variant of its flagship Pepsi brand in more than a decade, with Pepsi Raw, a cola made with pure cane sugar.
Some suggest the soft drinks industry is taking its cue from the confectionery market, which has consistently launched variants of master brands. Yet they say smaller players are stealing a march on their more established rivals and driving innovation across the soft drinks market.
Lack of innovation
One retail insider says: “There has not been much innovation, particularly across carbonates this past year, and it has mainly been about variants. The innovation is being driven through by the smaller players, like Suso, which is a great idea.” He suggests the bigger players should be doing more.

Suso is a carbonated fruit-juice drink set up by former Red Bull managing director Harry Drnec. It is set to launch this year.

Although Suso does not carry the brand recognition of Britvic or Coca-Cola, one executive believes its premise of a carbonated drink with pure blended fruit is a genuine innovation and likely to be a hit with consumers.

Mark Wickens, chairman and creative partner at Brandhouse, says: “The reason it appears that no soft drinks are being launched could well be to do with a strategic change in the minds of the manufacturers and the increasing cost of bringing new brands to the market.
“The drinks companies seem to be following similar strategies to the confectionery companies building pillar brands and launching sub-brands of these, instead of new brands.”

Scaling down
Another suggestion is that new-product development (NPD) is still blighted by a poor summer in 2006. Ian Hall, the former chairman of the National Mineral Water Association, says: “In terms of new product development it has been quiet. Last year was pretty disastrous and because of this a number of new companies have perhaps scaled back new product development.”
Yet, according to Mintel, categories such as juice and carbonated drinks are in rude health when it comes to innovation. Its figures reveal there were over 270 launches across the juice category in 2007, nearly three times the number in 2006, although this figure does include variants.
As Steve Cooper, marketing director and founder of Feel Good Drinks, says. “I don’t think NPD is
a thing of the past. There has not been a big breakthrough in the past couple of years.”

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